Lawmaker: 2021 budget draft has no caps on state-guaranteed debt, public debt may skyrocket

Head of the Verkhovna Rada's Budget Committee Yuriy Aristov says the draft national budget for 2021 has no caps on the maximum levels of state-guaranteed debt and state guarantees, as a result of which public debt may skyrocket uncontrollably.

"The draft [national budget] for 2021, as is the case this year, does not define ceilings on guaranteed debt and state guarantees. At the same time, the government proposes that the relevant provisions of the Budget Code be suspended. The absence of such caps may lead to uncontrollable growth of public debt. And, as a consequence, we risk to have the heavier debt burden on the national budget in the coming years," he said while presenting the 2021 budget draft in parliament on September 18.

Read alsoFinance minister elaborates on IMF's position on 2021 budget draft

As was initiated by the government, the Budget Code's requirement to draw up the budget declaration shall not be applicable this year, Aristov said. As a result, there is no government document of medium-term budget planning, which was to define guidelines of budget policy and indicators for the next three years.

Moreover, the draft national budget does not specify state investment projects in which state capital will be injected. Aristov says such funds are only accumulated for the relevant program of the Economy Ministry, while Article 25 of the draft document proposes their distribution by the Cabinet, which is at variance with the Budget Code and should be fixed during the finalization of the draft budget.

"The draft [national budget] also stipulates a number of other provisions allocating budget funds by decision of the government. In other words, they propose that public funds be managed manually, without control by parliament. This is unacceptable and must be fixed as well," he stressed.

According to Aristov, the Verkhovna Rada's regulations do not suggest any voting right now, therefore, there will be only preparations of the draft budget for the first reading, which are about to start on September 18. Lawmakers and parliamentary committees may submit their proposals concerning the draft budget by October 1.

Key indicators of the 2021 national budget

• 4.6% GDP growth;
• The average annual forex rate of the hryvnia set at UAH 29.1 per U.S. dollar;
• Revenue at almost UAH 1.1 trillion (US$39.1 billion);
• Spending at UAH 1.35 trillion (US$46.2 billion); and
• Budget deficit at UAH 270 billion (US$9.6 billion).

State budget for 2021: Background

• On September 18, 2020, the Cabinet of Ministers presented the 2021 national budget draft at the Verkhovna Rada, Ukraine's parliament.
• On September 14, 2020, Ukraine's Finance Ministry forwarded the national budget draft for 2021 to the government for consideration.
• On the same day, the Cabinet of Ministers endorsed the 2021 national budget draft and tabled it in parliament.