According to the calculations of the publication Delo.ua, the government proposes to reduce the road fund by 5.5 billion UAH and reduce the subvention for regional road construction by 3.2 billion UAH. The President of Ukraine Vladimir Zelensky insisted on continuing the construction program.
The Cabinet of Ministers of Ukraine proposes to reduce costs for the “Big Construction” – a project for the construction and repair of roads in 2020 by 10 billion UAH. About this with reference to the analysis of the proposed changes in the budget by the government website Delo.ua.
According to the publication’s estimates, it is proposed to reduce the road fund by 5.5 billion UAH, or by 15%, and by 3.2 billion UAH, also by 15%, to reduce the subvention for regional road construction.
President Vladimir Zelensky on the eve called on the government and the leadership of the regional administrations not to stop the Big Construction project.
“We have no right to completely stop the country. The Big Construction project must be continued, but everything must be safe,” Zelensky said.
The fact that it is not planned to slow down work due to the coronavirus pandemic was also announced in Ukravtodor.
Reducing funding for construction of road works is a bad signal to market participants, local authorities and international partners of Ukraine who intend to invest up to UAH 27 billion in roads, the author of the article, Dmitry Filipenko, believes. In addition, it is being questioned whether Ukravtodor receives guarantees for credit lines in the amount of UAH 19.5 billion, and the possibility of issuing Eurobonds will actually be frozen.
The author notes that companies incur huge expenses for the prepayment of equipment, materials, raw materials in order to be able to repair 30–40 km of roads within one lot in a season. Therefore, a reduction in funding will lead to misallocation of resources. In addition, reducing the cost of the road industry, the government itself robs additional revenue, the journalist writes. According to various estimates, from 50% to 60% of the funds allocated for the purchase of goods, works and services in road construction are returned to the budget in the form of taxes.
According to the author, the reduction of road costs is an initiative of the Minister of Finance Igor Umansky and his deputy Vasily Shkurakov, who, with the help of such an initiative, “probe the ground” before starting to cut total costs for other infrastructure projects in favor of exclusively social benefits.
According to the publication, the road workers are preparing a separate appeal to the government and the president demanding not to cut back on infrastructure projects, which should become the “backbone” of economic recovery after the coming crisis.
An outbreak of COVID-19 coronavirus infection began in December 2019 in China. March 11, the World Health Organization announced the spread of coronavirus pandemic. According to the Ministry of Health on the morning of March 26, in Ukraine laboratory confirmed 156 cases COVID-19 disease, five people died. After this, several regions reported new infections. Edition “GORDON” monitors the situation online.
Moodyʼs Analytics believes coronavirus epidemic may become a black swan for the global economy and do more damage than the financial crisis of 2008-2009.