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Perseverance of West brings qualitative changes in Ukrainian economy

Author : Olexandr Honcharov

No one is surprised why we have such high inflation and astronomical prices for utility, why pensions are not indexed and wages are not paid on time. It’s because now, to maintain loyalty within this country, politicians need precisely such a difficult economic situation and no other
20:56, 26 June 2018

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Last week, legislators during the plenary sessions in the Verkhovna Rada demonstrated surprisingly constructive and productive work. True, the beginning of the plenary week was marked by loud protests at the parliament building. But, what is especially important, we finally got the law of Ukraine "On currency and currency transactions," which replaced the Decree of the Cabinet "On the Currency Regulation and Exchange Control System" of 1993.

So, let’s talk about it. For me, a victory of common sense was the exclamation of miners, Chernobyl victims, veterans of the Armed Forces and the Ministry of Internal Affairs "How much more do we have to endure ?!", which we again heard under the walls of the Parliament. Yes, it's the 5th year after the Maidan, but no one is going to change the internal structure of the state-corporation. Inside state structures, there are still only those who are related to each other or are united by commercial interests, loyalty, sympathies and other things. Ordinary Ukrainians have nothing to do with the management of this corporation, let alone a small part of the income. Now in Ukraine, the middle class is actually washed out. There is a ratio: 1: 9, where 1 is rich citizens, and 9 are those who have practically gone beyond the poverty line.

Therefore, no one is surprised why we have such high inflation and astronomical prices for utility, why pensions are not indexed and wages are not paid on time. It’s because now, to maintain loyalty within this corporation, they need precisely such a difficult economic situation and no other. Why? I think that this autumn everyone will receive a long-awaited answer. In turn, the International Monetary Fund, in communication with our authorities, withdrew from the language of the Soviets and passed to stringent requirements. And the statement of IMF Managing Director Christine Lagarde from June 20 could become if discard diplomatic language, a verdict for the Verkhovna Rada and the government.

"We agreed that it is now important that the parliament quickly approve an additional law submitted by the president for the formal establishment of the court, as well as the necessary amendments to restore all conditions for consideration of all cases by the Supreme Anticorruption Court, including all appeals against the relevant decisions of the first instance court, as was in the draft law approved on first reading." These categorical words were understood as follows: there will be no positive vote in the Parliament - there will be no next tranche of the loan.

It's not hard to imagine that politicians who have lost all credibility cannot clearly explain to Ukrainians why people should tolerate them, and even feed them. Analyzing the recent actions of the majority of people's deputies, who are forced to accept a whole series of bills only because of Western partners, one cannot help realizing that general confusion, uncertainty and expectation of rapid changes arise when political leaders think not about how to defeat the crisis, but about how could they remain on their positions. But they failed to retain the old redoubts, and on June 21, legislators nevertheless adopted Law No. 8497 on the creation of the Supreme Anti-Corruption Court (265 MPs voted "for"), and earlier, on June 7, Verkhovna Rada adopted Law No. 7440 on the Anticorruption Court.

Now we will wait for a corresponding response from the International Monetary Fund, although in a reckless run for the fifth tranche of $ 1.9 billion, Volodymyr Groysman seems to have lost sight of the country's economy. On June 20, at the meeting of the Verkhovna Rada Committee on budget issues, the chairman of the Accounting Chamber Valeri Patscan tried to restore the sense of reality: say, the total state budget fund in the first quarter of 2018 lost 65.9 billion hryvnias or 22.5% of the revenue plan. And this is more than the amount of the expected loan from the IMF! Yes, for Ukraine the current economic situation is critical for a very simple reason: we purposefully destroy the entire manufacturing economy. It is difficult to explain why this is done. It is even more difficult for our authorities to change political rhetoric for credit money.

Everyone knows that today we have a very scarce budget - we live at the expense of the money of international creditors. But this will end. According to experts, by 2020 Ukraine's share in the world economy will be the smallest in the history of our independence. Apparently, the heart of the premier minister feels: we are on the verge of a grandiose scandal. And we will remember Volodymyr Groysman’s emotional words: "I'll show you what governance is."

For the sake of justice, we must admit that on June 20 at the meeting of the Cabinet of Ministers Groysman finally resolutely announced the beginning of a fight with the smuggling of oil products: "The fight against smuggling will be successful, we have tens of billions of hryvnias going beyond the state budget". He also warned everyone that he personally does not hurry to try on the laurels of the winner, therefore the leading role in this struggle is provided by the Ministry of Internal Affairs, the National Police and the Fiscal Service. But then explain to me, what did these three structures do before?

What will the Cabinet do next? The authorities have not yet offered any obvious solution to this difficult economic situation. However, a qualitative breakthrough in the Ukrainian market is not far off, I believe it sincerely, because the West did push our lawmakers, and on June 21, 228 people's deputies with the minimum required 226 voted for the Law of Ukraine "On Currency and Currency Operations." Henceforth, foreign exchange operations will be carried out without restrictions, except for cases when the National Bank imposes protective measures in accordance with this law. And most importantly, the principal came into force: everything that is not directly prohibited by law is allowed. It remains to wait for the adoption of the bill number 7055 "On capital markets and regulated markets." At such times, people really want to create and develop a business.

And yet, what should the government do? First of all, we need to tackle the key problems of the Ukrainian economy. we need to solve problems of external and internal debts, stabilize hryvnia and the level of the state budget deficit, and drastically reduce the volume of problem assets of the corporate sector in the banking system, and so on. We need the recovery of the Ukrainian economy, that is, the improvement of the state budget, and then - the selection of a new economic model.

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