Ukraine sidestepped default and now faces an opportunity to raise social standards for 3.5 million public sector employees, 7.5 million retirees and 1.5 million people who get different kinds of social aid from the state, Poroshenko said during the Cabinet of Minister's meeting on Sept. 8. The government plans to spend Hr 10 billion - or $440 million - on the increases.
Social Policy Minister Pavlo Rozenko promised that more than 80 kinds of
social aid, compensation, scholarships and other payments are set to increase.
The minimum payments per person will increase for Hr 160 and will amount to Hr
1,378 ($62), while the minimum pension rate will constitute Hr 1,074 ($48).
Ukraine’s total budget is expected to reach less than $25 billion this
year on gross domestic product of $75 billion this year.
Parliament will consider these changes to the 2015 state budget during
the next week, said Verkhovna Rada’s speaker Volodymyr Groisman, noting that
this is a part of “social contract with Ukrainian people Ukraine’s government
has to execute in good faith.”
“This is a symbol of commitment of Ukraine’s authorities to its duties,”
Poroshenko said. “This is a signal that painful reforms bring benefits.”
This result was not easy to achieve, though. It required restructuring
debt, fighting corruption and increasing revenues to the state budget,
Poroshenko admitted.
On Sept. 7, during a meeting with Poroshenko, International Monetary
Fund Managing Director Christine Lagarde said that Ukraine “has surprised the
world, surprised with what it managed to achieve during such a short term,”
according to the president.
Given Ukraine’s previous practice of repeated violations of its
commitments, Largarde’s words “delighted” Poroshenko. “This is an
international recognition of efforts of our country,” he said.
“Lagarde also recognized that in difficult circumstances ‘Ukrainians
achieved a macroeconomic stability, while Ukraine’s economy already
demonstrates signs of recovery,’ ” Poroshenko said noting that IMF does not
waste words.
The first and second loan tranches issued by IMF to Ukraine in March and
August – part of a $17.5 billion loan commitment – helped stabilize Ukraine’s
payment balance, harmonize export and import, and stabilize banking system.
While debt restructuring deal concluded on Aug.27 didn’t merely write
off 20 percent of Ukraine’s debt before foreign creditors, but also delayed
exorbitant burden for state’s budget for the next four years, said Poroshenko.
According to Ukraine’s Finance Minister Natalie Jaresko, this deal saved
Ukraine some $9.2 billion, including the amount of loans and costs needed for
their servicing.
Given the IMF’s forecasts regarding growth of Ukraine’s gross domestic
product by 4 percent, Ukraine will be able to reach the level of Swiss economy
by 2040, Jaresko added.
However, it doesn’t mean that Ukraine has overcome all challenges.
Russia’s military threat, instability in the world’s economy and rising
political tensions within Ukraine are the main challenges Ukraine is facing
now.
“Ukraine has to stay united,” Poroshenko said, referring to the clashes
near parliament on Aug. 31 in which three National Guard members were killed by
a grenade, allegedly thrown by a former soldier during a demonstration against
proposed constitutional changes.
“Soon the details of investigation will become publicly available,” he
said. “And you will be frightened with what terrorists were planning to do.”
From Sept. 22 until the end of October, IMF will visit Ukraine to
discuss the fate of the third tranche under the IMF’s Memorandum with Ukraine.
“We agreed with Lagarde that it would be preferable if IMF decides to
loan Ukraine $1.7 billion in October,” said Poroshenko, noting that borrowing
from international donors is no substitute for attracting direct foreign
investment in Ukraine.
To achieve this goal, Ukraine has to speed up reforms in all sectors:
deregulation, liberal tax reform, introduction of visa-free regime and full
operation of free trade zone with the European Union.
“If it needs changes I will take this decision as granted,” said
Poroshenko. “However, this decision will be certainly up to you (government),
coalition and Verkhovna Rada.”
Kyiv
Post’s legal affairs reporter Mariana Antonovych can be reached at
[email protected]
