Mariana Antonovych writes: 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. 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.
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.
“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.
