On July, 8, 2020, the Cabinet of Ministers of Ukraine issued a resolution to allocate UAH 1,682 mln for social and economic development to finance 1,159 facilities and activities in different oblasts in Ukraine. It is by far the first time when the Ukrainian government allocated all the funds (99%) within the budgetary program as early as in the middle of the year.

The same as in the previous years, Civil Network OPORA decided to explore into how far the funds, the same as the UAH 15 bln allocated in 2015-2019, managed to “tackle” at least some challenges in the regions. In fact, the provisional research findings show that the budgetary funds are very often spent on the trifle procurement such as printers, meat mincers, school desks or bicycles, rather than on some solid infrastructure projects.

What has changed
  1. Ministry for Regional Development replaced the Ministry for Finance as a key subventions administrator. In terms of the scope of jurisdiction of the ministries, the solution shall be welcome.
  2. In addition, the general rules for allocation changed. Now, a key criterion for each region is the number of population (80% of funds are allocated in accordance with the number of population residing in the region).
  3. With account for the quarantine and the epidemic, the government identified that in 2020, the subvention “shall be primarily directed at activities aimed at prevention of breakout and spread, localization and liquidation of outbreaks, epidemics, and pandemics of the acute respiratory disease COVID-19 caused by the coronavirus SARS-CoV-2, and at the implementation of construction projects intended to improve the quality of education, health care, and sport services.” In practice, the rule was largely followed.
  4. Allocation of funds has become more relevant and systemic. The average amount of subventions in 2020, compared with the previous year, has increased 4-fold: from the UAH 365,000 to UAH 1,450,000. As to the minor projects, worth under UAH 50,000, they disappeared – their number dropped from 37% to 0.5% (6 facilities only). 
  5. Despite the fact that the deputies are still the key actors to submit the proposals for social and economic facilities, the phenomenon of PR based to budgetary funds has decreased.
What did the funds “go for”?

Unlike in the previous years, it was the first time that basically the same and the highest amount of subventions were directly related to medical facilities (36.4% or UAH 611.8 mln.), and educational institutions (31.3%, or UAH 626.8 mln.). This year, the commonly subventions-covered housing and utilities management area, as well as infrastructure, has received as little as 18% (UAH 302 mln.) of all the funds. 

In 2020, the same as in the previous years, the subvention funds were allocated either for construction or reconstruction of playgrounds for children and sports grounds. In general, the UAH 114 mln. (6.8%) was spent to use the 145 subventions (12.5% of the total amount). In percentage terms, it is even higher than in the recent years.

The lowest amount was sent to road repairs – 5.8% (UAH 98.1 mln.) and to social and cultural field – 1.7% (as little as UAH 28.7 mln.).

Regional distribution

Unlike the previous years, in 2020, the Cabinet of Ministers relied on the rule when the “80% of funds shall be distributed in accordance with the number of population residing in the region,” and managed to virtually evenly distribute the funds among the regions. The highest amounts were sent to Dnipropetrovsk Oblast (UAH 168.1 mln.), Donetsk Oblast (UAH 134 mln.), the city of Kyiv (UAH 127.3 mln.), Kharkiv Oblast (UAH 109.8 mln.), and Lviv Oblast (UAH 88.56 mln.). At the same time, the least of money was received by Volyn Oblast (UAH 33.5 mln.), Rivne Oblast (UAH 36.5 mln.), and Kherson Oblast (UAH 39.6 mln.). 

Despite the positive Pearson correlation coefficient of 0.9 between the number of population and the amount of funds received by the region (a similar situation was found in 2015), there is a difference between the funds per one citizen in different Oblasts of Ukraine.

Thus, in Mykolayiv Oblast, the ratio was UAH 62 per one citizen, in Dnipropetrovsk Oblast – UAH 52 per capita; UAH 50 - for Chernihiv, Cherkasy, and Poltava Oblasts, each. At the same time, in Zaporizhia Oblast, UAH 27 was sent per one citizen, and UAH 31 in Rivne Oblast. 

Different quantities of facilities are funded in different regions in Ukraine. Thus, 140 subventions were sent to the city of Kyiv; 88 subventions – to Zhytomyr Oblast; but in Chernivtsi, for instance, the number was as little as 9. Certainly, the practice of distributing the funds does not imply any inefficiency, but it may be indicative of the still relevant influence of deputies on the subvention distribution process.

Distribution within constituencies

With regards to the direct engagement of people’s deputies in the process of formation and allocation of budgetary subventions, and the unequal distribution of funds among different regions of Ukraine in the previous years, we conducted the analysis of the allocated funds in the majoritarian constituencies.

Thus, in 2020, 40 constituencies (20%) have not been allocated with any funds at all. On the other hand, facilities and activities have been covered by budgetary subventions in 158 constituencies. The constituencies left without  any subventions are represented in the parliament by 13 MPs from the group “For the Future,” by 8 representatives of the “Servant of the People,” by 7 non-affiliated MPs, by 4 majoritarian deputies for the group “Dovira” and 4 MPs from the “Opposition Platform – For Life” faction, 2 members of the “European Solidarity,” 1 representative of the “Batkivshchyna” AU, and 1 for the “Holos.”

In general, the highest amount (UAH 81 mln.) was allocated to the constituency No 48 (Donetsk Oblast) represented in the Verkhovna Rada by Maksym Yefimov (“Dovira” group). The second highest amount (over UAH 32 mln.) was received by constituency 124 in Lviv region. The majoritarian candidate elected therein at the parliamentary elections was Yuriy Kamelchuk (“Servant of the People”). 

Constituency No 204 (Chernivtsi Oblast) of Valeriy Bozhyk from the “Servant of the People” and constituency No 114 (Luhansk Oblast) represented by Serhiy Shakhov (“Dovira” group) received UAH 31 mln. of subventions, each. At the same time, UAH 30 mln. was received by the constituency 136 in Odesa region (a deputy Oleksandr Horyniuk, “Servant of the People” faction).

As far as the number of subventions, the leading constituency is No 219 of  Mykola Tyshchenko (“Servant of the People”) – 48 subventions. In fact, all the subventions were allocated for playgrounds with the same designated use: “Capital repairs. Equipment of the playground.”

The second largest number of subventions (39 facilities) is in constituency No 63 of Bohdan Kytsak (“Servant of the People”) in Zhytomyr region. Unlike the constituency of his colleague, here, the subventions were mostly targeting the development of educational institutions – 69%, and health care – 23%. 

The top third constituency in this ranking is No 48 in Donetsk region represented by Maksym Yefimov  in the Verkhovna Rada (“Dovira” group) – 36 subventions, of which 66% were targeted at the “Thermal modernization of residential buildings in Kramatorsk city.”

  1. The process of distributing the subventions has not become more public or transparent, but it is by far the first time since 2015 that the Cabinet of Ministers has allocated funds (at least partially) in line with the priorities they defined.
  2. Proposals from the Civil Network OPORA about the improvement of the procedure for allocating the funds have been partially taken into account. Thus, the Government clearly identified that during the distribution of funds, 80% is sent in accordance with the number of population residing in the region. In addition, the funds administrator is now the sectoral ministry, the Ministry for Regional Development.
  3. The minor facilities and events with the “one-time” effect have almost disappeared from the subvention records. After all, one subvention is now 4 times higher than in 2019: its amount has increased from UAH 365,000 to UAH 1,450,000.
  4. The people’s deputies have not lost the possibility to submit proposals as to the distribution of subventions. However, in terms of the number of subventions and the critical position of the public, the MPs are not taking this option to gain electoral advantages so far, when out of electoral season. However, in certain districts (not mentioned in the resolution on subvention distribution), the funding has been attached to playgrounds only (constituency 219 of Mykola Tyshchenko (“Servant of the People”) – 48 subventions).

In this paper, the Civil Network OPORA has explored the uniformity in distributing the subventions for social economic development of territories. The attachment of the funds to the regions does not imply any automatic engagement of the funds by a people’s deputy representing the constituency in Verkhovna Rada.

The data used in the account about the distribution of funds in the deputy constituencies and the categories of facilities are not to be made public by the Cabinet of Ministers of Ukraine. Therefore, we collected them via the computer assisted tools. It might have compromised their completeness or precision.