Ukraine Has Ran out of Funds for the Payment of Subsidies to Beneficiaries

Translated by Ollie Richardson & Angelina Siard


In Ukraine money for the payment of subsidies to beneficiaries ended, reported experts of the public organization “Public Audit”. According to the State Statistics Service, 17% of GDP was spent for this purpose — more than what is spent on defense or healthcare. Meanwhile the army of beneficiaries grows: Ukrainians claim several types of social help at once. The number of granted privileges already exceeded the population of the country. A source of RT in the Ukrainian Ministry of Social Policy stated that the authorities of the country won’t yet deprive the population of the right for subsidies because they are “afraid of the army of discontent persons”. The Kiev correspondent of RT discovered whether a collapse in the social sphere threatens Ukraine.

The budget is not elastic

Experts of the Ukrainian public organization “Public Audit” estimated that in Ukraine money for the payment of subsidies has ended. According to State Statistics Service, from January 1st to May 31st Ukrainians already claimed subsidies to the sum of 64.9 billion UAH ($2.5 billion), from which the State paid 34.2 billion UAH ($1.3 billion) – another 30.77 billion hryvnia ($1,2 billion) is the debt of the State to company-suppliers of housing and communal services.

In total in the budget of this year 47 billion UAH ($1.8 billion) is allocated for the beneficiaries of subsidies.

“This sum is extremely small, because after Groisman established a ‘uniform market price of gas’, utilities became inaccessible to 9 million Ukrainian families (there are about 16 million families in all of Ukraine),” it is said in the report of “Public Audit”.

According to the experts of the public organization, the real need of the population for subsidies this year totals 120 billion UAH ($4.6 billion), but such money in Ukraine doesn’t exist. That’s why everything that will be calculated in the second half of the year will already be taken from the budget of next year.

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The need for subsidies

The majority part of the population of the country tries to receive social benefits. Thus one Ukrainian tries to apply for several types of social help at the same time.

According to the Center for Economic Strategy, officially in Ukraine about 48 million people use privileges, despite the fact that the population of the country is a little more than 40 million.

For example, as is said in the report of State Statistics Service, from 12 million pensioners only 9 million became retired upon reaching retirement age; the others use privileges.

About 10 million Ukrainians are entitled to not only a free public transport pass, but also a minibus one. Private company-carriers complain that it is unlikely to be possible for recipients of benefits to receive reimbursement from local budgets for journeys.

According to the state service for veterans of war and participants of military operations in Donbass, currently about 300,000 people already received the status and certificate of a participant of military operations.
“It is possible to issue such certificate without special difficulties for some thousands of hryvnia and to use privileges. Nobody checks its legality,” said a seller of certificates in the Petrovka market in Kiev to RT.

He added that demand for certificate is very high because they not only do they grant the right for a free public transport pass, but also privileges in terms of payments for housing and communal services, as well as the right to free holidays in sanatoria and so on. The seller, who identified himself as Pavel, insists that a uniform database of beneficiaries doesn’t exist, therefore there nobody will check the legality of certificates in a minibus or at subway stations.

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“It is necessary to eat less”

A large number of privileges is caused by the impoverishment of the population. For the last three years the price of housing and communal services in Ukraine grew on average by two-three times, while, according to Ukrainian recruitment agencies, salaries increased only by 20-30%.

For example, in the winter the payment of housing and communal services for a standard two-room flat of about 70 sq.m is about 3,000 UAH a month ($115), whereas the average salary in the country, according to Gosstat’s data, is about 7,200 UAH a month ($280). As a result, over 60% of families can’t pay utilities completely. The majority of pensioners and low-paid workers are compelled to claim privileges.

Ukrainians spend the remaining money from payments for housing and communal services on food. As was recognised by the Minister of Social Policy Andrey Reva, the population allocates about 50% of earnings for food. According to Reva, the residents of Germany, for example, spend only 14% of their salary on food. The minister found an explanation.

“Germans eat a little differently. They have another diet. Their culture of food very much differs from ours. Considering the fact that food prices are approximately identical in Germany and in Ukraine, they (Germans) eat less not because they have no opportunity to, but because it’s their culture. And that’s why they spend less in comparison with our people,” stated Reva on the air of the Ukrainian media.

Army of beneficiaries

Despite the catastrophic nature of the situation with privileges, the State isn’t in a hurry to carry out reforms in this sphere.

“We are afraid to sharply deprive consumers of the right to subsidies or other payments because we are afraid of the army of dissatisfied persons. Ukrainians are told gradually that housing and communal services can’t be cheap and that it is time to economise,” said a source in the Ministry of Social Policy to RT.

According to the interlocutor of RT, next year the department is ready to take concrete steps: monetization of social benefits and the creation of so-called social commissions. They will evaluate the housing of applicants of social help, study their accounts, and also their trips abroad. This, according to the government, will allow to reduce number of beneficiaries.

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