Even though money for public sector salaries are enough only until July, the government is pumping additional financing into “strategic” majoritarian electoral districts to expand influence of the Regions, KW wrote in the last January issue.

The other day President Yanukovych demanded that the government revise the law On the 2012 National Budget by the end of January and reallocate financing for provincial development. Yanukovych’s anxiety is understandable. At the moment, over 95% of local budgets have been worked out. Experts the Association of Ukrainian Cities (AUC) says regional authorities, especially in western oblasts, were forced to seriously tighten their belts to get these budgets done and passed. First of all, this is because the government drew up the national budget with huge deficit financing for fulfilling oblast responsibilities, such as schools and hospitals, which came to about 20% of the total budget, or UAH 12 bn. UAH 6 bn of that sum will be spent on salaries while the rest will go to pay utilities.

Factors that caused this large deficit include the fact that the finance ministry did not take into account the 40% raise of minimum salaries in the Unified Wage Tariff System, from UAH 773 to UAH 1,073. This means that the five-fold increase in salaries promised by the government, as calculated on the basis of this formula, will not happen for public sector employees. Moreover, for the salaries of administrative staff alone there is only enough money in the kitty for just 5–6 months, as well as for those working in culture and sports.

The scarce financing to cover social welfare benefits, in particular, subsidized public transportation fares, is over UAH 1 bn. Together, these factors are forcing local authorities to forget about not only development programs, but repairs to municipal property, the article by Yuriy Shcherbyna concludes.