Ukraine might overcome marginalization in some 15-20 years

Author : Olexandr Honcharov

In terms of technological progress, we are behind the qualitative economies of the developed countries of the European Union, the United States, and Asia
10:45, 30 June 2017

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I wonder what Ukraine’s first president Leonid Kuchma started to comprehend that something is wrong. When his family business began to drift down? Or when he realized the real threat of the country's marginalization? Apparently, therefore, Leonid Danylovych unexpectedly said at the international forum "Dawn of Europe: the historical pattern of civilizational choice" that neither the US nor Europe would help Ukraine, we were practically alone. And then he summed up: "We have forgot about out economy, we are falling apart! We are becoming a raw material appendage." He added that the Europeans put Ukraine on their knees, they have long forgotten about the problems of Ukraine and its citizens.

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Undoubtedly, we are technologically behind the qualitative economies of the developed countries of the European Union, the United States, and Asia. For 2016 year, we had only 93 billion dollars of gross domestic product. This is unacceptably small number for the second largest European country, which has such a large human capital. Especially in comparison with Germany, whose GDP in 2016, according to the International Monetary Fund, amounted to 3.467 trillion dollars, the GDP of France and Poland - 2463 and 468 billion dollars respectively.

Realizing that the military and political upheavals in our country will not settle down soon, and in terms of economy, everything is simpler and more primitive, a bitter joke comes to mind: it is painful to watch, but life is life; the wrong country was called Honduras. And in order to radically change something in the current socio-economic or monetary policy, you need to understand that life is complicated, this whole story is complicated.

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This is not that difficult to put diagnosis to our economic diseases, but what should be the recipes for recovery? Thus, increasing the state share in the banking system of Ukraine, most likely, is the main obstacle to its growth. This is not my idea, its world practice. After all, banking is the circulatory system of the economy of any country, and to whose decent hands we gave it? Wholesalers and currency speculators? Now the life enterprises and overwhelming number of citizens depend on them, because they not only carry out money operations, but also organize their circulation.

Few people say about this, and financial and economic block of the Cabinet often conceals our rather short financial history, although there is already a lot of interesting and instructive information. In this regard, I often ask myself for how long, sorry for the rude word, legal entities would be treated like fools? I mean all those customers of insolvent banks. Contributions of natural persons are at least insured for 200 thousand hryvnas. And taking into account the specific features of the Fund for Guaranteeing Deposits of Individuals, legal entities, under the current legislation, cannot even count on the slightest part of compensation. Plus, the refinance has firmly linked the leadership of the National Bank with the beneficiaries of insolvent banks.

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It is no coincidence that on June 26, the chairperson of the PrivatBank board, Olexander Shlapak, has resigned. Apparently, the situation in the bank has become very tense, so this anti-crisis cadence is difficult to complete. That is why I continue to insist that the Directorate of the Deposit Guarantee Fund has long ago launched a pilot project to introduce into the Ukrainian practice the experience of US financial consultants contractors of the Federal Deposit Insurance Corporation (with the possible technical support of the International Financial Corporation and Tianjin Joint Stock Company "Bohai Commodity Exchange").


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What else should the government of Groisman do? First of all, do not create devaluation expectations, reduce interest rates on loans for the real sector of the economy and, of course, increase certainty in the financial and commodity markets to increase investment activity. And you can even sacrifice a few percent of the growth rate of consumer demand in order to attract foreign direct investment for the modernization of Ukrainian industries. But, unfortunately, the authorities have no money to support small and medium-sized businesses, project financing in the real sector of the economy, let independent innovative entrepreneurship.

But unexpectedly, the country has found 38.5 billion hryvnias (!) for PrivatBank's capitalization, which would go to the well-known paths of the foreign exchange market and offshore. Everything is against a stable hryvnia and modernization of production. So it has already happened that now the main problem of our economy is debtors of banks.

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I am convinced that Ukraine needs a more perfect legal mechanism for controlling the trade in financial resources and their distribution. Now we do not have such a mechanism, that is why we suffer from this bank destruction. I will not further exaggerate the situation, of course, not everything is so bad for us. A few days ago, my old acquaintance, a great trader, whom I met on our stock market back in the mid-90s (he flew to Kyiv from Denmark, where he lives with great pleasure), dared to make such a disappointing forecast: the dollar would survive for some few years.  And then the euro will come. Real estate prices in Europe for 2-3 more years will stay at almost such levels, and then this "mountain" will collapse dramatically.

Well, we will see, we would not wait long. But now the main task for us is to set a big goal. And increase in the rate can hardly be attributed to an economic growth, I think it is much more important to overcome the marginalization of the country. Alas, it will be hard to do it quickly, overcoming the marginalization of the country would take some 15-20 years. At the same time, citizens themselves participate in the socio-economic and cultural development of Ukraine.

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