Changing the minister does not mean changing the economic system

Author : Olexandr Honcharov

Source : 112 Ukraine

Ukrainian Verkhovna Rada voted for Danylyuk’s dismissal as Minister of Finance
11:16, 11 June 2018

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RBC Ukraine

Danylyuk and Yuzhanina

Thursday, June 7, 254 people's deputies voted for the resignation of the Minister of Finance Olexandr Danylyuk and soon, perhaps, the president would appoint the head of the Verkhovna Rada's Committee Nina Yuzhanina to this post. Still, two key problems remain in Ukraine's economy, which could not be solved by a simple change of the minister.

Related: Ukraine's Parliament dismisses Finance Minister Danylyuk

The first problem is connected with a real sector of the economy enterprises’ slender purse, an uncontrollable rise in prices for energy resources, utility tariffs, social and other food products. Moreover, this month the price of gas for the population might rise, and, for example, the dynamics of meat prices have already outstripped the growth of wages of working Ukrainians. Also, all the fresh vegetables for the red-beet soup became more expensive by 15-60% (depending on the region of Ukraine) compared to June 2017. The second problem is the constant accidents of over-funded infrastructure and, above all, the housing and utilities sector. There was - and there is - no money for major repairs.

Of course, the time when all this will converge at one point is near, then it will flabbergast! I have no doubt that the ministers are well aware of this, but they will not be able to prepare for this. Moreover, the pre-election campaign is close, and absolutely different problems are being solved. And this is again a very powerful blow to the pockets of the ordinary Ukrainians. After all, the government and the Verkhovna Rada serves the interests of Naftogaz and natural monopolies more careful than the interests of the overwhelming majority of the country's population.

Related: Danyliuk's resignation: PM asks Rada to dismiss Ukraine's Ministrer of Finance

In fact, nothing has changed for the better, and after Yatsenyuk’s premiership, it did not become easier to borrow money, serve the public debt or create new jobs. The growing negative balance (in the first quarter of 2018 amounted to minus (-) 134.9 million US dollars) eats the currency funds from the economy of Ukraine and increases the volatility of hryvnia, and in order to keep the situation, we need new IMF loans. By the way, the negative balance of Ukraine's foreign trade balance in 2017 amounted to $ 2.63 billion.

But we are glad that on June 7, our legislators have fulfilled the basic requirement of the International Monetary Fund and passed a bill on the creation of the Supreme Anti-Corruption Court in. Maybe, by the end of this month, we will receive the fifth tranche of the IMF loan in the amount of $ 1.9 billion. Nevertheless, June 6, our Eurobonds (denominated in US dollars) fell sharply (their value maturing in 2026 and 2027 decreased by more than 0.7 cents, while shorter government bonds lost in value to 0.2 cents) after PM Groysman submitted to the Verkhovna Rada a document on the dismissal of ex-Minister Danylyuk.

Yes, international markets react to such news from Ukraine very nervously. Moreover, the problem of unemployment continues to deteriorate (in the first quarter of 2018, the unemployment rate among the economically active population aged 15-70 years was 9.5%, and among the working-age population - 9.9%). Undoubtedly, investors understand that the real consequences of this great crisis are yet to be fully felt. But, unfortunately, these and other problems with this composition of Groysman’s Cabinet will only grow.

Related: My entire team leaves, - ex-Finance Minister Danylyuk

Everything is getting worse, confirming the fact that one cannot rely on those politicians, who have brought the country to such a great economic crisis, in the issues of getting out of it. Therefore, today we are on a par with African countries, which are the most vulnerable to macroeconomic instability, and our national markets have the same high degree of risk, which includes the weakest sectors in Africa. And still, this speculative mechanism of launching local financial crises operates in Ukraine - free capital account, hryvnia volatility, and high profitability of currency transactions.

Related: If IMF does not give a loan to Ukraine, National Bank will be forced to increase interest rate again

In this situation, we can sadly confirm that we continue to observe high inflation, while the deficit of the state budget and debt load continue to grow. There is no proper tax revenue, the tax system is very ineffective, however, we continue to discuss the level of rates of various taxes without discussing the actual operating system. And most importantly, we do not discuss how to change it for the better. I do not think that changing the chair of the Verkhovna Rada Committee on Tax and Customs Policy to the post of Minister of Finance of Ukraine would somehow visibly influence the situation.

I have no doubt that we will witness the old new games of the financial authorities.

This column does not necessarily reflect the opinion of the editorial board or 112.International and its owners.

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