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Strategical points of PM Honcharuk: Land market, cheap loans, tariff reduction

Author : Igor Smolov

Source : 112 Ukraine

The government believes that everything depends on reforms and cheap loans for businesses that will trigger economic growth and bring tens of billions to the budget
20:01, 27 December 2019

Oleksiy Honcharuk, the Prime Minister of Ukraine
Oleksiy Honcharuk Twitter

Until 2025, Ukraine should enter the TOP 25 countries of the world with the simplest conditions for paying taxes. GDP should rise by 40%, and foreign direct investments – by $ 50 billion. Such ambitious goals are recorded in the program of activities of Ukrainian Cabinet, supported by the Verkhovna Rada. Experts say that the bar is too high. The government believes that everything depends on reforms and cheap loans for businesses that will trigger economic growth and bring tens of billions to the budget.

Helping business. From February 1, 2020, the state lending program for small and medium-sized businesses will start operating at just 5-9% per annum.

"Its goal is to stimulate the emergence of new entrepreneurs and encourage our workers to return home and open a business here. To participate in the program, you will need a business plan, a positive financial and credit reputation, and payment discipline," the PM explained.

Related: PM Honcharuk met with ex-MP oligarch Zhevago, who is on international wanted list

If the business intends to generate at least 1 million USD of revenue per year and two jobs are created, the state will be able to provide a 60,000 USD loan at 5% for 5 years. At 7% - for a business with revenue up to 1 million USD without new jobs, but with the possibility of reducing the rate by 0.5% for each new employee, and at 9% - for a business with revenue up to 2 million USD.

Reducing rates. In Ukraine, more than 10 million people live below the poverty line. That is, their income is actually below the subsistence level, which today is 2027 UAH (87 USD). According to Prime Minister, the cost of living in Ukraine should be at least twice as high – 181 USD.

More than 150 types of payments and financial indicators are tied to the cost of living. For example, official salaries of officials and fines. Therefore, an increase in the cost of living automatically leads to an increase in all these indicators. The government estimates: in order to double the cost of living, covering the automatic increase in other financial indicators, about 6,5 billion USD is needed.

There is no such money in the revenue side of the Ukrainian budget yet. But the Cabinet of Ministers found a way to reduce heating tariffs by 30%. After all, the debts of Ukrainians for communal services reached 2 billion USD, and some families spend up to 70% of their budget on paying for housing and communal services. According to Oleksiy Honcharuk, the Cabinet of Ministers handed over the relevant calculations to local authorities, and already in December, Ukrainians can receive payments with an amount of 12-16 USD less.

Related: Ups and downs of Ukraine's PM Honcharuk's first 100 days

According to political consultant Petro Okhotin, such a step significantly strengthens the electoral position of the authorities. "The government actually takes the agenda from the opposition, given that, according to all opinion polls, high tariffs are in the TOP 3 of the most important problems of people," the expert writes on his Facebook.

New roads. Roads should be one of the 2020 priority areas. The Cabinet of Ministers announced that large-scale construction will begin in March next year. And in 3-5 years, the country should finally have good routes connecting all major cities.

"The construction of roads for us is not only a way to build a country, it is also a way to start the economy. It is one of the three economic pillars on which economic growth will be supported for the next five years," Honcharuk said.

So, next year the budget includes 1,3 billion USD for repair and construction of roads, another 168 million - funds from multilateral lenders. But now work is underway to attract additional money: the government, the Ministry of Finance and Ukravtodor have already found the opportunity to increase the budget for repair and construction of roads by almost 844 million UAH. In 2020, it is planned to repair more than 4 thousand km.

Land, amber, and casino. The three basic reforms that PM Honcharuk is betting on in the Cabinet are the opening of the land market, as well as the legalization of amber and gambling. From their launch in the first year alone, they hope to receive up to 506 million USD in revenue. For comparison, the same amount of revenues to the 2020 budget was provided from privatization.

Parliament approved the government bill on agricultural land circulation on first reading on November 13. In general, they plan to vote on the document in early January in order to launch the land market from October 1, 2020.

Related: Cabinet of Ministers transferred to State Property Fund last 37 enterprises, - Honcharuk

The fate of the government bill on the legalization of gambling is not so successful. His vote on December 19 failed, and the document was sent for revision. But the government, together with the National Police, has already begun a fight with casinos disguised as lotteries and slot machines.

According to PM Honcharuk, slot machines should completely disappear from Ukraine, and gambling should be “unshadowed.” Otherwise, the state does not earn money on it, and crime is concentrated around the shadow industry and corruption of law enforcement agencies is flourishing. Legalization of gambling brings 183 million USD in the budget-2020.

The same goes for amber mining. On December 19, the Verkhovna Rada adopted a government bill that criminalizes the illegal extraction and sale of minerals, as well as evasion of land reclamation. The Cabinet of Ministers also prescribed in the document the mechanism for purchasing exploration permits with the right to produce amber at special auctions. In the first year of legalization of amber production alone, according to the Ministry of Finance, the budget will receive more than 21 million USD.

Related: Honcharuk: Gas negotiations are still ongoing we need some more time

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