The Cabinet of Ministers proposes to abolish support for agricultural producers, for which UAH 4 billion is provided in the 2020 national budget and increase funding for the Pension Fund of Ukraine by UAH 20 billion, to UAH 192 billion.
The materials of amendments to the law on the 2020 national budget of Ukraine, which the government submitted to the leadership of the Verkhovna Rada, were released by MP Oleksiy Honcharenko in the Telegram Channel on Thursday, March 26.
According to the amendments, the Cabinet of Ministers also intends to cut a number of subventions to local budgets, namely for the construction and repair of roads by UAH 3.24 billion, to UAH 18.9 billion; for local elections by more than UAH 2 billion, to UAH 1.3 million.
The amendments also provide for a reduction in the financing of the State Road Agency (Ukravtodor) by UAH 3.27 billion, to UAH 18.9 billion.
Regarding the country’s power bloc, it is proposed that the financing of the Interior Ministry be left at almost the same level at UAH 92.961 billion against the current UAH 92.966 billion. The costs for the Prosecutor General’s Office are proposed to be cut by UAH 50 million, to UAH 7.55 billion.
According to the materials with the proposed changes, funding for the Cabinet of Ministers Secretariat can be reduced by UAH 670 million, to UAH 930 million; the Supreme Court by UAH 110 million, to UAH 2.27 billion, the Verkhovna Rada apparatus by UAH 11 million, to UAH 1.989 billion.
Ukrainian farmers under the government-funded program to support acquisition of Ukrainian machinery and equipment bought it for the amount of over UAH 5.77 billion in 2019, which is 31.2% more than in 2018, Secretary of the National Committee for Industrial Development Olena Salikhova has said.
“At the same time, the amount of compensation [25% of the cost] for the purchased equipment according to the Ministry of Economic Development, Trade and Agriculture, in fact in 2019 amounted to UAH 640 million (applications submitted by farmers in September were satisfied), while applications filed in October-November for the amount of UAH 563 million were not compensated, but the equipment was purchased,” she said during a Thursday working meeting with Deputy Minister of Economic Development, Trade and Agriculture Taras Vysotsky with agricultural associations devoted to support programs for 2020.
In turn, Vysotsky said that this program was underfunded due to the fact that the budget provided for these purposes less funds (UAH 682 million) than the demand for this program.
“Farmers bought a lot more equipment under the program than there were funds in the budget, so we can discuss the possibility of considering this compensation in 2020. Our position is to complete all the programs,” the deputy minister said.
He said that in the fourth quarter, when there was no money left for compensation, farmers purchased equipment for UAH 2 billion, which means compensation for another UAH 500 million.
The World Bank invites the Ukrainian government to consider the creation of the Partial Credit Guarantee Agency as a special financial tool that will allow small and medium-sized agricultural producers to receive financing for the acquisition of land after the launch of the market. “Partial guarantee for loan contributions is the best option for Ukraine,” Lead Financial Sector Specialist for the Finance and Markets Global Practice in Belarus, Moldova and Ukraine Vahe Vardanyan said at a press conference on Thursday.
According to him, at least half of the countries have introduced government partial guarantees as a way to facilitate access to loans. There is also the practice of creating specialized partial guarantees designed specifically for agriculture, for example, in Mexico and Colombia, he said.
In order to receive partial guarantees, the farmer applies for a loan to a bank, which analyzes the application and determines the need for partial guarantee, then the bank contacts the Credit Guarantee Agency. The latter checks the compliance criteria and carries out risk analysis, approves and provides a partial credit guarantee, receives a fee from the bank for issuing the guarantee. Further, the bank provides a loan secured by partial guarantees.
In addition, the World Bank said that the Credit Guarantee Agency (company/fund) is usually a non-banking financial institution, it has its own: management, governance, capital, operating procedures. The legal structure of the agency allows for a mixed type of ownership at a certain stage, the government is not always a full owner. The National Commission for Financial Service Markets Regulation exercises supervision as over a non-banking financial institution.
All over the world, guarantee agencies are state-owned, co-financing, public private partnership is possible, but this is about joining after the first year of the institutions’ work, World Bank Country Director for Belarus, Ukraine and Moldova Satu Kahkonen said.
The Ministry of Agrarian Policy and Food of Ukraine in January-July 2019 allocated UAH 64.12 million to compensate interest on loans for agricultural producers.
According to the press service of the ministry, farmers for the seven months attracted loans in the amount of UAH 3.8 billion. The largest amounts of compensation were received by manufacturers in Vinnytsia (UAH 6.17 million), Cherkasy (UAH 5.95 million), Kyiv (UAH 5.43 million), Poltava (UAH 4.5 million) and Khmelnytsky (UAH 4.29 million) regions.
As reported, the 2019 budget under state programs for agribusinesses foresees UAH 800 million for support to farmers, UAH 244.5 million in loans to farms, UAH 127.2 million for cheapening loans for farmers, UAH 400 million in support for hop growing, gardens, vineyards, and berry production. Some UAH 3.5 billion is provided for the program to support animal farming, storage and processing of agricultural products, as well as fish farming in 2019.
The program of financial support for agricultural producers (subsidies for the purchase of agricultural machinery, equipment, wagons) foresees about UAH 881.8 million.
The Ministry of Agrarian Policy and Food of Ukraine intends to allocate UAH 119.8 million for reimbursement of expenses to 112 business entities under the program to support the development of viticulture, horticulture and hop production, the press service of the ministry has reported.
The ministry’s commissions made the corresponding decision at a meeting on July 12.
“Thanks to state support, Ukrainian agricultural producers have already planted 1,853 hectares with new crops, in particular, hazelnuts, walnuts, apples, pears, cherries, blueberries, strawberries, grapes, cherries, raspberries, plums, peaches, sea buckthorn,” the ministry noted.
The Ukrsadprom has addressed the Ukrainian president, prime minister and leaders of the political parties asking to introduce some measures for the development of gardening, in particular, to introduce the fixed land tax per ha depending on the type of economic activities.
According to the press service of the association, Ukrsadprom also asked to return preferential VAT for farmers, to provide state support for the export of horticultural products, and also to modernize the industry’s subsidy program with a focus on processing.
As reported, the Ukrsadvynprom association asked the Agricultural Policy and Food Ministry to adapt the program of state support for gardening to berry enterprises, as well as to expand the list of wine-making areas.