Zelensky's free education program: Why introducing economic passport is wrong?

Author : Anna Peshkova

Source : 112 Ukraine

Affordable learning for every child. President Zelensky has returned to his election promise to introduce the so-called economic passport of a Ukrainian in Ukraine. They plan to open savings accounts for young citizens, which will become available upon reaching the age of majority. And this time it is assumed that the funds that will be accumulated in these accounts, after the age of majority, can be used to obtain higher education diplomas
23:16, 23 March 2021

Open source

According to the Constitution, lands, mineral resources, water and other natural resources within the territory of Ukraine are the property of the Ukrainian people. So, theoretically, Ukrainians really have the right to a share of finances from their implementation.

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Counting money

In fact, apart from confirming the relevance of this topic in the current realities, the president did not voice anything new. The fact that money from the accounts of Ukrainians could be used for education was known before. The bill № 2801, registered a year ago, assumed that the money could be spent on any needs of the child. And for the sake of such goals as education, they could be removed ahead of schedule. As in cases when funds will be needed for the treatment of a child, if the parents do not have the finances for this, for housing, if a natural disaster occurs.

The main intrigue for today is around the amount that they plan to pay to little Ukrainians. Of course, Ukraine is not Kuwait, whose citizens are paid from 50,000 to 200,000 USD. One of the initiatives was to create a "Fund for the Future", replenished by rent. According to our calculations, Ukrainians could receive 40 thousand hryvnias by the age of majority. And this is without taking inflation into account.

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Bill No. 2801 assumed that the Ukrainians would immediately be allocated 1,800 USD from the treasury. Taking into account the current rates on deposits by the age of the child, the amount could grow to about 6.800 USD.

This amount could really be enough for four years of study at the university. True, not in everyone. For example, it will not cover education at the Shevchenko National University of Kyiv: a full bachelor's degree now costs about 8,800 USD.

In addition, if deposit rates are lowered, funds may end up being reduced. And if accumulation in hryvnia is supposed, inflation can simply "eat up" a significant part of the money. The hryvnia has already depreciated 3.5 times. If the economy showed its cyclical nature and all the events of the last 18 years were repeated, then, according to our calculations, this deposit amount by 2039 would be equal to today's 3,000 USD. Moreover, since this is a non-refundable financial aid, it is likely to be further taxed by 18%.

Even so, the financial support of the Ukrainians in any case looks positive. The main question remains: where to get the money?

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Who to pay for this?

The UAE, where the "economic passport" works, is one of the world leaders in terms of oil production. Ukraine is also among the main mineral and raw material states of the world, but there is not enough oil and gas, which the states with "economic passports" are proud of. The main reserves were depleted during the Soviet Union. We extract sand, crushed stone, amber, nickel, minerals, from which ferroalloys are produced.

Legislators indicated the state budget as a source for the first initiative, without going into details. That is, the Ukrainians themselves will pay for the future of small citizens. And this is not counting the fact that they still finance the children's money from their own pockets with taxes, regardless of whether they themselves have children or not.

Complete fertility data for 2020 is not yet available. But if you start from the data of 2019, in order to allocate 1,800 USD for all newborns in 2021, Ukrainians will need to chip off 0,55 billion USD.

If we analyze the bill, which was related to the rent for the extraction of minerals, the expenses are supposed to be much more modest - at half a billion hryvnia per year. However, it cannot be said that rent is free money. Income usually goes to pensions, low-income benefits, scholarships, and other benefits.

Annually, budget revenues from rent are reduced, as the production of both gas and coal in Ukraine is falling. It is unclear whether the country will have funds in 10 years to fulfill its obligations to newborns with this option.

The funds, of course, can be simply printed, but in this case the whole idea of ​​an "economic passport" is leveled. In addition, we will pay out of our own pocket with inflation.

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Risks and disadvantages

But more importantly, it is not known who will be responsible for the safety of Ukrainians' funds. If they are invested in a state bank that goes bankrupt, the funds will be compensated by the state, that is, again - by the citizens themselves. If the "Fund of the Future" is created, will the management of the fund be held liable for the misuse of funds?

Let us remind you that even with the ongoing help at the birth of a child, abuse is observed. An official of one of the regional departments of social protection, for example, issued benefits for 190 non-existent children.

In Norway, funds are accumulated in special funds and invested abroad, so as not to spur inflation in the country. The purpose of the fund is to ensure the well-being of the country after the oil reserves run out. That is, first the money is multiplied, directed to restructuring the economy, and then it is divided. Roughly speaking, you can distribute fish to people, or you can sell it, buy fishing rods and then distribute much more fish to people.

Whatever the positive idea of ​​the "economic passport", unfortunately, it does not become more realistic from this. If you want to make education more accessible, you don't need to reinvent the wheel. It is enough to expand the state order to universities. But the main thing is that before we can eat up money, we need to learn how to make it.

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