OPORA has been researching the distribution of state subventions for social and economic development between single-member district in Ukraine for four years already. Based on data analysis for 2016-2019, political factors are influencing the administration of state subventions, and they are distributed nontransparently and unevenly between different regions and districts within the same oblast. In addition, the subvention itself has become an instrument which the government uses to ensure the loyalty of majoritarian MPs to the decisions and policies it implements. 

Another major issue is that MPs used subventions for campaigning purposes, what is a form of budget administrative resource. From June 2018 to July 2019, Civil Network OPORA's observers detected 2,724 cases of promotions on budget resources by 147 MPs elected in majoritarian districts and 27 party-list MPs.

Taking into consideration this fact, OPORA had repeatedly called attention to the fact that the distribution process should be transparent, based on clear criteria, uniform and impartial, and allocation of funds to constituencies should not become a promotion for MPs. Although new Government and Parliament can change the existing practices of non-transparent distribution of subventions, there is a risk that the situation will remain unchanged.

On October 18, the Parliament supported the Draft Law on Budget for 2020 in the first reading. 255 MPs voted for this Law. OPORA has already mentionedthat this document does not include funds on subventions for social and economic development of territories. However, we then predicted that they could appear in the document already at the stage of its preparation for the second reading. Taking into consideration the recent events at a closed meeting of the Servant of the People faction and Prime Minister Oleksii Honcharuk, it is likely to happen. Thus, the portal Ukrainska Pravda published information that MPs and the Prime Minister conflicted over the distribution of subventions on social and economic development at this October 18 morning meeting.

"Our majoritarians were told there will be no subventions, and it turned out today that some kind of working group under the Ministry of Finance and the Budget Committee has distributed the financing on social and economic development for 2019. In fact, 100 majoritarians were left with no money! Thus, they were indignant and quarrelled," - said one of the MPs from Servant of the People in conversation with the Ukrainska Pravda.

On the very same day, Editor-in-Chief of the Levyi Bereh edition Sonia Koshkina posted in her Telegram channel a spreadsheet of parliamentary inquiries concerning the financing of districts from subventions on social and economic development for the next budget year. The list includes 67 MPs. Most of them represent the Servant of the People faction. The total amount of financing is a little bit over 2 billion UAH.

Once the spreadsheet was online, the same Telegram channel posted information that MP from the Batkivshchyna Ivan Krulko (with 185 million UAH against his name in the spreadsheet) explained that he requested only 5 million for Cherkasy, and other 180 millions are from requests of MPs, which were sent to him as a Deputy Head of the Budget Committee.

We believe that preservation of non-transparent distribution of subventions on social and economic development in inadmissible practice, which contradicts to the political course declared by the new Government and state leaders.

Thus,  Civil Network OPORA calls to:

  1. Make the distribution of subventions on social and economic development transparent and based on clear criteria, or redirect subvention funds to the State Fund for Regional Development (SFRD), which uses clear procedure to distribute subventions.
  2. Take into account other recommendations of Civil Network OPORA and the Accounting Chamber, and increase the transparency of the subvention distribution.
  3. Publish all the proposals of MPs sent to the Ministry of Finance concerning the distribution of state subventions on social and economic development of territories.
  4. Publish the meeting minutes of the Commission on Preparation of Proposals for the Distribution of Subventions from the state budget to local budgets for realisation of social and economic development of certain territories.
  5. Strengthen oversight of the use of budget funds.
  6. Provide proper informing and reporting to prevent the use of budget resources for campaigning purposes.