Opora

OPORA has been analyzing the distribution of state subventions for social and economic development of territories for the second year in a row. In 2016, the financing reached 2 billion 453 million UAH for 3,714 objects (measures). However, the amount had increased in 2017 in over two times reaching 5 billions 252 million UAH, and the number of objects increased in almost three and a half times. According to OPORA's research, the majority of financing is scattered among projects, which priority may be put in question. According to the analysis of expenses and presentation of this state assistance to the public, the budget resources are used for election campaigns by majoritarian candidates. This information was presented by the experts of Civil Network OPORA on 7 May conference.

Civil Network OPORA has prepared the second research on the distribution of state subventions for social and economic development between single-member district in Ukraine. Similarly to the previous year, the data analysis for 2017 shows there are political factors influencing the administration of state subventions. We may see from the way the government financial assistance for regional development is used, how wide are the opportunities, opened for influential majoritarian MPs in receiving considerable financing for the solution of problems in their constituencies. Political motivation in the distribution of state funds reveals the problem of lobbying by MPs and inequal distribution of funds. Electoral manipulations with misuse of subventions for social and economic regional development even long before the start of 2019 national elections may hazard the availability of equal opportunities for each candidate during the election period.

The effectiveness of subventions is another serious challenge.

According to Head of the Board of Civil Network OPORA Olha Aivazovska, the misuse of budget administrative resource, i.e. using budget funds for the benefit of the certain parties and candidates, is one of the most dangerous violations of election standards. “Although misuse of such administrative resource is often within the formal regulations, it is disastrous for competitiveness of the election. Politicians manipulate by voters and communities desiring to get enough financing for local projects, and avoid the responsibility for de facto campaigning, financed from the state budget. We should also mention a negative practice of using infrastructure projects in the media and for campaign purposes by current MPs of Ukraine and state officials,” – she emphasized.

For example, the average size of a state subvention for social and economic development has increased in 36% in 2017, and the list of financed projects contains striking examples of unsystematic, or even trivial expenses.

“One regions use subventions for big costly projects, while the others use financing for unsystematic or even petty expenses. The number of projects, which received state financing in amount of 50 thousand UAH and less, has increased from 13% in 2016 to 26% in 2017,” – told the Analyst of the Civil Network OPORA Andrii Savchuk.

According to him, the Resolution #106 of the Cabinet of Ministers “On the Procedure and Conditions of Receiving State Budget Subventions” establishes specific targets for financing, we may see from a detailed analysis of subsidies that budget funds are spent on extremely wide variety of objects (measures). For example, expenses within one region or district may be allocated for big infrastructural objects, major repairs of hospitals, roads or schools, and for absolutely "trivial" purchases like toys, computers, bicycles, or construction of playgrounds. While in the first case the allocation of funds seems to be logical, it is quite questionable in the second one.

Thus, the biggest number and amount of subventions was allocated on educational establishments. In 2016, 1,782 objects received the financing in amount of 987 million UAH. In 2017, this sector received 6,254 subventions amounting almost 1 billion 952 million UAH. Educational reform certainly must be among top priorities for Ukraine. However, there are hundreds and thousands of trivial expenses among financed objects (matters) besides constructions, major repairs, reconstructions of educational institutions, and other important infrastructural project. For example, over 700 subventions in 2017 were allocated for the procurement of multimedia equipment and other devices; 500 – for the purchase of furniture; and over 400 for sports inventory and toys in schools. Thus, only 14% (269 millions UAH) of all financing allocated for this type of subventions, were spent on expenses comprising one third of all subventions for educational establishments.

“From over 5 billions UAH of state subventions, “as little as” 178 millions UAH was spent on the construction of playgrounds and sports grounds in 2017. It's almost three times more than in 2016. Children in 123 electoral district (Lviv oblast) received the biggest number of such “presents”. For example, 119 playgrounds costing 6.6 millions UAH were constructed in the district of non-faction MP Taras Batenko,” – Andrii Savchuk told.

Electoral manipulations with misuse of subventions for social and economic regional development even long before the start of 2019 national elections may hazard the availability of equal opportunities for each candidate during the election period. Taking into consideration this fact, Civil Network OPORA continues analyzing whether the subsidies are evenly distributed among the districts, represented in the Parliament by MPs from parliamentary factions and groups of MPs.

The largest amounts of subventions, both in financial and quantitative equivalents, received 72 districts of majoritarian MPs representing the Petro Poroshenko Bloc. In 2016, they received 1,837 subventions amounting 1 billion 62 millions UAH”. In 2017 — 5,718 subventions amounting 1 billion 967 millions UAH. Members of the People's Front faction and of the “Vidrodzhennia” Party group of MPs received in 2.5 times less financing in 2017 – 798 millions UAH and 750 millions UAH respectively. At the same time, taking into consideration a large number of majoritarian MPs representing the Opposition Bloc (16), they received little subventions.

Another tendency is the list of those who didn't receive any subventions at all. While there were 43 such majoritarian MPs in 2016, their number decreased to 24 in 2017. 18 majoritarian MPs haven't received any subventions on social and economic development for the second year in a row.

“Thus, we may see from the statistical data on the distribution of funds among the districts that there are the certain preferences in receiving the funds by majoritarians, affiliated in the Petro Poroshenko Bloc, People's Front, Volia Narodu group and “Vidrodzhennia” Party,” – OPORA's Analyst emphasized.

 

Having analyzed the allocation of subventions in 2016 and 2017, OPORA has made the following conclusions:

  1. The allocation of subventions on social and economic regional development is very “politicized”.
  2. Approval mechanisms and procedures for the selection of objects (measures) subject to subvention, is nontransparent and unclear. There are no public consultations concerning top priority sectors for social and economic development.
  3. The amount of financing, allocated for different regions of Ukraine, is absolutely unequal.
  4. The financing is scattered among projects, which priority may be put in question, what makes it impossible to reach any long-term results, and the list of financed projects contains striking examples of unsystematic, or even trivial expenses.
  5. Most of majoritarian MPs use infrastructural objects, financed from the state budget, in media or campaign purposes.

Taking into consideration the research findings, Civil Network OPORA recommends the Cabinet of Ministers of Ukraine and the Verkhovna Rada of Ukraine to improve the existing mechanisms for allocation of subventions on social and economic development, particularly:

  1. To make the whole process more simple and easy to understand.
  2. To guarantee a transparent compilation of the list of objects, which are expected to be financed from the state budget.
  3. To introduce public consultations, aimed to determine which objects (measures) are going to be financed first.
  4. To create the conditions for equal distribution of funds among, first of all, different regions of Ukraine, and among the electoral districts, which are also represented by MPs from different political parties and groups.

Full text: https://www.oporaua.org/novyny/45345-derzhavni-subventsiyi-2017-yak-ne-peretvoryty-byudzhetni-koshty-v-peredvyborchyy-instrument

Contact information Kateryna Zhemchuzhnykova 066 270 17 13, kzh@opora.org.ua

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