Sergey Aleksashenko: Budget Process Cannot be More Stable than the State

Budget planning and evaluation of its execution seriously depend on economic development. If you look at only two indicators for the Ukrainian economy – GDP and inflation dynamics – it becomes clear that any economic stability, the predictability that is required are lacking in Ukraine.

Stability of the budget process and adherence to the rules of its preparation, parliamentary approval and implementation of the budget is important for any state built on democratic principles, where there is a system of checks and balances. However, it would be naive to assume that in an unstable country with unstable economy the budgetary process could function regardless of what is happening in the country.

If we look at Ukraine, for the period discussed in the article (2000-2015) 10 prime ministers and 12 ministers of finance replaced one another with very few of them being able to prepare two budgets in a row. While those persons are key figures in any government who determine how the budget will be composed, what priorities will be incorporated into it. Having the experience of budgetary planning, I can say that the normal “educational” period for any Minister of Finance – in order to understand the technology of the budgetary process and to understand the substance of the document that you will submit to the Government and the Parliament – requires not weeks, but months and even years. And I cannot imagine a responsible politician ready to go to the parliament with the budget which he does not understand.

Budget planning and evaluation of its execution seriously depend on economic development. If you look at only two indicators for the Ukrainian economy – GDP and inflation dynamics – it becomes clear that any economic stability, predictability that are required are lacking in Ukraine. But if we add to this the global economic crisis of 2008-2009 and the military conflict in Donbass, the macroeconomic forecasting in Ukraine can safely be categorized as mission impossible.

Making long story short, the budget process cannot fit into the rigid framework of the rules prescribed in the laws and terms, if the political system of the country is in the process of constant change, and if the economy sometimes runs, sometimes falls and sometimes lies down.