My fellow compatriots!
Despite the difficult political situation, our government continues to work. Over the recent week we have held several meetings of the government and approved a number of crucial decisions that affect each of you and the standard of living within the country.
First of all, I would like to dwell on one of these. This week, at the insistence of the People’s Front faction and the government of Ukraine, the parliament, in the first reading, passed the law that allows the confiscation of $1.5 billion that had been plundered by the regime of Viktor Yanukovych and his associates.
These funds were arrested over a year ago by the government.
I hope that in the next plenary week, the Verkhovna Rada will push the matter through and adopt the law as whole to enable the Ukrainian law enforcement agencies and judiciary to carry out a lawful procedure of forfeiture of these assets, which will subsequently be allotted to meet the demands of the Ukrainian Army and to improve the welfare standards within the country.
This week the government approved a decision to allocate over Hr 6 billion ($226.4 million) for the reconstruction and repair of roads. It is solely the amount allotted from the state budget.
Separate financing has been granted by international financial institutions. The total funding for repair, reconstruction and construction of new roads will be Hr 14 billion ($530 million).
Hr 3.5 billion ($132 million) will be directed to the running repair of our main highways, while a further Hr 2.5 billion ($94.3 million) will be allocated for minor repairs to ensure maintenance of the road network.
Following the approval of our decision, the first machinery will soon set to work on the roads and highways. We are planning to construct and repair a network of over 1,700 kilometers of roads at the expense of the state budget and funding from the international community.
A further decision of the government is the allocation of Hr 1 billion ($37.7 million) to 159 united territorial communities in Ukraine. The funds are to be spent to create high-quality infrastructure for these communities and to provide top quality services to the people. The money from the budget will go to the reconstruction of educational and medical institutions and the construction of roads and schools.
A separate expenditure item is planned for projects of energy efficiency and energy saving. The system of decision-making on the allocation of funding is simple and transparent. Each member of the community will be able to see which projects are funded and how the funds are being used efficiently in each particular town or village.
This week there have been two final decisions adopted opening up a way for our citizens to receive a visa-free regime with the European Union.
This week there have been two final decisions adopted opening up a way for our citizens to receive a visa-free regime with the European Union. The first one is the endorsement of amendments to the Law on the electronic declarations. This is an electronic system of declaration of incomes for all Ukrainian officials. It is another achievement in our fight against corruption designed to ensure transparency in our public administration.
The second is the establishment and launch of the National Agency for the Prevention of Corruption. This week at its meeting, which was streamed live, an independent Commission chose two more members of the Agency. Now there are four thus they can legally begin their activity. The Government has adopted all the relevant decisions. Let me remind you, this Agency will check the conformity of the declarations of officials with their actual lifestyle.
So, the prospect of visa-free travel within the European Union is now rather close. We have fulfilled our part of work and the European Union has acknowledged our completion. We expect an appropriate final decision to be announced by our European partners in the near future.
The government continues to introduce world standard best-practices in the interaction between business and the State. Back in 2014, we established the institution of Business Ombudsmen, and now we have provided legal framework for that.
The government approved all the relevant bills to enable the Office of the Business Ombudsman, which stipulates additional mechanisms to facilitate his collaboration with public authorities aimed to protect the interests of entrepreneurs.
In fact, we have created an institution of an advocate for entrepreneurs, an advocate who has the right to defend the interests of entrepreneurs in all public authorities.
We have created an institution of an advocate for entrepreneurs, an advocate who has the right to defend the interests of entrepreneurs in all public authorities.
An important achievement in the deregulation process was the launch by the Ministry of Economic Development of an updated resource – the Single State Portal of Administrative Services.
Now via this portal, actually from home, not running from pillar to post between various public institutions, one can receive 16 online services, including obtaining licenses and various permits.
We are striving to minimize the influence of the state on development of businesses, and for this purpose, it is vital to remove the bureaucratic barriers that enhance corruption. As is well-known, a computer cannot take bribes.
Moreover, this week at its session which was broadcast live the government of Ukraine heard the results of the activities of 17 major state-owned companies.
The issue of the efficiency of state-owned companies has been raised by politicians and media a number of times, including questions on the performance of these companies. And I, as prime minister, have demanded that state companies cease to be a feeding trough for politicians and political forces.
We have drawn up preliminary results of the performance of these companies and conducted an audit and inspection of a great number of large state-owned enterprises. 17 companies pay 10% of all taxes paid by those involved in entrepreneurial activity in Ukraine.
Now about the results of activities of particular companies, what has changed in their management, and how has this affected their financial performance. I’d like to give a figure regarding the 17 companies that reported to the Cabinet of Ministers of Ukraine.
Last year’s earnings have increased by almost 40 percent, with the total revenues of these companies amounting to Hr 2.6 billion ($98 million) against losses of previous year of Hr 7.4 billion ($279 million). That is, we have improved their financial performance by Hr 10 billion ($377 million).
That is, we have improved their financial performance by Hr 10 billion ($377 million).
I can give examples of state-owned enterprises. For instance, SE Energorynok – it has improved its financial performance by Hr 1.6 billion ($60 million).
State Enterprise Ukrainian Sea Ports Authority has boosted its performance by Hr 2.3 billion ($86 million).
Or JSC Odessa Port Plant, which for the first time in a few years has become profitable and improved its financial performance by nearly half a billion hryvnia ($18.86 million).
I wish I could say the same about such companies as JSC Centrenergo, or about SE Ukrspyrt or PJSC Ukrnafta.
NJSC Naftogaz Ukraine has demonstrated better financial performance at plus Hr 65 billion ($2.45 billion). This company, which had always been in the red and a source to feed tycoons, through their shadowy gas scheme is, at last, reaching profitability and transparency.
And, actually, this is far from what we are capable of achieving as the position and policy of the Government is to completely change the executive staff and governance systems within these companies.
I remind you that the Cabinet of Ministers adopted a decision to launch an open and transparent tender to select CEOs of state-owned companies. As a result, 6 directors of state-owned companies have already been appointed not by politicians but by an independent Nomination Committee. Another 12 directors are either undergoing the appointment procedure or are participating in an appropriate competition.
I deem it expedient, however, that we must appoint all the CEOs of the top 50 major public companies through the transparent independent competition. My firm stance is the absence of political or any other influence on the leaders of state-owned companies. The primary objective for the head of each company is to improve efficiency, to create jobs, to pay taxes and to boost state-owned asset value.
To this end, the government has introduced a market-based remuneration system for employees of state companies. The more efficiently they work the more they earn.
We have also obliged all public companies to hold a transparent audit. So far, only six companies have signed the relevant decisions. Therefore, the government made all the rest conduct an independent public audit of the activities of their companies.
Why are state-owned companies not profitable?
There are economic factors that are affected by falling prices in external markets and external conditions, but the problem lies in a different plane. Many state-owned companies continue to use intermediaries and financial cushions in offshore zones, in which there sits hundreds of thousands of dollars that should be transferred to the state budget as taxes. These constitute part of the national wealth of the country and should not be part of the wealth of a political class trying to take control of state-owned enterprises.
Many state-owned companies continue to use intermediaries and financial cushions in offshore zones, in which there sits hundreds of thousands of dollars that should be transferred to the state budget as taxes.
This is why I commissioned a comprehensive audit of all major Ukrainian state-owned companies. 25 companies have already completed their checks, and these audit results were presented to the Cabinet of Ministers. Following the audits the Cabinet of Ministers handed over all the necessary documentation to the National Anti-Corruption Bureau, prosecutors and law enforcement agencies to initiate appropriate criminal proceedings, part of which have already been initiated and are now being investigated.For example, the Government transferred cases on Ukrhydroenergo, Ukrspyrt, Centrenergo, State Food and Grain Corporation of Ukraine, United Mining and Chemical Company and other state enterprises, in which facts of abuse were revealed.
The better the performance demonstrate by state-owned companies, the more taxes they will pay to the state budget, the more opportunities we will have to raise welfare standards, wages and pensions, to build new roads, schools and hospitals.
Starting on May 1st this year we will trigger the first stage of a 6 percent increase in social standards. In general, this year we plan to improve social standards by 12 percent.
I have instructed relevant line ministries to prepare the framework to ensure that higher salaries and pensions are paid to each citizen of the country in May of the current year.
Much has been done but much more needs to be done. One should never stop halfway. It is always difficult to climb, but we’ll get to the top, to the peak of our joint Ukrainian success.
See you next time.
