The Phases of Budgetary Reform

Abstract

This chapter analyzes comprehensively Ukraine’s fiscal policy from the end of 1991 to the middle of 1999. It discusses the principal features of the fiscal policy in transition. The chapter describes the organizational aspects and legislative basis of Ukraine’s system of public finance—the role of the Ministry of Finance, the budget and tax systems and the development of the treasury bill market. The system of administrative price formation and multiple exchange rates inevitably caused huge open or hidden subsidies and the artificial repression of enterprise profits. For a number of political, organizational, and personal reasons, the Ukrainian Ministry of Finance has traditionally had a weak position within the government structure. The permanent decline in real revenues from the enterprise profit tax reflects the economic situation of enterprises. The further reduction of different forms of subsidies, particularly in agriculture, the coal and energy industry, housing and municipal services, and transport is absolutely necessary, as is a comprehensive tax reform.