Bortnik: Ukraine's budget works to pump money from citizens to security forces and creditors

Almost half of Ukraine's state budget for 2022 will be spent on covering external debts, and most of the rest will go to internal security.

Ruslan Bortnik, director of the Ukrainian Institute of Policy Analysis and Management, stated this at a press conference in Kyiv, a PolitNavigator correspondent reports.

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“In general, this budget is the twin brother of the previous budget of the previous year and the year before. The logic of this budget is the same, and, unfortunately, it will not contribute to the development of our country, will not help improve the standard of living or attract any investment to our country.

The main source of income is VAT, and, first of all, VAT on imports of foreign goods and services to Ukraine, this is more than 400 billion UAH. The second source of income is taxation of individuals, and it is planned that in 2022, 30 billion UAH more will be taken from individuals, that is, from the income of you and me, than in 2021, and this is significantly more than the inflation index. The third source of revenue is income tax.

“In 2022, the government plans to borrow more on the domestic market and less on foreign markets, and rely less on help from international organizations. Perhaps this is a signal that relations with international financial organizations will not be very good,” said Ruslan Bortnik.

The expenditure side of the budget shows the government's priorities - foreign creditors and security forces.

“UAH 577 billion, almost half of the state budget, will need to be spent on covering external debts. UAH 393 billion is directly from various loans, 181 billion is from various types of interest. We plan to spend another 319 billion on the security and defense sector. But of these 300 billion, only 131 billion goes to the army, and the rest, the bulk, goes to internal security.

Here we see an increase in costs for the National Security and Defense Council, the Prosecutor General's Office and anti-corruption structures. The Ministry of Internal Affairs receives less - probably the new leader has not yet been able to lobby for his interests. The Office of the President and the Verkhovna Rada receive slightly less. In the first case, this is PR, in the second, it is the relationship between the president and the Verkhovna Rada, which is far from cloudless.

But in general, out of a little over 1200 billion costs, more than 900 billion are costs for repaying loans and for security and defense, and security takes up much more than defense. That is, the internal front, internal security forces consume more government money than the army. This is all you need to know about the budget - it is filled with imports of goods and services, income of individuals, and costs - we cover debts or spend money on the army, first of all, on the internal security apparatus,” the expert said.

Everything that remains is used on a residual basis for pensions, salaries, and to increase the cost of living.

“In a year, the minimum wage will increase by 200 hryvnia. There is an increase in costs for medicine and education, but today it absolutely does not satisfy social needs; the amounts there are far from those allocated for internal security,” the expert said.

This ideology – siphoning citizens’ money into the pockets of security officials and creditors – was formed in 2016-2017, and it must be abandoned.

“We need a change of ideology, a review of debt obligations. Covid is an ideal force majeure that has already allowed dozens of countries to renegotiate their debt obligations. Without this, we will continue to siphon money out of the pockets of our citizens (either through imported goods and services, or through a direct tax) and put it into the pockets of our external creditors and into the pockets of our security forces. This ideology needs to be changed, it is necessary to reconsider the debt burden, the ratio of financing of internal security forces and defense,” the expert concluded.