Days after President Leonid Kuchma warned the Cabinet of Prime Minister Viktor Yushchenko not to be overconfident about Ukraine's recent economic growth, Yushchenko struck back by defending that growth as a definitive sign the country is on a path of economic recovery.
'We have a brand-new Ukraine, and those who don't want to see now will become convinced later,' Yushchenko told a press conference on May 4, two days before his departure to the United States for talks with international lending organizations.
Yushchenko's comments were based on recently released government statistics that indicate the country is experiencing economic growth for the first time since independence.
Gross domestic product was up 5.6 percent in the first three months of the year compared to the same period last year, while industrial production was up more than 9 percent. Inflation, which amounted to 4.6 percent in January, slowed down to 1.7 percent in April. And statistics say that Ukraine's trade balance, which was in the black for the first time in a decade last year, was continuing to improve.
The prime minister's view on the robust growth figures contrasts markedly with the opinions of economists, who chalk up sudden growth to rapid devaluation of the hryvna, which boosted exports and ignited domestic production of goods that had been previously imported.
Economists also have explained the sky-rocketing growth by the fact that the economy had contracted sharply in January-March 1999, the period against which this year's first-quarter statistics were calculated.
In late April, President Kuchma took the side of the economists as he excoriated Yushchenko and the Cabinet for trying to take too much credit for the growth figures. Kuchma warned the Cabinet's failure to enhance that growth by launching deep structural reforms could soon bring the economic expansion to an end.
Yushchenko refused to see it that way, claiming the positive statistics provide a 'sufficient basis to talk about an economy of growth.'
Speaking at another press conference on May 4 – one of three he held on that day – Yushchenko said the Cabinet was working actively on a series of measures to support the recent economic growth. He mentioned, in particular, a draft tax code that aims to reduce the existing high tax burden to 30 percent of gross domestic product by cutting the total number of taxes from 35 to about 25.
Yushchenko said the government had also begun to work out a state budget for 2001 based on the new planned tax code. Government officials earlier expressed hope that parliament would approve the tax code by September.
Yushchenko also said his rosy description of the state of Ukraine's economy was not an attempt to influence the International Monetary Fund and World Bank ahead of his trip to Washington.
'Our government is guided by the [understanding] that economic reform is for the Ukrainian people,' Yushchenko said.
