O. Ustenko, “Ukraine will receive from the IMF’s $ 2.5 billion this year”

О. Устенко: «Украина получит от МВФ 2,5 миллиарда долларов уже в этом году»

In Ukraine, completed its work the IMF mission. What are the results of the negotiations, what to expect of the ordinary citizens of our country, how to increase gas tariffs and utilities, ГолосUА decided to ask the Executive Director of the International Bleyzer Foundation, President at Harvard Club of Ukraine Oleg Ustenko.

– The nineteenth of September, Ukraine had completed its work, the technical mission of the International monetary Fund. What are the pros and cons for Ukraine and the population in General?

The results of the work of the IMF I would be “wrapped” in several messages. The first is that nobody knows exactly and for sure what decision will be taken in respect of Ukraine. Moreover, he did not know even within the mission, each mission specialists working in the particular sector and they meet together only on General negotiation, where each concludes in its sector.

In addition, the mission works in any country and in Ukraine, in particular, collecting information, meeting with government officials. The documents are processed and all the conclusions are made upon arrival at the headquarters. The mission left Ukraine, so in the headquarters of the IMF experts was recently, now they are working with documents, and now no one knows the outcome of the negotiations. Almost any statement (both positive and negative is just speculation).

Tell, and what appeared information that the gas will rise in price almost twice, what he was talking about even the Prime Minister Volodymyr Groysman, it is true?

– If Ukraine wants to secure the necessary financial resources and not to suffer complete financial collapse until March of next year, because that’s what is so may be enough, the net international reserves of the NBU, then she needs to look for funding. Sources for Ukraine now, alas, not so much. Moreover, he now there is no alternative source of external funding besides the International monetary Fund. All other sources are blocked for as long as rasplachivaetsya cooperation with the IMF.

It would be ideal to inflows of foreign direct investment and not to borrow money from international financial institutions, and do not borrow from anyone. But for this it was necessary to work actively over the quality of the investment climate in the country. Not this year or last year, and starting from 2014-year, and the more, the better. As a result, in fact, we will receive this year’s $ 2.5 billion of foreign direct investment an absolute necessity in a panic looking for somewhere funding. Therefore, all attempts to blame the government is wrong, because the blame for everything all the power and, above all, the deputies, who gladly takes the arrows, as well as the administration of the President on the Prime Minister.

In fact, he is no more guilty than all the others. So, the question is, when you are in a panic looking for funding, you fulfill all the promises that took you, your country, and the proposals which she had assumed was the reduction of tariffs to the import parity. I assume the mistake was made at the very beginning, when in March 2015 Prime Minister Yatsenyuk signed a document on cooperation with the IMF. Then the document was signed in the absolute certainty that the gas price will be stable and will not be, not to increase, but rather tend to decrease. Therefore, they believed that taking on this responsibility, they will be able not just to actively raise gas prices, and perhaps even they do not enhance in that case, if the price will continue to fall.

– Why Yatsenyuk agreed to sign this agreement?

Why? Yes, because in the March 2015 year, the price of a barrel of Brent oil was around forty dollars, and because the price of oil generates gas prices, they believed that the price of gas will not increase. But as it turned out, they are deeply mistaken and today the price of gas is already above 80 dollars. Even if you follow the logic of promises made by Prime Minister Yatsenyuk, Finance Minister Yaresko and the head of the NBU Gontareva and President Poroshenko, by signing the document, when they took to the country’s obligation to bring to the import parity, they still hoped that the price of gas will not significantly change and for them to be all quiet.

But the price since has changed in more than two and a half times. On the other hand, in March 2015, the price of gas was about four thousand hryvnia, which at the then exchange rate was about $ 300. Respectively, the price must increase in dollar terms because there was a global devaluation. I understand that Groysman is now in a corner with one hand on him trying to hang all the dogs and transfer it to all the arrows, starting up and ending the parliamentary factions, but in parallel he does not want to be extreme in this scenario.

In addition, he sees himself in the future political system of Ukraine, obviously, so he tries to “bargain” and to soften the blow, which should be at those promises, which were given by his predecessors. Theoretically I understand what is being discussed with the IMF, the increase in gas prices from 30 to 60%. Why is floated the figure of 20%? In my opinion, she has emerged during the negotiation process. But my understanding of the situation, is that in the beginning it was supposed jump in the price of gas at least 1.5 times. Understand that a compromise was found at a lower price level. But it also means that the process of “price of adaptation” is not finished. Future price hikes are ahead.

– What other requirements could arise in the IMF?

Another requirement may be everything about the budget. And I also understand there is a debate. The fake who goes to Kiev in relation to the fact that the money will not give, because there is no budget, in my opinion, is not reality. Because the International monetary Fund clearly understand how the budget process in Ukraine. Objectively, it should not be finished in the beginning of October.

– Oleg, also goes, that tranche will not give us due to the fact that Ukraine is in a pre-election situation and the financial assistance we receive only after the elections, with a new President and the government, this is true or not?

– No, I believe that we will receive funding this year, because otherwise I can’t imagine how we will be able to hold on to parliamentary elections. I also think that the chances of the next tranche tend to zero, but now we will get it.

– After the gas will increase tariffs on utility services?

– Of course. In our collective consumer basket of at least 15% – that depends on energy. That is, if you give a one-time shock in 20%, the cost of the entire consumer basket increased by 3%.

The only problem is that if you increase the cost of energy to increase not only the part that relates to energy and utility rates, other costs will also increase because they also include energy costs.

– Is there any positive side of the visit of the IMF mission or anything, except the price hike, ordinary Ukrainians will not see?

– I think that if the government did not agree to continue lending, in Ukraine there would be total and difficult situation. Authorities cornered and trying to pin all the negativity on the Prime Minister, while completely forgetting about what had previously been a telephone conversation between the President and Ms. Lagarde. And two months ago, she posted a press release on its website, saying that reached a full understanding on promotion of reforms in Ukraine and to increase tariffs and increase tariffs, it put in the first place.

And only after appearance of this announcement on the website Lagarde, it appeared on the website of President Poroshenko. In addition, a month and a half ago to London travelled MS Markarova, which confirmed our desire to continue cooperation and again confirmed the “desire” to increase fares. Therefore, all statements were made by representatives of the Ukrainian authorities for a long time. I believe that in the baseline scenario we have to assume that cooperation with IMF will be continued.

– When we will know what our government agreed with the IMF?

As we will see in the coming month. Taking into account the finalization and decision on the Board of Directors, we may expect that in the first half of October. But now it is also important to think about the future, to change it will be possible only if drastic changes in economic policy of the country. We can, should and must grow, not “pathetic” two or three percent, and a full five. Then the reduction of tariffs to the import parity is not as sharp and painful subject.

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