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14.10.2008
Credit-Rating: Early elections as a regular challenge for budgetary process in Ukraine
The parliament dissolved weeks before the new budgetary period may drastically hamper proper activities executed by Ukrainian municipalities in 2009, and, according to Credit-Rating`s head for municipal sector Elena Samoylova, `will negatively affect their creditworthiness`.
Pursuant to the Budgetary Code of Ukraine, a city budget may not be approved prior to adoption at second reading of the Law of Ukraine `On the State Budget`, which specifies the volumes of inter-budgetary transfers and other norms necessary for local budgets forming. As the early poll is scheduled for December 2008, the parliament is unlikely to adopt the state financial plan in the current year.
In this case the monthly funding of the city expenditures in 2009 will
be performed in accordance with the time schedule within 1/12 of the volume of
expenditures approved in the previous budget year. It should be noted that the funding in
such amounts will not cover real expenditures of the local budget, since 2008 saw gradual
rise in both salaries in the budget-financed sector and in prices for energy supply.
Moreover, the budget-affecting legislation prohibits capital expenditures before adoption
of the local budget, which prevents the
self-government bodies from executing their functions in housing, transport and
construction sectors in this period.
Credit-Rating believes that absence of the State Budget approved by Verkhovna Rada for 2009 will significantly constrain functions of the local self-government bodies aimed at both meeting their budget liabilities and at funding of the current expenditures for the budget-financed sector.
Information on all credit ratings assigned in accordance with the National Rating Scale may be found in REUTERS and BLOOMBERG information systems.
For more information, please contact:
Information and Communication Department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
