3 February 2021
Ukraine’s government spent UAH 78.4 bln out of an
appropriated UAH 80.9 bln from COVID-19 Fighting Fund in 2020, Ukraine’s
Ministry of Finance reported on its website on Feb. 2. The Fund’s major
recipients were the State Agency for Automobile Roads (UAH 25.7 bln) and the
Health Ministry (UAH 17.8 bln).
In addition, UAH 8.8 bln was spent for unemployment
benefits, tax compensation and subsidies to businesses. The Ministry of Social
Policy spent UAH 4.0 bln on COVID-related insurance payments.
Evgeniya Akhtyrko: By
publishing this report, the government checks-off the IMF structural benchmark
requiring details regarding COVID Fighting Fund. However, it is important to
look at the essence of spending rather than on the formal fact of reporting.
The report reveals that about one-third of COVID funds
were spent on COVID-unrelated purposes, i.e. the development and the
maintenance of the country’s automobile roads. Recall, the government took the
decision of transferring the Fund resources for infrastructure development
needs in summer, when COVID incidents in Ukraine were relatively low.
However, Ukraine’s health care system verged on
collapse in November-December when inñidents peaked. Not surprisingly, the
Cabinet and the Zelensky administration were heavily criticized for bad
prioritizing of government spending. Moreover, it was obvious that the Zelensky
administration used the project of big road building as a tool for maintaining
its popularity.
This misuse of public funds also undermines the
trust of Ukraine’s western partners, which were involved in disbursing
substantial funds for COVID-related needs in Ukraine. Needless to say, the
reported information will be taken into account in the IMF’s decision-making on
financial assistance to Ukraine.