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 Economics
  21990

 Ukraine on the Verge of Default: Government Spent Almost all Savings

The government Hs more and more difficulty paying the bills. On Friday, the Ministry of Finance reported a record budget deficit in December 2012 - 12.16 billion UAH - on a background of low growth of income of the general fund, the annual plan which has been underfulfilled by 32.6 billion USD.

According to Kommersant to finance its social obligations, the government had to virtually zero the balances in the national currency of the single Treasury account to 0.5 billion USD. This year will be no less difficult, experts predict, because under the conditions of low economic growth the reduction of the fiscal press is nor expected.

Ministry of Finance report released on Friday on the implementation of a consolidated and the state budget in 2012 confirmed the chronic problems in budget planning. Although in IV quarter the deputies 21 times made changes to the state budget, a plan of its revenue is still too high - by 27.93 billion UAH (received 346 billion UAH). General fund of the Treasury is missing even more funds - 32.65 billion UAH (289.6 billion UAH). The rate of revenue growth began to decline in the late summer.

In autumn, it became clear that the for the fulfillment of the budget its earnings in the end of the year have to grow by 60%, which did not happen - revenues rose by 10% in comparison with the state budget in 2011. According to the report of the Ministry of Finance that the public finance situation worsened in December. The significant budget deficit was a record one for the entire year - 12.16 billion UAH (deficit of the general fund - 14.73 billion UAH), while in autumn months it did not exceed 9 billion UAH. Because of the hole in the budget plan treasury deficit exceeded the target by 14.58 billion UAH and constituted $ 53.35 billion UAH (3.8% of the GDP). In particular, issuing of the government bonds some of whom bought by the National Bank.

"To secure timely finance of expenditures", budgetary surpluses generated at the beginning of last year were used and borrowings of the Treasury Single Account (TSA) were conducted, the Finance Ministry said in a report.

As the Ministry of Finance borrowed at CEN, possibly from local budgets and social funds, the total amount of government and other institutions in the NBU for the year fell from 12.68 billion UAH to 1.87 billion UAH, according to yesterday's report of the NBU.

In the national currency the government had only 0.5 billion UAH - at least since August 2003, according to another report. The criticality of this figure emphasizes the fact that this is the sum of state expenditures for 12 hours. The minimal amount of the government accounts became known only from the reports of the NBU - State Treasury has not been reporting the balance of the CEN for two months.

According to experts, the tense budget situation will continue in 2013. Director General of the Institute for Budgetary and Socio-Economic Research Iryna Shcherbyna does not see anything critical in failing the budget and spending all CEN funds. "We economists believe that, on the contrary, it is a bad thing when the money stays in the account. It needs to work for the economy," she said.

 
 
 
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