The growth of the shadow economy in Ukraine poses the greatest threat to the country's economic security, President Leonid Kuchma said Tuesday.
Speaking to top prosecutors, Kuchma called for a fight against tax evasion, capital flight and illegal banking operations.
It should not be a 'frontal campaign' but a steady, consistent effort, Kuchma said, according to the Interfax news agency.
Kuchma estimated that $15 billion to $20 billion in capital has left Ukraine since the republic became independent in 1991, far exceeding the nation's $10 billion foreign debt.
He said the shadow economy was estimated to be 40 percent to 45 percent of Ukraine's overall gross domestic product.
'The progressing growth of the shadow economy poses the greatest threat to economic security of Ukraine,' Kuchma said while introducing Ukraine's new prosecutor-general, Mykhailo Potebenko.
Kuchma's estimate was lower than one given last month by Ukraine's tax chief, Mykola Azarov, who put the size of the shadow economy at up to 60 percent of the country's GDP.
The president blamed Ukraine's underdeveloped market economy, imperfect legislation, high taxes and corruption, and said law-enforcement bodies were not determined enough to fight the phenomenon.
The existence of the shadow economy has hampered tax collection and deepened the federal budget deficit, leaving Ukraine on the brink of financial crisis. International lenders insist that Kyiv reduce the deficit and boost revenues before they will agree to provide aid.
Kuchma also said that he was preparing a new decree on amnesty for tax evaders, but noted that there would be no restructuring or cancellation of federal debts for delinquent businesses.
