What 2019 budget mean for ordinary Ukrainians?

Author : Olexandr Honcharov

Source : 112 Ukraine

And what could go wrong? If suddenly there are some peak negative situations in our domestic and the global economy, how can this affect ordinary Ukrainians who go to the office every morning, then go to the store and then back home? Does it somehow change their lives if the economic situation deteriorates dramatically?
22:37, 11 December 2018

Open source

In this regard, at least two factors can be distinguished in a tactical perspective, and should be considered as serious risks. The first risk is a reduction in industry turnovers, a narrowing of sales markets for industrial products and, as a result, a reduction in employment. Next, judge for yourself. The volume of industrial production in Ukraine in September fell by 1.3% compared with the same month of 2017, and by the end of August the State Statistics Service reported a fall in industrial production by 0.5%. And as a result, in the third quarter of 2018, the National Bank noted a slowdown in real GDP growth (to 3.1%) amid a deterioration in the dynamics of the basic sectors of the Ukrainian economy. Well, a number of Ukrainian experts began to predict that in the IV quarter, the growth rate of GDP would drop to 1.5%. In turn, the International Monetary Fund also lowered its forecast for Ukraine’s GDP growth in 2019 from 3.3% to 2.7%.

The second risk is a noticeable drop in real incomes that our population has. In 2018, Ukrainians more often applied for microloans in order to pay utility bills, medicines, or just food. In particular, DeltaCredit analysts conducted a study and noted that in 2018, the population of Ukraine paid monthly on average to 933 UAH to commercial banks, while they gave 729 UAH to their neighbors. At the same time, in our largest cities with a population of over 1 million this year, loans were given out to 21% of the population, and in settlements, where 100 to 500 thousand people live, 17% of citizens applied for loans. Most often, microloans are needed by  villagers. Here, 30% of residents received money in debt, a little less - 23% - in small cities where less than 5 000 Ukrainians live. Indicative is the fact that 54% of women applied for consumer loans, and 46% of men.

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Accordingly, if you barely manage to live from paycheck to paycheck, then the demand of our citizens drops, plus, at the initiative of the authorities, the national debt continues to grow. Now, according to analysts, the debt per capita is $ 1,800 per Ukrainian. However, the Cabinet of Ministers is optimistic, waiting for the next tranche of the IMF loan to receive a new stand-by financing program (essentially, a line of credit) by the end of December 2018 at a rate of about 2 billion dollars.

I think, no one was surprised by the message that our country in the outgoing 2018 was on the 138th place out of 156 in the International Index of Happiness. By the way, when it was made by the UN unit "Searching for sustainable development solutions", six factors were used: GDP per capita, social support, life expectancy, freedom of citizens to make vital decisions, generosity and attitude to corruption. Naturally, we are at the end of the rate.

But if we see such deplorable results, then why don't the government and the Verkhovna Rada abandon their ineffective social and economic decisions, what turned out to be a mistake and a gross miscalculation? For example, we badly need money to maintain consumer demand, but the Cabinet of Ministers, as always, has no money for that. Therefore, the source of investment in the national economy is completely disappearing. And today, the main problem of the Ukrainian markets is that the hryvnia is not an investment currency. Yes, we all make mistakes, but we must move forward, and not preserve backwardness. And we should not make poor people even poorer.

Unfortunately, we still do not have a long-term strategy to combat poverty, with the enormous stratification of society into the rich and the poor. But in Ukraine, according to experts, no more than 3% of people live at the level of the middle class of European countries. It is very, very small percentage. But according to official data of the Ukrainian Demography and Sociology Institute, in 2017, 58% of Ukrainians were below the poverty line.

If incomes are below the subsistence minimum, then this is real poverty. Moreover, any citizen is below the monetary poverty line, if he receives an amount less than 75% of average per capita expenses per month. And the next (2019) year does not promise optimistic prospects for the majority of citizens, since at this stage the size of the subsistence minimum is UAH 1,777, and from January 1 it should rise only to UAH 1,836 (USD 65), from July 1 - UAH 1,936 (USD 69), from December 1 – to 2 027 UAH (USD 72). This is not so bad. We have more serious horror stories.

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