Despite the pre-election race, in January 2019, the average salary has decreased dramatically compared to December 2018. It has decreased by 12.8%, or by 48 USD, and amounted to 330 USD per month (in January-September 2018, monthly wages of 27% of our citizens was above 180 USD).
But the most important thing here is when Ukraine’s Ministry of Finance offers not to index public sector wages and reduce investment costs. Financial authorities do not think about the future of the country's economy.
And again, the Ministry of Finance has to adjust the revenues of the budget-2019 to new economic realities, increasing the volumes of loans by placing government bonds (T-bills).
So, only on February 26, the financial authorities placed hryvnia government bonds 36 million USD and currency securities at 136,2 million USD. The state budget has attracted 169 million USD!
Ukraine’s Ministry of Finance has placed 22,8 million USD of government bonds with a circulation period of 105 days under 19,5% per annum, 5,9 million USD with a circulation period of 161 days under 19% per annum, 35 millions USD of securities in foreign currency with a circulation period of 288 days under 7, 5% per annum, 4,241 million dollars for 715 days under 7,5% per annum.
And it is completely incomprehensible how would Ukraine pay back the next multi-billion IMF loan or pay salaries to the state employees and retirees.
Does it mean that again all the money from the privatization of energy holdings will be eaten? There is nothing left for development.
It is in such a difficult period, oligarchs try to cheaply buy the remaining pieces of large-scale privatization, I mean, energy-generating companies.
Let me remind you, in 2018, the net profit of PJSC Centrenergo energy company dropped by almost four times compared to 2017, by 50 million USD, and amounted to 17,8 million USD.
Well, the cost of these facilities would be largely reduced. And we, the taxpayers, would be forced to pay extra money for unfair privatization of PJSC Centrenergo. Therefore, we unwittingly expect the worst scenario.
After all, the actions and statements of our authorities, they do not understand the current situation in the country's economy, and the political system is the main obstacle to resolving Ukraine’s urgent problems.
Everyone realizes that we have carried out large-scale privatization in the most unfortunate ways, taking into account the interests of the FIGs. Consequently, there will be no aggressive crediting of the real sector of the economy. There will be no foreign direct investments. There will be no decent salaries and pensions.
But, according to the State Statistics Committee of Ukraine, for the third quarter of the past (2018), the average monthly income of over 40% of Ukrainians did not exceed 130 (!) USD. Respectively, in December 2018 only 58% of Ukrainians were able to pay for the utility bills.
At the same time, the third part of working citizens is forced to survive for a salary that is less than the actual level of the subsistence minimum. As a result of ill-considered and erroneous actions of the government and the Verkhovna Rada, our enterprises began to freeze the salaries of employees and pay fewer taxes. Although there are very rare exceptions.
For example, February 28, the Naftogaz Supervisory Board decided to extend the contract with Andriy Kobolev, the head of the board, setting a monthly salary of 71 thousand USD, which would most likely significantly affect the average wage around the country.
How can the Ukrainian economy and specific enterprises continue to survive in these circumstances? What should we do? After all, the negative balance of foreign trade in 2018 compared to 2017 has increased by 32.9%.
First of all, I propose to convert corporate external debt of enterprises and financial institutions into sovereign debt through a system of open exchange trading, in which foreign creditors could exchange corporate debts for Ukraine Eurobonds with repayment in 2025-2030.
This measure would save our gold reserves, would free up funds for current tasks, would make the support of at least hundreds of enterprises and commercial banks that may turn out to be bankrupt unnecessary.
What else should be done?
First, we should not do harmful things in the taxation sphere. It is necessary to reduce taxes on the money that goes on creating new jobs.
Secondly, we should reform the tax system, which would make the real economy attractive for foreign direct investment, lowering the NBU discount rate from 18% to 12% per annum.
Third, we should inject liquidity into the domestic market through the support of our citizens in order to keep consumer demand.
Fourthly, we should introduce a job loss insurance system that can compensate for 60-70% of lost earnings within nine months after dismissal.
This column does not necessarily reflect the opinion of the editorial board or 112.International and its owners.