“Impoverished society is not calm”: the government’s priorities and reality

«Обнищавшее общество не успокоить»: приоритеты правительства и реальность

The government promises economic growth to appease the citizens before the election, experts say. They state that the actual steps of the authorities are contrary to the promises in the state budget has not laid the Foundation for a better life.

“A full-fledged gas market” and social protection

Prime Minister of Ukraine Vladimir Groisman presented the priorities of the government, which will form the key objectives and targets for 2019.

“Priorities for 2019 – increasing economic growth, good governance, human capital development, rule of law and the fight against corruption, security issues and defense”, – quotes the Prime Minister governmental portal.

In the energy sector envisages the development of gas and electricity market. And the attention of the government will be on the social security of pensioners and working citizens, protection of veterans – “until you update the legislation.”

Earlier, the economist Viktor Skarshevsky said that the government laid out the state budget for 2019 does not provide for the growth of social security. “The budget for 2019 is antisocial. The growth of social expenditure is only 5%, while inflation, which the government set aside a budget that is too low. That is, the social spending adjusted for inflation will decrease, and people will become more poorer,” the economist said.

Note that the budget for next year based on the inflation forecast in the framework of 7.4%. But Skarshevsky convinced: “the inflation rate in reality will be 10-11 percent.” He notes that the rate of inflation factored into the budget, linked all social spending and the indexation of social standards, but they are, according to the economist, will be indexed at the level of less than the rate of real inflation.

The economist stated that the cost of housing subsidies inherent in smaller volume than in 2018. Therefore, the government “will reduce the number of subsidianes and the amount of subsidies”.

Indeed, the costs in 2019 was reduced from the current 71 to 55 billion UAH, the price of gas for households raised by 23.5%. The national Commission, carrying out state regulation in spheres of power and utilities (NKREKU) has approved new tariffs for centralized heating and hot water. They will come into force after the New year. In particular, in Kiev to raise tariffs for heat for the population of 22.7%.

The very increase in gas prices was associated with the development of the “full market”, which says Volodymyr Groysman. And since the price was not raised immediately, the price increase is distributed on several stages spread over one year. In October media reported that a price increase should occur in the spring of 2019 – then prices will increase by 15% in the fall of 2019.

That is, the gas price for population in Ukraine should rise another 40%, just as it compares with the market as it was approved during the negotiations of the Cabinet with the International monetary Fund. It was noted that the market price is calculated on the basis of import parity. This component in the structure of gas prices for consumers is the greatest. It includes the projected price of the German gas trading platform (hub NCG), as well as the cost of transporting gas from the NCG to the Western border of Ukraine, through Germany, the Czech Republic and Slovakia.

The population uses the gas produced in Ukraine.

Pensioners not to laugh

Director of the Institute for development of economy of Ukraine Alexander Goncharov noted that the budget for the 2019 laid down the Pension Fund deficit at 167 billion USD, and subject to the stipulated allowances, money in retirement you will need 20% more – up to 400 billion.

“Pensioners not to laugh! Now the old nail sitting in my head question – where is the guarantee the future payment of pensions?”, – he wrote in Facebook.

Goncharov said that in 2019, the Cabinet will chase immediately after two rabbits, namely: “support to the national currency, the budget aspect, on the other hand, social”. The economist notes that the budget aspect will be the authorities under the strict control, because the budget deficit is 89.9 billion, and the IMF lowered the estimate of growth of Ukraine’s GDP in 2019. to 2.7% from 3.3%.

“Well, the social aspect, apparently, the Cabinet was least interested in. This is particularly significant against the fact that the wealth of the 100 richest Ukrainians grew 12 times faster than Ukraine’s GDP, concentrated in his hands USD 37.5 billion. USA. And as in mockery envisioned 1.01 2019. a living wage in the amount of UAH 1853., and the minimum wage – 4173 hryvnia. People work, but almost get nothing for a decent life. Yes, there are successful, but far more Ukrainians below the poverty line,” – said the economist.

Indeed, the annual ranking presented by the magazine Novoye Vremya in conjunction with the investment company Dragon Capital shows that 100 of the richest Ukrainians has increased the speed with which grows their overall condition, from 33% to current 43 %.

Leading the list of Rinat Akhmetov, whose fortune grew by 76 %. During the year the oligarchs became richer by $ 5.3 billion. Now it is 12.2 billion us dollars. Second in the ranking of the 100 richest listed Victor Pinchuk. He made a fortune by 87% and has 2 billion $ 70 million. Followed by Vadim Novinsky. The rich at 94% to 2.3 billion.

Fourth and fifth place is occupied by representatives of group “Privat” Gennady Bogolyubov and Igor Kolomoisky. They got rich, respectively, by 113% and 60%, and now have 1.6 billion dollars. each.

Followed by the President of Ukraine Petro Poroshenko. Evaluation of Dragon Capital, the President increased his wealth by 10% and has a capital of 1.1 billion. Analysts in detail not dwell on this point of rating.

Dragon Capital believe that to increase the capital of domestic oligarchs helps a favorable situation on the world commodity exchanges, reflecting the increase in the consumption of steel and iron ore products. Also rich those who have oil and gas assets, because the price of energy in the world is also growing.

At the same time, analysts at Credit Suisse has published the rating of personal wealth earthlings depending on the country of habitat. In it, Ukraine was in 123rd place (out of 140 countries). The level of personal wealth estimated at 1.5 thousand dollars. for each inhabitant of the country. For personal well-being, the Ukrainians are ahead of the inhabitants of Nepal (more than 2 thousand dollars.) Bangladesh (2,3 thousand dollars), Lesotho (2,6 thousand dollars).

Alexander Goncharov believes that to predict a definite movement on the path of market reforms in the economy impossible.

“Moreover, it is now not straightforward, as promised, the Cabinet and the Verkhovna Rada in order to calm the most active and aggressive of the severely impoverished society. But where to take the money? After all, sustainable economic growth and raise incomes, we need investment and investors don’t see the “top” of competent and committed leaders. Still they are not established in Ukraine with modern institutions and new investment infrastructure,” – said the economist.

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