Ihor Slisarenko: Good evening. On air is the informational-subjective, but very sensible program "Vrazhinnia" [Impressions]. This is a project of Hromadske Radio, I am Ihor Slisarenko. In the program we usually talk about the events that impressed us during the week, and about the people to whom we owe this. \n \nToday we will talk about money, about big money, about our money, from which, in fact, the budget of our entire country is composed. I confess, I still have a fresh television image before my eyes, a video from Japan. There, today was a very tense day in the Japanese parliament. \n \nThere they were deciding the fate of pension reform. The opposition fought, blocked, as we are accustomed to saying, the work of parliament and, in the literal sense of the word, fought with representatives of the majority government party, trying to disrupt the vote. To harm, to prevent the vote by the ruling majority on pension reform. \n\nSince they are convinced that the government's proposed bill on pension reform aims to increase Japanese people's contributions to the pension fund. Instead, they will not receive larger pensions from this. We will watch how events unfold further in Japan, what instructive lessons we can draw from there. And this week things were also heated here regarding the money issue in our domestic parliament. In particular, parliament reviewed the government's report on the implementation of last year's budget. \n\nI am happy to introduce the guests of today's studio. Ms. Liudmyla Suprun, People's Deputy of Ukraine, faction of the "People's Democratic Party and the Party of Industrialists and Entrepreneurs," first deputy head of the Verkhovna Rada Committee on Budget Issues. Welcome, Ms. Liudmyla. \n\nLiudmyla Suprun: Good evening. \n\nIhor Slisarenko: And Mr. Viktor Pynzenyk, People's Deputy of Ukraine, faction of "Our Ukraine," member of the Committee on Finance and Banking Activity. Welcome, Mr. Viktor. \n\nViktor Pynzenyk: Good evening. \n\nIhor Slisarenko: For those who are listening to us in real time, in Internet mode, I remind you that you can ask your questions if you use an ordinary telephone, the phone numbers are known to you: 4515803, 4517119. So, for those who have just joined, I inform you that in our studio are People's Deputies Liudmyla Suprun and Viktor Pynzenyk. We are talking about how this week the government's report on the implementation of last year's budget was approved. And the first question to all our guests, for a warm-up, is how each of them voted, "for" or "against" this report? Ms. Liudmyla. \n\nLiudmyla Suprun: I supported the government's report. I can say that the law that was prepared by parliament in 2002 — this is the law on the budget for 2003 — was indeed a product of cooperation between the government and parliament. Perhaps because at that time the government was not yet so experienced and relied on parliament in many cases. \n\nWe introduced about 90 amendments and innovations against the draft law that was submitted by the government. We believe that many non-traditional sources were used, they worked for the economy. We also made several inaccuracies in the draft law, several mistakes, which, unfortunately, later turned into billion-hryvnia losses. \n\nIhor Slisarenko: Nice mistakes that turned into billion-hryvnia losses \n\nLiudmyla Suprun: This is a problem with VAT refunds, VAT was being refunded at a frantic pace. Unfortunately, today there still exists a system that allows using holes in legislation, other things. Even fraud, in this way, from the state budget a frantic amount of money is washed out that taxpayers pay in the form of VAT that was never paid. \n\nAnd therefore the budget surplus that formed in December 2003 was much reduced, since this uncontrolled VAT refund led to the fact that we actually reduced the budget surplus by approximately 2.5 billion hryvnias. The government's report is considered so that we analyze the legislation, study where the mistakes are, where the miscalculations are, where there were advantages, were able to make changes to the legislation, and thus not allow these mistakes the following year. \n\nIn my view, there were several positives. First — the budget was implemented at 100%, even at 103.4% for the general fund, for the special fund 116.4%. This can be evaluated from different sides. On one hand as imperfect planning, and on the other hand as the fact that we were still able to hold on to our taxes and did not increase the budget deficit, did not impose additional burdens for servicing our state debt, etc. \n\nI could now tell you a lot, but I would like citizens to understand. Approval of the government's report is, to a certain extent, a technical procedure that takes place in parliament. It is good that the government changed its position regarding the report, because it was proposed to write one sentence to approve the government's report in such revenues and such expenditures. \n\nWithout even discussion. In our view this was not entirely correct, we — members of the government-parliamentary coalition, we — members of the majority that supports the government today, but still believe that such discussion must necessarily take place in parliament. This is a normal democratic procedure. Another matter is that not everything proposed sometimes by people's deputies is taken into account. But still the fact that the report is approved... \n\nIhor Slisarenko: Thank you. Such is the position of the People's Deputy, Ms. Liudmyla Suprun. I turn with the same question to Viktor Pynzenyk. \n\nViktor Pynzenyk: The "Our Ukraine" faction did not support the budget. Moreover. We submitted a resolution on rejecting the report and recognizing the government's work on budget implementation as unsatisfactory. What is this connected with? With those manipulations and falsification of the budget of the previous year as well. This is yet another confirmation of the things I have been talking about for the second year, about falsification of the budget. Why? \n\nBecause the government submitted for approval a draft budget of 47.2 billion, the Verkhovna Rada approved 50 billion, and budget revenues will be 55 billion, 5 billion more. That is where the overperformance of the budget comes from. The government understates budget revenues. And most importantly. Where did this money go, 5 billion? \n\nSocial goals are there in last place, that for which the budget is primarily intended. Funds went wherever, for example, with revenues exceeding by 8.5 times, funds were increased for the construction of administrative premises, for officials. By 2.3 times funds were increased for the repair of these buildings. \n\nI mean for such social payments as pensions and assistance, by only 3%. And such a situation, when the government essentially manipulates the budget, spends funds without parliament, then at the end of the year changes the budget to match actual implementation. We could not support such manipulations. The government actually sharply increased financing where distribution can be done according to so-called "understandings" rather than by law, where "carving up" of funds is also possible. Therefore such was our position, and we did not vote for the budget report. \n\nLiudmyla Suprun: I cannot agree with these things, because we monitor the reports of the Accounting Chamber and the reports on the treasury. The government did not make expenditures beyond the amount of designated appropriations. But where funds were insufficient, changes were indeed submitted. \n\nBy the way, people's deputies also submitted changes to the law on the state budget. For example, it was proposed to increase expenditures for compensation to agricultural producers for lost winter crops. And such a compensation amount was 360 million hryvnias, this is absolutely understandable.. as for the numbers, there 8 times, or 0.3%, that is relative. if, say, 300 thousand was allocated for repair of premises, then 8 times — that is 2.5 million. I am giving an example. \n\nViktor Pynzenyk: I have two clarifications here. First: I did not use any figures other than government figures. All data that I operate with are government.. if for the construction of administrative buildings it was planned to allocate 75 million, over 70 million hryvnias, and 600-something million hryvnias were spent, then how can you call these hundreds of thousands? \n\nLiudmyla Suprun: And where is this information from? \n\nViktor Pynzenyk: From the State Treasury of Ukraine, I am responsible for these figures. By 8.5 times expenditures for officials were increased, almost a billion hryvnias. I demonstrated all this data in the Verkhovna Rada.. I specifically made all these calculations. \n\nLiudmyla Suprun: What premises are these? \n\nViktor Pynzenyk: And what does that matter? \n\nLiudmyla Suprun: If you mean the purchase of buildings, then there was a procedure by which the National Bank actually sold premises for administrative buildings. \n\nViktor Pynzenyk: We are talking about the expenditure item construction of administrative buildings, repair of administrative premises by 2.3 times more. That is where the 5 billion went. And the scheme by which construction or so-called state procurement is conducted, they are all conducted with "carving up," with so-called kickbacks. Where 20-30% is built into the price. \n\nIhor Slisarenko: Dear gentlemen, then such a question. And who, actually. Who among us controls these issues, this budget implementation, so that if something happens, to slap wrists, to stop it — parliament, the relevant profile committee or the Accounting Chamber, the state treasury. To what extent, in your opinion, do they cope? \n\nLiudmyla Suprun: I think there is a certain substitution of concepts here. The thing is that we made changes to the budget by which we allowed the government to purchase the full economic property complex of the former bank "Ukraina." That is precisely why the tax item was increased. But in reality a technological procedure is taking place. \n\nWhat does it consist of? The National Bank transferred more than 500 million hryvnias to the budget, excess of revenues over expenditures. And these funds were transferred again to the National Bank as payment for property that has now come under the authority of the property fund and undoubtedly the government. Therefore this figure sounds like that, but all these premises are used for housing state institutions. This is a technical procedure. It would have been very difficult for us to ensure such a process by another route. \n\nAs for control, control is possibly indeed not strict enough. Why? Because, for example, the budget committee does not have the ability to control the treasury in real time, every expenditure, etc. Such control on behalf of the Verkhovna Rada is carried out by the Accounting Chamber. But the Accounting Chamber controls only expenditures. It does not control revenues. And in our country, full revenues in the budget go with a minus. Thus, the Accounting Chamber is deprived of carrying out such control. Among the forms of control are parliamentary hearings, hearings at the budget committee. \n\nUnfortunately, they are not always effective. And we cannot say that certain violations indeed occur, both when funds are spent, and during tenders, and during other procedures. I think the more precisely legislation writes out regulatory norms, and the more order there is in the country, the fewer such violations there will be. \n\nIhor Slisarenko: Such is the opinion of Liudmyla Suprun. \n\nLiudmyla Suprun: I think the public participates insufficiently in this. And it seems to me that precisely this manifestation of civil society as control by public organizations could significantly influence this. \n\nIhor Slisarenko: I hope that we will talk later specifically about public control and at least advise how to carry it out. Mr. Viktor, what is your opinion? \n\nViktor Pynzenyk: The budget needs to be real. Because when revenues are understated, then the government always manipulates expenditures. \n\nLiudmyla Suprun: By the way, Viktor Mykhailovych can confirm, we always work in the committee to ensure that revenues are reflected in full. Otherwise everyone loses. Because we cannot, we do not have appropriations, we do not have expenditures, even if additional money comes into the budget, no one has the right to use it \n\nViktor Pynzenyk: But let us return to this problem. I assert that this year the government hid in the budget no less than 15 billion hryvnias. \n\nLiudmyla Suprun: In 2004? \n\nViktor Pynzenyk: This year. Of which 10 billion hryvnias in the budget and no less than 5 billion hryvnias in the pension fund. That is, appetite grows with eating. I am ready to prove this. Secondly, this always creates opportunities for loopholes. And the government constantly claims that it has no funds for social problems. Second. From the point of view of control over expenditures. First of all, expenditure procedures. \n\nEspecially of certain funds. That is why the government prefers building roads to paying salaries? One of the reasons. You cannot steal a salary from a doctor's pocket. During road construction "carving up" is always possible. Here tender instruments are needed, where technical conditions are clearly formulated, but there is also a second problem that you touched upon. I will say, we are talking about public control. \n\nOnly I would like no one to return to the traditions of the Soviet system, we are talking about something else. We are talking about the publicity of any actions, including expenditures made by the government. On all government expenditures. \n\nAn official knows that any expenditure, when published in the press with breakdowns, restrains and controls the official's activity. By the way, for the second year in a row my laws have been lying in parliament, I cannot get them passed. We are talking about just this, that budgets of all levels, the main spenders of budget funds every year must make a public report on expenditures. \n\nMoreover, make an announcement in the press, invite the press, public organizations and break down the expenditures. I cannot get this decision passed. Secondly, recently I as a deputy addressed several funds — provide me with information on revenues and expenditures. In response I heard: "And why do you need them?" \n\nIhor Slisarenko: Indeed, why do you need them? \n\nLiudmyla Suprun: State funds are meant. \n\nViktor Pynzenyk: I am not interested in charitable funds or other funds, that is not my competence. But everything that has a state nature and is collected in the form of taxes must be accessible not just to a deputy, but to any citizen of Ukraine, it must be public. Because if this is done under the table, abuses are always possible. If one always acts transparently for society, the possibility of abuse is minimized. \n\nLiudmyla Suprun: Here one can agree that public control is a necessary component. In our budget code, by the way, such a principle as publicity of state finances and publication of the report is provided for. But it is clear that this is not enough.. moreover. \n\nI, for example, have been insisting for several years that we have not just a state budget and a law on the state budget in the form of a generalization, but that we have detailization for all types of taxes. Well, let's say, a program is running. The total volume of the program is 500 million. \n\nWe say, we need to see how all these funds will be used. And I think we will insist that this year in the budget resolution there be exactly such a record: detailization of expenditures, not only by program classification, but also by functional. And down to the sum of 10, 15 or 5 thousand hryvnias, because we must know in detail where funds are spent. \n\nThis will give the opportunity to control the situation. And I know the budget very well, how it is formed, where there are what opportunities, pluses or minuses, and therefore I believe that this is a necessary condition. This will give the opportunity to normally plan finances in the country. This will give the opportunity to forecast a certain development of certain sectors, enterprises, certain social directions. This is a normal approach. \n\nWell and undoubtedly it will not give the opportunity to abuse the situation, because when everything is public, when every item is considered, when we know every sum, every expenditure on business trips, on payment for energy carriers, etc., then undoubtedly the degree of control is greater. As for the position on so-called hiding of revenues. I do not support the position of an extremely cautious approach to forming the budget, say, and clamping down on the revenue part. \n\nBecause if we do not set a certain goal, if we do not see a goal before us, we will never move toward it. In the state budget today the pension fund is not accounted for, therefore it is difficult here, here I can agree with Viktor Mykhailovych that pension fund revenues are being clamped down. But we review the pension fund estimate, and this estimate must be approved by the Cabinet of Ministers of Ukraine. Indeed, right now there is an excess of revenues to the pension fund. \n\nThese excesses amount to 9 to 12%, they fluctuate across different periods, but this sum will amount to 3 to 5 billion. if we conduct explanatory work regarding the new procedure for paying income tax, and it is now 13%, you know, established, then I am confident that we will receive a larger volume of revenues, because of the pension fund, because people will pay and legalize their wages and control employers so that they pay income to the pension fund, contributions to the pension fund. \n\nTherefore I think that with normal organization of work these revenues can be even larger, this is unequivocal. Spending of funds from the pension fund is possible only for pensions. We have a pension fund estimate that we have in order to control the expenditures of the fund's representatives themselves, this is wages, this is premises, etc. They are small. \n\nEverything that will come from above must undoubtedly be distributed for pensions; it is precisely at the expense of these revenues that pension recalculations are now taking place. Another matter is that this is indeed insufficiently transparent, public and accessible to the population, for understanding. And here one can agree with Viktor Mykhailovych that this also needed to be forecast. Because if we do not forecast, then what are we doing in parliament or what are we doing in the government? Regarding the hiding or so-called understating of the volume of state budget revenues, I know one thing. \n\nWe can forecast quite accurately the revenues of the general fund of the state budget. But there are such things as revenues of the special fund, and as practice shows, overperformance, by the way, in 2003 as well, went through the special fund, 116% against 100% planned. Is this good or bad? Good that there are more of them, and bad that we do not plan them sufficiently. What are these special fund revenues? \n\nLet's say, higher educational institutions, they admit students on a paid basis, and funds come to the special fund, and then these educational institutions independently spend them in accordance with their estimates. These funds have increased. if we take the ratio, the state budget finances 770 million approximately for education, and higher educational institutions receive more than 1.5 billion hryvnias of special funds.\n\nIhor Slisarenko: I apologize. I recall that about a couple of weeks ago the Ministry of Education announced that half of secondary school graduates this year, which is more than 200 thousand, will study at universities at state expense.\n\nLiudmyla Suprun: That is so. That is, what are we talking about? We are talking about the fact that overperformance of revenues in the special fund is not always something we can plan. Let's say, one of the enterprises provides more paid services, receives more money, we, say, control it more strictly, for example, the possibility of understating rent has been suspended. \n\nPartial suspension of the possibility of understating rent that state institutions provide, that is, more money comes in. Funds from the sale of military property are credited to the special fund. if more of this property is sold than planned, then undoubtedly this will also come to the special fund of the budget. But planning needs to be improved. \n\nAnd, perhaps, we need to return to the system of the former state planning committee, because the state plan essentially squeezed out supply and demand and production possibilities and provided information about balancing various sectors. We lost this position in a market economy, although all developed countries have such structures, have such bodies. Perhaps the government also needed to return to this issue.\n\nViktor Pynzenyk: I think we need to return not to the state plan, but to such a concept as morality.\n\nLiudmyla Suprun: That is sacred.\n\nViktor Pynzenyk: I assert, the government wants to "carve up" no less than 15 billion hryvnias and wants to show us figures. And there is nothing to talk about here regarding special and general funds. All the figures I will now name are exclusively official. The government calculated the budget based on gross domestic product — 255 billion, raise the figure from the report — 264 billion. That is last year, understated by 9 billion. Second, the government calculated budget revenues from economic growth — 4.8%. We have an actual figure of 11.5%. The difference between the gross domestic product that the government laid into the budget and the one that will be this year — 31 billion hryvnias. And now I will explain. What does gross domestic product include? Three components. The wage fund, the second component — profit, that is, objects of taxation, and the third — net taxes. These are VAT and excise. \n\nLiudmyla Suprun: Not only. And also citizens' incomes in the form of pension payments. \n\nViktor Pynzenyk: Excuse me. That is directly. Either taxes, or the base. And when I hear from the government that GDP growth does not lead to revenue growth, then let it open a textbook. Secondly, the government is deceiving with the pension fund. Last year the wage fund was 91 billion. It calculated pension fund revenues for this year — 89 billion. \n\nJust now Liudmyla said a figure that I confirm, that the wage fund this year is growing by 30%. It was 91, and it calculated the pension fund from 89, that is, in the pension fund large revenues are hidden that are capable of resolving, removing tension both in social payments and in pension provision. And the problem of the minimum wage, and raising salaries for doctors, teachers, and most importantly. \n\nThat this money works very effectively for the economy. Everything we pay to doctors, teachers, military, pensioners, it returns tomorrow to the Ukrainian economy, and returns with additional revenues to the Ukrainian budget.\n\nLiudmyla Suprun: Well, here we have no dispute over the figures, the only thing where the problem is. I believe that the government cannot use money if it additionally comes to the state budget. Why? Because there are no designations for it. Let us imagine a situation. The budget is overperformed twofold. Could someone in the government take this overperformance and use it for any purpose?\n\nViktor Pynzenyk: They could. \n\nLiudmyla Suprun: Under today's existing system this is practically impossible to do, changes to legislation must be made. if someone thinks that they will make expenditures and then make changes retroactively, then I think there is a mistake here. Since the treasury, it simply works within the government system. But it is still sufficiently autonomous, and plus the Accounting Chamber and plus control from the Verkhovna Rada. We see that we do not have planned expenditures exceeding those that were included in the budget. \n\nIhor Slisarenko: Impossible, says Ms. Liudmyla. Possible, says Mr. Viktor.\n\nLiudmyla Suprun: Tell me, maybe I don't know about this.\n\nThe technology is known. The government made expenditures, it does not go beyond the annual schedule. But it finances some items to a greater extent, others not. Then it brings changes under actual implementation. The last changes to last year's budget were made on November 18, that is, when the budget year is already ending. And today we have a repeat situation. Half the year is already gone, and expenditures are already being made. \n\nAnd the structure of expenditure increases is not uniform, and today one can see it. What the government dislikes most is social items, that for which the budget is intended, because the budget always has a social nature. Its goal is precisely support for those things that do not have a commercial nature, not a commercial character. These are budget spheres, and those who cannot earn money.\n\nLiudmyla Suprun: I can agree that financing of individual items is uneven. Let's say, we have such an item, for example, so that it is clear to our listeners, as a subsidy for agricultural producers, for livestock products. That is, if a farmer raises livestock to a certain weight and then delivers it, then this farmer is paid additional funds from the state budget as an incentive so that he can somehow hold on a bit, that is, the price is sufficiently low. \n\nAnd for such expenditures indeed, to the extent that we plan a small amount, last year this was an amount of about 115 million, this year approximately in the same range. More products were delivered, and already at mid-year the entire amount of appropriations was used. What to do? The program exists. Practically the obligation to pay such money exists? But there is no money. \n\nChanges to the budget must be made, and this is correct, this is how it should be done. Therefore, perhaps, here I will agree that indeed individual payments are made, say, in January, if they were even envisaged throughout the year, because further there is simply no possibility to finance them. Then changes must be made. We understand that the budget is quite an influential mechanism, and we cannot say rigidly: yes, and we do nothing more! Everyone else, if we planned incorrectly or some events occurred, must sit and wait until the next year comes. \n\nTherefore making changes is absolutely normal, reacting to changes is normal, say, right now the situation on the petroleum products market, we are not actually reacting to it through legislation. Or should we have reacted? \n\nWe should have reacted with certain measures. The fact that monitoring must be applied is unequivocal, because today there is a discrepancy between the growth of the price of oil and the growth of the price of petroleum products in Ukraine. The cost of transportation services is the same on the territory of Ukraine, the cost of processing at refineries is the same. And the price of petroleum products is much higher than the price of oil. What happened? As we saw today, the government signed an agreement with those who process oil, who supply petroleum products, on price reduction.\n\nIhor Slisarenko: But only for, as far as I recall, A-95, down to 2 hryvnias 90 kopecks.\n\nLiudmyla Suprun: Of course. Well, still a bit lower than what we currently have in the retail price, etc. We have such mechanisms by which we can regulate changes in world prices in order to preserve our own producer or not give these changes great importance, for example, regulation through the level of excises. Let's say, today for petroleum products the level of excises is respectively 30 and 60 euros. \n\nAt the expense of reducing the share of excises we could somehow balance the economy. But on condition that such a reduction occurs only for those petroleum products that are produced on the territory of Ukraine. What would this give us the opportunity to do? First, by reducing the excise rate, we indeed lose something in the state budget. But we would compensate those losses with other types of revenues, say, payment for processing. Then after payment for processing come revenues. \n\nThis is corporate income tax, personal income tax, value added tax, and so on, that is, compensators would more or less work. Unfortunately, we have not yet applied these methods, but I think the government, in principle, can apply them and should do so. But this is possible only through changes to the law. In this case not to the law on the state budget, although also to it, because everything is interconnected. By the way, we work in different committees. \n\nViktor Mykhailovych works in the committee on finance and banking activity, I — in the budget one. And these committees — they are simply twins. Why? They almost cannot live without each other. if only the committee on finance and banking activity makes changes to legislation, this can unequivocally affect the budget either plus or minus. Undoubtedly, we must maintain closer control, closer communication. We, in principle, try to do this. Although we do not always succeed.\n\nIhor Slisarenko: Here, by the way, it is good that you mentioned the committees. It is interesting, returning again to the discussion in parliament on Wednesday, here is a resonant speech, the speech of the head of the budget committee Petro Poroshenko. Is this his personal position, or a position agreed upon in the committee, or was it a surprise for you? There was such a sharp, critical speech.\n\nLiudmyla Suprun: The head of the budget committee has such a function, he must speak like that. You know that in many countries of the world this committee, as a rule, and this is even enshrined in legislation, it is even enshrined constitutionally, is given, like the committee on freedom of speech, to the opposition. Therefore, as they say, that is why the pike is in the river, so that the carp does not doze. But I can agree with many professional positions that Petro Oleksiiovych expressed. \n\nUndoubtedly, there was little time for the speech, because there was also the positive. He said that many things that enabled filling the state budget, that gave, say, a positive for the budget, that did not allow corruption to manifest on certain issues. Such a thing as the sale of the quota for import of raw sugar into Ukraine. \n\nThe mechanism that was proposed by the budget committee was supported by the Verkhovna Rada, gave total revenues to the state budget of 360 million hryvnias. That is, the state proposes, we will be able to remove taxes, there is a quota for importing sugar into the territory of Ukraine, please, here is an auction. Buy those who want to import sugar here, and we will see what the real market value of such sugar and such a quota will be. This gave huge revenues for the budget. \n\nHuge. Therefore we believe that this mechanism gave us the opportunity to minimize any corruption manifestations. The market, the market worked. And many other things. Well, perhaps with some things I can not fully agree, but in many cases it is possible.\n\nViktor Pynzenyk: I think we need to pay attention not only to the praise words that Petro Poroshenko said, but also to the good speech of Volodymyr Lytvyn, the speaker of parliament. Where he spoke about that very crying contradiction of the budget that I have been talking about for the second year already. \n\nWith a growing economy we have no serious changes in the social sphere. Moreover, this is a paradox that is not connected with the economy. It cannot be explained economically. Our pension is falling. The real size of the pension is falling. Over the past year the pension grew by 12% with inflation of 8%. And if we take the consumption structure of pensioners, where mainly food products, then I assert that their pension has decreased. \n\nOur real subsistence minimum is decreasing, which over 2 years increased by 5.8%, and we already have inflation of 13%. And next month we will have a breakthrough in connection with the situation on the gasoline market. And Volodymyr Lytvyn noted this contradiction and what it is connected with. It is connected with those problems that I am talking about. That revenues are being hidden and not given to social goals. \n\nFor the second year in a row I write memos on the draft budget. And here, by the way, our estimates with the budget committee for last year approximately coincided. I did the development according to my methodology, the budget committee according to its own. But the revenue figure we had was almost the one that it showed in the report. And we spoke about the need for progress in social payments: salaries and pensions. \n\nAnd progress of the economy, because ultimately the Ukrainian economy grows from this. And this money immediately returns to the Ukrainian treasury. The government shouted then, God forbid doing these things. The second time I already wrote a letter to the President and to the deputies, I gave each deputy a letter with materials and justifications. I believe that parliament has no right to silently watch as an attempt to hide revenues is underway. \n\nThe matter concerns a huge sum. And here I am glad that this week a decision was adopted that we have been seeking for 4 months. 4 months ago the relevant draft laws were submitted. And yesterday there was an agreement that on the 16th this law is considered first. About the situation with the budget and hiding of revenues and where these funds should be directed.\n\nLiudmyla Suprun: In reality, social payments are increasing for us, but we must take into account what their character is. Let's say, if we talk about wages, I cannot call this a social payment. This is the obligation of the government as the largest employer to pay wages to its employees in the budget sphere. What is this? What employees are these? These are not only administrators who sit here in Kyiv, or in some cities. \n\nThese are teachers, these are doctors, these are scientists, and cultural workers, and so on. That is all those who receive money through the budget. It does not matter whether it is in the city of Kyiv, or at the local level. Because, say, the exercise of powers on education — these are delegated state powers that are carried out by local self-government bodies. Therefore, in my view, one cannot say that we are not increasing anything. \n\nWe increased. But simply this increase — it is still not sufficient to satisfy the elementary needs of a person. And everyone understands that this is indeed happening. In my view, if we talk about social payments, these are subsidies for the population, this is assistance for the low-income, this is a subsidy for the purchase of solid fuel, this is payment of privileges for gas, for telephones, and so on. \n\nFor us they indeed do not grow sufficiently, because we replaced, say, certain privileges, such as the 50% right of payment for gas, with a subsidy. That is, instead of this the citizen received monetary funds. And this slightly changes the system and character of payments. I think it is no secret to anyone today that some use these privileges illegally. A citizen can arrive for unemployment assistance in a Mercedes. \n\nDo we not know this? We know. But we still provide him this assistance and provide it at the expense of funds, here precisely Viktor Mykhailovych spoke about state funds. Here the moral factor does not work. One can afford, some believe, to drive a car for assistance of 200 hryvnias. He will use just about half a tank of gasoline to get there, because he works somewhere else, either abroad or something. \n\nThat is there are certain things that are undoubtedly difficult to reconcile with each other and here I can agree that perhaps we pay very little attention to the morality of such factors as receiving subsidies, paying subsidies, as paying taxes. Why? if precisely the citizen and the population and the country know how this money is earned, the kopecks that make up the budget, how they are spent. if they see that the activity of the government, the Verkhovna Rada is directed toward transparency of such work. Toward everything being done as needed, then perhaps citizens would also relate differently, right?\n\nIhor Slisarenko: Of course. Or they see luxurious government cars on the streets, then they indeed think, why should I pay for these cars?\n\nViktor Pynzenyk: I supported the problem of control over those people who, for example, illegally receive subsidies, on one condition. Right now, it seems to me, talking about such problems is generally inappropriate. \n\nif the "Kryvorizhstal" plant gives 1 billion dollars of profit per year, and this plant is wanted to be sold for 750 million, and moreover it is not even possible to consider this issue in parliament, because the morality of deputies is so high that they do not vote to consider this law. Then what 200 hryvnias are we talking about, if someone arrives in a Mercedes for a subsidy? Here it is not 200 hryvnias, I am talking about a plant that costs 5-6 billion dollars. And it is being sold for 750. And we are talking about holes.\n\nLiudmyla Suprun: Viktor Mykhailovych, here we are talking about something completely different. The thing is, if you know, my position as a person who works in the budget committee, as a people's deputy, is that we should not thoughtlessly sell property that we will then never build and will not be able to create. This is the wrong approach. Our total volume of revenues of net profit that formed last year at state enterprises is 10 billion. 10 billion 72 million, to be precise. \n\nWe proposed in the budget that part of this profit, because these are enterprise revenues after taxation, be transferred to the state budget — 400 million — a pittance, to start this process. If you had seen what frantic pressure began on the deputy corps: how is this so, we already paid taxes, this is all ours, don't touch it! We say, wait, how is this yours? \n\nA joint-stock company has an owner, a shareholder, and he receives a share of revenues in the form of distribution of dividends. The state has 100% ownership of the enterprise. And the enterprise receives revenues and these revenues are the property of the state. Indeed, as practice has shown, and this is recorded in the government's report, instead of 400 million the government collected more than 700 million hryvnias according to such a principle. That is, we can, and moreover revenues from privatization amount to 2 billion. \n\nSo which is better, selling enterprises that give profit to the budget constantly or still using this share of revenues from activity? In my view, it would be expedient to leave for a certain period of time, while it is profitable, while it is economically justified, such enterprises in state ownership.\n\nViktor Pynzenyk: Then I hope the NDP will vote next week to leave "Kryvorizhstal" in state ownership. Because we are ready to support this.\n\nIhor Slisarenko: Let me just explain to listeners that indeed yesterday the situation in the Verkhovna Rada was heated. The opposition blocked the tribune with the demand precisely to prevent the future privatization of "Kryvorizhstal." And the President takes a firm position, he vetoed the draft law that would have banned it. \n\n\nAnd, indeed, the situation is interesting in that, say, I recall, People's Deputy Valentyna Semeniuk is conducting several court cases regarding violations of the rights of workers of this enterprise. This is one aspect. And another interesting aspect is that, indeed, the enterprise, as indicators show, in recent years is only growing and becoming more and more profitable. And a logical question arises: "And why then privatize it, if it is already not bad?" \n\nLiudmyla Suprun: Privatization is economically justified when revenues from the sale of property exceed at least a three-year volume of revenues that the state can receive in the form of dividends. This is economically justified. At least three-year. In principle, privatization of the enterprise itself would be possible.\n\nViktor Pynzenyk: At the current level of profitability this plant costs 5-6 billion dollars.\n\nLiudmyla Suprun: That is why I say, take into account, if one billion two hundred is the annual profit, multiply by 3 years, that is 3 billion 600 million. This would be somehow justified. Well, no one will buy if the plant costs 5 billion, no one will definitely buy it for exactly the same sum, because slightly different mechanisms are evaluated. It may cost a lot but give no revenues or a minimum. \n\nOr there may be some other problems, say, restrictions, monopolism, and so on. Therefore, if we talk about sale, I accept the word sale or privatization when this privatization is conducted at a price that is economically justified. We can now receive a sufficiently high level of revenues that will significantly exceed the profitability for the state from the activity of this enterprise. Well, one more thing must be taken into account. \n\nThere are such things that are not evaluated by the principle of profitability. We are talking about national security, about national defense and other things of such content. Let's say, privatizing an enterprise that deals with control over airspace movement would be inexpedient, because it must be a state institution, this is state security, and so on. \n\nIhor Slisarenko: Or water supply.\n\nLiudmyla Suprun: Water supply, yes. Privatization of "Oblenergo" is also a very interesting question. Can we privatize them or not? We can privatize "Oblenergo," but give them only one function — this is the right to carry out transportation of electricity.\n\nViktor Pynzenyk: Tell me, please, do you eat bread from private companies or not?\n\nIhor Slisarenko: Bread?\n\nViktor Pynzenyk: Yes.\n\nIhor Slisarenko: From private companies?\n\nViktor Pynzenyk: Yes.\n\nIhor Slisarenko: I do.\n\nViktor Pynzenyk: And you eat it?\n\nLiudmyla Suprun: And you?\n\nViktor Pynzenyk: I do.\n\nLiudmyla Suprun: I can even bake it myself. And can you bake bread? Have you been there, no?\n\nViktor Pynzenyk: I am not talking about this. The problem is not whether it is state or private. And what difference does it make if the water pipe is private. Citizens are not interested in this, they are interested in the quality of services and their price. And whether it will be private or not private. I am not conducting discussions on whether or not to privatize. It is necessary. It is not profitable to privatize today. Tomorrow we will take significantly more, in a year significantly more. \n\nAnd the second main thing is that the price of a plant is determined not by the value of its property, but by its profitability. And that which gives profits, a billion dollars, is never sold at a price less than a year's profit. This fits into everyone's pocket. If you want, calculate at home each for yourselves how much fits into the pocket of each of you, because this is state property.\n\nIhor Slisarenko: Let us return again to the question of the water pipe. Perhaps I am mistaken, but I recall, it seems, in France, in the USA water supply — this is a state function, and the explanation there is simple. So that in case a bad guy with bad intentions comes, he cannot harm either national interests or a large number of people. Here is how primitively possible, but it is simply explained. So involuntarily you will think, indeed, there is a certain sense. Someone alone will take it with evil will and turn the tap.\n\nViktor Pynzenyk: All over the world there are rules of behavior for people, including entrepreneurs. And special rules for special types of activity, for example, water supply, and it does not matter whether it is the state or private sector, there are no exceptions to the rules. Do we not have abuses in the state sector? There is no state sector in our country. And we should not deceive people. Legally we have a state sector. \n\nBut in fact it has long been private. It is unknown what is happening around the same "Kryvorizhstal." A state plant that has grown over, it does not sell a single ton of metal for export. Itself. Everything goes through intermediaries. The difference in price is about 100 dollars, here are the consequences of the state sector for you. The problem is not whether it should be, it must be privatized. But not to privatize today, nothing will happen, why so urgently privatize? Secondly, at a real price.\n\nIhor Slisarenko: Ms. Liudmyla, still, regarding national interests, perhaps you will clarify?\n\nLiudmyla Suprun: We have no disagreements here, perhaps Viktor Mykhailovych sharpens the question a bit more. The thing is that when an enterprise is given into private hands, then sometimes it is used as a mechanism for squeezing out profit, but not on the territory of Ukraine. Let us look at our oil-refining plants that have been privatized. \n\nI will not now talk about the prices at which they were privatized, this is generally a separate topic of conversation. But how does this enterprise work today? A plant that receives oil, processes it. It has only one type of revenue. This is a tiny payment for oil processing. Everything else remains outside the country, because oil supply is on tolling terms. They supplied, paid a little, so that it is enough to pay wages, a part of funds for depreciation, to obtain fixed assets. Well, if something is needed for development, a little remains, but not much. \n\nAnd that is it, no profits, no other revenues. That is, the use of property goes exclusively as a special kind of press where maximum profits are squeezed out. This is also a consequence of privatization, and this is not a state enterprise, this is a private one. Therefore in both the one and the other case such things can happen. \nIt is bad when it is a private enterprise, we can control it to a lesser extent from the state side. But when it comes to large state enterprises, then undoubtedly these things are impermissible, and on state ownership a revenue base can and must be formed, funds for development, because these revenues belong to the state. \nAnd we tried with the law on the state budget for 2003 to confirm and carry through this clear firm line, that if this enterprise is state ownership, then part of the revenues must be transferred to the state budget.\n\nIhor Slisarenko: I cannot bypass this question, a general one, perhaps, but again, for reflection. To what extent is this pre-election atmosphere now making itself felt. Today the Committee of Voters of Ukraine, a public organization, announced so pathetically that in fact the pre-election campaign has already begun. \nAlthough officially — in July. Say in this sense there are grounds to talk about the government hiding funds, there are grounds to put forward such a conspiratorial version that funds are being accumulated for the future election campaign, for the administrative resource. This is not even my question, it is of ordinary people with whom one has to talk, hear their conversations. Here even the same gasoline crisis. People far from big politics express such an opinion that it was raised in order to accumulate money for future elections.\n\nViktor Pynzenyk: Honestly, Ihor, I thought you were putting the question in a different vein. Because so often I hear it put to me in parliament. Soon it will be generally impossible to raise any question in parliament, because it will be interpreted as an election campaign. Because, for example, as regards the budget, I wrote about last year's budget too. \nThe elections were still far away. Although some try to translate this purely into the plane of political confrontation, and not an election campaign. But you mentioned another aspect. One can, of course, allow such a variant too, I do not exclude it. But the main thing is not this. Whichever variant is laid down, but the task of all state institutions, including parliament, is not to allow such things. \nI hope that in parliament there will be found healthy forces to force the government to still sit down, recalculate the budget and direct it transparently publicly to priority priorities. We have acute issues. Acute. We have a miserable level of salary for teachers, doctors. There was serious pension discrimination. \nLet us fix at least some things. Let us make the first step and next year — the next step. That is, the possibility of not allowing such things exists. Because no one has the right by their decision, whether by "carving up" or by another method, including for political purposes, to use the budget.\n\nIhor Slisarenko: But here precisely under the elections they may also raise the salaries of the same teachers, the same doctors.\n\nViktor Pynzenyk: We have been seeking this for the fourth month already, that hidden revenues go in the interests of the budget spheres.\n\nIhor Slisarenko: But the dividends will remain not with the opposition?\n\nViktor Pynzenyk: You know, ultimately the task of politicians is to think about society, not about dividends. Probably, many things I would do differently if I had to make unpleasant things too. And if I thought only about personal dividends.\n\nIhor Slisarenko: Ms. Liudmyla.\n\nLiudmyla Suprun: I think that the election process as a legal fact has not yet begun, but it is about to begin. But the election campaign, it began long ago. In principle, it should have begun on the second day after the presidential elections. But, unfortunately, this did not happen and everyone waited for when all the elections would pass, already the five-year term, and then we will turn around. \nIn reality, one must fight for the voter every day. And this understanding, I think, to a certain extent, is either already or about to be formed in Ukraine. How to fight? With one's position, one's thoughts, one's actions. With the publicity of statements on one or another occasion, so that people know what kind of candidate this is, what he wants, what he will do. Whether his words diverge from his deeds. \nWhether he is capable of becoming a leader of the nation and leading people after him. Whether one wants to see him as a leader? Whether he is sufficiently intelligent, handsome, decent, whether he has a team, and so on. Unfortunately, we learn democracy for a long time, we learn politics for a long time. 13 years of independence, and still we have not acquired the experience that should already be there. Perhaps only because the leader keeps growing and growing, growing and growing, soon like Prince Charles, will soon go into retirement, and still remains a prince. \nTherefore I would like the election campaign, presidential or parliamentary, not to end in the sense of the struggle for people's consciousness. And in this regard only those methods that are perceived by people should be used. Because if a person is convinced of something, then in the voting booth they will do it according to their convictions. And not because of who paid them how much, or who wrote another tick instead of them. Therefore, in my view, I distinguish these things. \nAnd the election process — it is already beginning to unfold. Everyone is still sitting it out in the trenches. They are still looking, maybe someone else will come from those who are not expected. But, in principle, most of all the population is waiting for this. The main question that citizens are now asking, and they have an extremely high political consciousness, when we communicate with them, travel to constituencies, or travel to meetings, or such meetings take place, they ask: "And who do you think will be, and who can, and who is capable of becoming President?"\n\nIhor Slisarenko: And who is capable, Ms. Liudmyla?\n\nLiudmyla Suprun: You know, I believe that several persons can, they are capable of doing this. One needs to know that we ourselves form these people. We can either cultivate them, or, on the contrary, forever drive them underground or there under the table, so that they never stick their heads out from there. \nWe are very ruthless sometimes in our categoricalness, we can brand a person for some small faults, or forgive great ones, if they behave in accordance with our mentality. There will be many contenders, I think.\n\nIhor Slisarenko: Mr. Viktor. Briefly, in your opinion, one contender worthy or several?\n\nViktor Pynzenyk: There are millions of worthy ones in Ukraine. I am convinced that there are many worthy people. But one person will become President. I even know their name. \n\nIhor Slisarenko: Thank you. Esteemed society, I sincerely thank you for this frank, information-rich conversation and hope for new meetings.\n\nLiudmyla Suprun: And it was also extremely pleasant for us, because we see you more on television, on radio there is no opportunity for everyone to see. But, perhaps, someday new technologies will come to us and radio will work in a mode almost of direct television broadcast\n\nIhor Slisarenko: Yes, there will be a combination.\n\nViktor Pynzenyk: Thank you.\n\nLiudmyla Suprun: All the best. \n\n\n\n