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What is Ukraine's political future?

Author : Olexandr Honcharov

In fact, the technical default of our country is getting closer and closer, as well as the “last chord” of the outgoing power
21:37, 9 July 2019

President of Ukraine Volodymyr Zelensky
Presidential Administration press office

Now, when switching the television news on, we involuntarily expect the onset of the worst scenario of political and socio-economic developments. Especially the Ministry of Finance and Naftogaz of Ukraine know how to shock us. Nothing is impossible on the Ukrainian political Olympus, especially before the parliamentary elections. So far, the political and economic decisions of President Zelensky and his opponents are not dramatic. But do not forget: July 21 is close!

In fact, the technical default is getting closer and closer, as well as the “last chord” of the outgoing power. Gentlemen in the Ministry of Finance, how could a crisis be treated only with new loans? And on July 4, you suddenly increased the projected estimate of payments to repay and service public debt in 2020 by as much as UAH 52 billion (while assessing the total amount of payments on government debt in 2019 at UAH 417 billion, or $ 14.2 billion)! Well, Yuriy Vitrenko, commercial director of Naftogaz Ukraine, well-known to all consumers, also optimistically warned of a possible full cessation of gas transit through Ukraine "not only in the first quarter of 2020, but in general after the end of 2019" - these are additional losses for us in the amount of about 3 billion dollars.

Yes, the default and personal budget of a Ukrainian in the conditions of a “gas trap” are topics that will worry us all more and more. And it is likely that the money factor will be rated for a long time. A lot of problems, possibly even more bad scenarios. So we live with "outstanding" officials who receive millions in salaries and bonuses, making our lives worse. And in these conditions, it is simply discouraged, as it was possible for the president a few days ago to declare about his lack of communication with Foreign Minister Klimkin. Gentlemen, well, we still have a state, not a “sandbox”, where someone can be offended at someone.

If such problems with the other ministers and leaders of Naftogaz may arise in the future, the next steps are likely to be price control and martial law. Well, how else? After all, according to the president, he learned from the Internet (!) about the note of the Russian Federation regarding the return of Ukrainian sailors and the response note that our Foreign Ministry sent.

Related: Do Ukrainian parties need state funding?

Should the president impose the martial law, thinking about saving the state, and not about saving the assets of the oligarchs? And as the next logical step - to begin the distribution of benefits not by income, but by other principles, reflecting the specifics of the current very difficult socio-economic situation in Ukraine. By the way, in all countries that were involved in wars, there was a rigid regulation of prices and total control over supplies for the needs of the army. And such a role of the state in wartime has always been clear to society since the state is obliged to regulate prices if there is a monopoly position of individual corporations, otherwise, monopolies will only be strengthened, as we observe in our country.

Practically all states do this, regulating prices to a varying degree not only by establishing direct control but also through various tax regimes, duties and tariffs. But the logic of the actions of the “Servant of the People”, which after July 21 will become the ruling party in Ukraine and will form the new Cabinet of Ministers, is not clear.

Many experts do not exclude that Zelensky’s party rating will break through the level of 40%. And if after the early elections the support of the voters will quickly fall, then in a couple of years new early elections to the Verkhovna Rada may take place - with the Cabinet of Ministers, where most of the supporters of the Opposition Platform - For Life can get. Yes, the mood in Ukraine is changing very quickly. Noticed how the views of the oligarch Igor Kolomoisky changed? I think he decided to exacerbate the situation.

Are we on the verge of a new conflict? We will see soon. Or is this the main diversionary maneuver ?! From what? From the further conservation of the backwardness of the Ukrainian markets from the developed economies. We have not been able to adopt the draft law "On capital markets" for the sixth year (this obligation is written in the Association Agreement between Ukraine and the EU) so that foreign direct investment will come to us. Or do we have the previous course - the impoverishment of people? Finally, who will be able to tame the National Bank and give the Ukrainian economy a little bit more?

For example, the US Fed has long maintained its key rate at 2.25–2.5% per annum, as a result, economic activity in America continues to grow (with the Fed itself cautiously predicting a rate cut in 2020). But in Ukraine, due to the record high NBU discount rate of 17.5% (!), not only mortgage rates and auto loans are becoming unaffordable, and for some entrepreneurs, the future of their business is at stake. Most likely, taking such a tough decision, the National Bank assessed two things: the level of inflation in Ukraine and the overall situation in the country's economy. In the current moment, both of these factors suggest lowering the discount rate.

In addition, we should expect large-scale cuts in key rates by other central banks and worsening currency wars. However, our state regulator, apparently having some insider information from the oligarchs, still does not allow Ukraine’s economy to grow in any way, and we are still in a deep crisis. Sad, very sad. The silence of the Zelensky’s team is surprising.

Related: Opposition Platform - For Life aims for ceasefire and peace in Donbas, - Medvedchuk

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