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Property, land or liberal laws: How Ukraine will pay its debts?

Author : Olexandr Honcharov

Several negative factors will converge in Ukraine by the beginning of this winter. And although the coalition of parliamentary factions and the new composition of the Cabinet of Ministers will be formed by this time, however, there will be a social protest due to very serious problems in the country's economy
20:32, 2 July 2019

National Bank of Ukraine
 

Several negative factors will converge in Ukraine by the beginning of this winter. And although the coalition of parliamentary factions and the new composition of the Cabinet of Ministers will be formed by this time, however, there will be a social protest due to very serious problems in the country's economy. Everything is logical, nothing surprising for a country, whose territory the West and the Russian Federation have turned into a testing ground for modern methods of conducting a hybrid war. This can be proved by the decisions of the Parliamentary Assembly of the Council of Europe and the outcome of the G20 summit in Osaka.

At the same time, the gap between our and developed markets of the USA, EU countries, China is only growing. When the Cabinet of Ministers will launch a productive economy and stop borrowing everywhere? Judge for yourself, since the beginning of 2019, the outgoing power has given to each of us another 4,100 UAH of debt. Shocked? Indeed, for the first time, the Ministry of Finance “delighted” us with its utmost frankness that since the beginning of 2019 Ukraine has taken UAH 182 billion (!). If you divide this amount, then it turns out that every Ukrainian should pay back $ 150. Well, let me remind you: in the next two and a half years, Ukraine needs to pay over $ 20 billion in foreign currency debt (this already exceeds the current volume of gold and foreign currency reserves of the National Bank)!

Related: China's economic expansion is a shot across the bow at Russia

And if we summarize all the criticism to the government voiced by experts, and now the arrows have flown towards President Zelensky’s team, this is mainly, lack of leadership, secondly, continuing corruption and loyalty to the stealing high-ranking officials, and finally, thirdly, the apparent incompetence of young politicians. And the worst thing is that our politicians do not know how to conduct a subtle and elegant game with their Western partners, they offer nothing to the leaders of the European Union, the United States, and China for mutually beneficial cooperation.

But for these countries, Ukraine could become a spare territory in the system of the international division of labor, and also create in Kyiv an international Investment hub with the Universal Exchange for large foreign capital. The new government needs to understand that further inaction is both irresponsibility and immaturity. That is why in the rich countries of the EU and North America such characteristics are unacceptable because they have other values and other challenges. And, unfortunately, the gap between us is only growing. To reduce it, leading experts and analysts are ready to help Zelensky’s team in every possible way, but they should also tell what they need. And do this without populist slogans.

In addition, the financial crisis looms ahead, and I think that now President Zelensky with a young team will most likely be already trapped. This is well understood both in the West and in Russia. I think they are playing out several scenarios, none of which will help us. No matter how bitter it is to admit, but the biggest problem for Ukraine is that the burden of making key decisions is on politicians who are not capable of doing so. Until now, new political leaders do not want to share with the society their vision of the development of the economic situation in Ukraine even until the end of the current 2019. Yes, Zelensky stands for peace in Donbas and intends to return Crimea. But what is to be done to achieve these goals?

Related: Zelensky will never live up to Minsk agreements, - MP Rabinovich


I am convinced that the initiative to solve the key problems of Donbas and the end of the war must be taken by the residents of Donetsk and Luhansk regions, who left and remained in uncontrolled territories (anyway, relatives, friends, local entrepreneurs meet, communicate and think how to change the situation for the better).

First, after the completion of the early elections to the Verkhovna Rada, changes and additions should be made to the law on the reintegration of Donbas.

Secondly, we should prepare the concept of the Integrated Support for Small and Medium  Business of Donbas with the provision of tax holidays, a moratorium on regulatory authorities inspections, ensuring access of business to state and international programs of concessional financing.

Thirdly, to create the State Fund for the Support of Small Innovative Business of Donbas, which will make it possible to significantly solve the problem of employment in the region and the outdated structure of the local economy, primarily in single-industry towns.

Related: How to get out of trap of slow economic development?


And, of course, these days the society especially lacks a state ideology. And without it, it is impossible for people to understand what strategic goals and guidelines are in power for the future socio-economic development of Ukraine. What socio-economic model do we want to build in the global system of the international division of labor? Will human capital be put at the head of the reform? And the draft state budget 2020, which should be submitted before September 15 of the current 2019, the new composition of the Cabinet will again have to be adjusted to the constantly deteriorating economic realities.

Perhaps, in October it will be clear that we will not be able to succeed. Even with this, the hryvnia exchange rate, which, unfortunately for the budget, continues to strengthen, and the country's economy lives beyond its means and is funded through the sale of state assets, donor loans and borrowed funds from government bonds (government bonds). This is an obvious question for the president. How will we pay our debts? Not knowing a clear and correct answer, we may face troubles from all sides. Therefore, gentlemen from the “Servant of the People” party, it is time to voice the answers to these questions, and be sure to remember - a social explosion inevitably occurs when the military, economic and political risks are added.

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