Avakov suggests plan for Ukraine to weather coronavirus economic crisis

One of the most influential and controversial politicians in Ukraine, longtime Interior Minister Arsen Avakov, has offered a strategy for tackling the economic crisis provoked by quarantine measures to prevent the spread of the novel coronavirus.

In a Facebook post on March 23, Ukraine’s top cop suggested that the state create unemployment benefits and utility bill subsidies and forbid state-owned enterprises to fire their staff. The interior minister stressed that, due to small businesses closing, many Ukrainians may now find themselves out of work.

People who were vulnerable before the COVID-19 pandemic will now be forced to fight for survival, he said. Hence, the state must quickly address the economic crisis.

“In the government, with the prime minister and president, we are actively discussing this problem. There will soon be a solution,” Avakov wrote. “No, this won’t be like during the times of communism when everyone gets what he needs. Our country is, unfortunately, too poor for that — but no person in Ukraine must wind up without a livelihood.”

Avakov’s post provides further evidence that the long-serving and divisive interior minister, who has held his position since February 2014, exerts influence beyond his official responsibilities.

Newly-appointed Economy Minister Ihor Petrashko did not comment on Avakov’s proposal.

Coronavirus crisis

Since January, when COVID-19 began spreading around the globe, numerous countries around the world have shut down to prevent the disease’s spread. Quarantine measures have delivered a heavy blow to many economies.

Ukraine is no exception. It has imposed quarantine measures set to last until April 3 — although they could potentially be extended further. A number of Ukrainian cities have declared an emergency over the spread of the coronavirus.

Avakov’s plan to address the economic consequences of these measures suggests revising the state budget and creating a stabilization fund dedicated to financing anti-crisis measures. He also proposes increasing the budget deficit and cutting investments while keeping security expenses on track.

The interior minister also suggests the state should persuade banks to stop accruing interest on loans for private individuals and stop enforcement proceedings for debts and collection on collateral for individual debtors for the duration of the quarantine.

On March 23, the National Bank of Ukraine (NBU) allowed Ukrainians to postpone paying their mortgages until the quarantine’s end.

Avakov’s idea to create utility bill subsidies appears to have received a response from the Ministry of Social Policy. On March 23, it announced a plan to present a new subsidies strategy to the Cabinet of Ministers.

Controversial minister 

Avakov was appointed minister on Feb. 22, 2014, the same day that the EuroMaidan Revolution ousted Russian-backed President Viktor Yanukovych. 

Avakov held onto this position under President Petro Poroshenko, who took office in June 2014. After Poroshenko lost re-election in 2019, Avakov was one of the two ministers who kept their jobs under President Volodymyr Zelensky. 

Today, he is the only remaining minister from the Poroshenko era. 

Avakov is a highly divisive figure, who has faced accusations of stalling investigations into attacks on activists, corruption and sabotaging of crucial reforms.

Despite the controversy surrounding the interior minister, Zelensky has said he is satisfied with his work.  

Avakov’s new economic strategy may help Ukraine weather the crisis, but it will likely not resolve the country’s problems in the longer term. 

Ukraine hopes to receive some of the $50 billion that the International Monetary Fund (IMF) is making available to help low-income and emerging market countries address the coronavirus. 

The country is also in negotiations with the IMF to receive a $5.5-billion loan program, which will be key to maintaining economic stability in Ukraine.