A best guess or pie in the sky? Ukrainian budget 2013

Although I studied economics as part of a degree in Business Management and Finance many moons ago, I can say without a shadow of a doubt that it was not exactly the most interesting of subjects, and one in which I had to motivate myself to maintain a respectable overall end grade.

The fact it is not an exact science, or indeed given recent events with a vast and very varied set of opinions from both well known and hitherto unknown “economists” and little else other than opinions since 2008, would suggest that to many it is not even a science but simply partially educated guesswork.  I make no comment!

Anyway, as is required by law, the Ukrainian budget for 2013 has to be agreed by the RADA before 2013 - which makes sense - other than due to the parliamentary elections and associated shenanigans which dragged the process on and on, the legally required resignations of the current Cabinet of Ministers due to said parliamentary elections and the soon to be appointed new Cabinet of Ministers,  on-going IMF negotiations by Cabinet Ministers who have now resigned and may have little authority by next week despite negotiating now, the gas price from Russia etc., etc., the 2013 budget will be something of a rush job with little time for debate in the RADA and quite possibly little or no responsibility for those who table it should they be dropped from the next Cabinet of Ministers.

Something of a mess procedurally when it comes to time-lines and that is without going into the proposed 2013 budget which is some 461 pages long, all of which are splattered with columns and columns of numbers, issued to a RADA membership some of which will not be RADA members next week and unseen by some successful candidates that will be RADA members next week.

Those personnel changes could even affect the composition of the Budget Committee that has submitted the budget proposal for 2013.

From what I have gleaned from those who have seen the draft budget, the government intends to continue to subsidise gas prices to consumers in 2013.  A stance that will make the on-going IMF negotiations very difficult, particularly as I understand that the gas price foreseen in the budget works on today’s pricing of $417 per 1000 cubic meters of gas.  That will mean the government will have to find UAH 21.5 billion ($2.7 billion) to cover the difference between purchase price from Russia and sale price to the Ukrainian consumer.  Ouch!

Further, an envisaged inflation rate of just over 6% and a US$ to UAH exchange rate of no more than 8.5 are foundations for the entirety of the 2013 budget.  Wishful thinking in both cases!

Possibly even worse, is that this budget is to go to the RADA tomorrow, and that means the almost disbanded current parliamentary assembly may well just vote it through as their very last act before the new parliament sits for the first time.  That, when amongst the current RADA members very few have seen it, and I strongly suspect given the average IQ amongst RADA deputies, hardly any will understand it,thus it seems fraught with danger or nefarious intentions - not that the new parliament will radically raise the IQ level of the parliamentarians or their understanding of budgetary matters.

The question therefore must be, given that the 2013 budget is supposed to be the economic blueprint for Ukraine next year - why the rush to get it finalised at the start of December when there is the entire month to debate and tinker with it?