Should Ukraine become European offshore?

Author : Olexandr Honcharov

Source : 112 Ukraine

Verkhovna Rada should adopt liberal legislation for a comfortable Ukrainian market entry/exit instead of tightening its grip on economy
23:21, 30 November 2017

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Our political leaders should not forget the key historical facts, for example, that none of the democratic countries could ever withstand the fall in the living standard more than twice. This inevitably ended in a socio-political catastrophe, and Germany in the 1920s is quite an indicative case in this respect.

There can be no modernization of the economy in a country where the government has a strategic plan for six month only. Accordingly, the coming 2018 year brings nothing good from a financial point. Apparently, a short-term show with a stable hryvnia will soon end, and in 2018, NBU discount rate will rise at least a couple of times the.

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In turn, Groysman's Cabinet will not freeze the prices for energy resources and housing and communal services tariffs at current levels, and the inflation forecast of the Ministry of Finance of 7% will not hold at this point, on the contrary, it will reach a two-digit figure. Of course, the Verkhovna Rada will be forced to vote for the sequestration of the state budget-2018 even before the beginning of next summer. And given the forecast by the Ministry of Finance before the end of 2018, the national currency at the level of 30.1 UAH for US dollars, I venture to say that our financial authorities will purposefully devalue hryvnia in the interests of exporters and currency speculators.

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Unfortunately, they do not use other ways of filling the revenue side of the budget. And what should they do? A set of incentives and measures were used to overcome the crisis in many countries, including the US during the Great Depression. And yet, how to solve the main problems, specifically, on points? First, to prohibit the export of money abroad. Secondly, establish control over prices, which allows people to carry out small sales in any trading "points." Thirdly, do not do harmful things, in particular, in taxation, reducing taxes on those investment projects that are aimed at creating new jobs.

Fourth, freeze prices for energy and utility tariffs. Fifthly, do not raise the discount rate of the NBU. Sixth, stabilize the hryvnia. Seventh, effectively combat the outflow of capital to offshore. Eighth, inject liquidity into the Ukrainian market, mainly through the salaries of citizens to maintain consumer demand. Ninth, introduce an insurance system in the event of job loss, which can compensate for at least 60% of the lost earnings within 9 months after the dismissal. Tenth, it is offensive to implement the antimonopoly policy, especially against cartel collusion.

If we begin to pursue such an effective economic policy, in 2018, first of all, American and Asian long money and new anchor investors from the United States, China, Japan, and South Korea will come to Ukraine. Bonds and shares will appear on the Ukrainian stock market there.

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This factor will greatly inhibit the growth of enterprises from financial and industrial groups of local oligarchs, in contrast to those companies whose share capital will include foreign investors. But the worst fact is that the so-called economic elite, which is now in power and which manages budgetary money, or more precisely many of them, do not associate the future of their children with Ukraine. Most of them have either residence permits or second passports in America, the EU, Israel, and other countries.

Therefore, they do not invest either dollars or hryvnia in the Ukrainian economy, everything earned here is quickly expelled to the offshore. But ordinary citizens of Ukraine do not learn anything from history. How long will this continue? But it is very easy to assess the actions of our authorities, it is enough to know the size of the subsistence minimum - from May 1, 2017 and so far it is 62 USD. It is a shame.

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Why should Ukraine wait now? In particular, it is interesting to follow the situation with currency transactions in the Ukrainian market in the near future.

Yes, today we have a particularly difficult and unpredictable life. Four years after Maidan brought no solutions and did not fulfill the promises. Why does nothing work? The power does not have the answer to this question.

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