Ukraine’s economy and finance during and after the coronavirus pandemic

On Tuesday, May 5, online conference on “Ukraine’s economy and finance during and after the coronavirus pandemic” with the participation of the country’s leading economists was held, it was organised by the International Centre for Policy Studies and the Hanns Seidel Foundation.

The online conference was attended by such experts on economic issues as Roman Shpek, Anatoliy Maksyuta, Tamara Solyanyk, Yaroslav Zhalilo, Roman Sheremeta, Taras Kozak, Serhiy Fursa, Yegor Kiyan, Olena Korobkova, First Deputy Chairman of the Verkhovna Rada Committee on Economic Development Serhiy Taruta, diplomats and analysts – Vasyl Filipchuk, Kostiantyn Hryshchenko, Oleksandr Chalyy, Oleksiy Semeniy and others.

“The crisis related to the coronavirus pandemic in the world has been compounded by crises in the commodity and financial markets,” Roman Shpek, chairman of the Council of the Independent Association of Banks of Ukraine and 5th Minister of Economy of Ukraine said. “Because reforms in Ukraine have not been comprehensive and have not been completed, our country’s economy is entering these crises in a vulnerable and fragile state.”

According to him, the main preconditions for the economic crisis in Ukraine are failed structural reforms, a large shadow economy, unequal conditions of competition, grey schemes for importing imported goods, lack of securities market, and closed access to the international borrowing market.

“In these conditions, our country should provide appropriate support to business, entrepreneurs, and population,” Roman Shpek stressed. – First of all, through the support of domestic production, consumption and trade. We shouldn`t stop to cooperate with international financial institutions and must have access to cheap and long-lasting funds.”

Chairman of the Board of the Institute of Socio-Economic Research Anatoliy Maksyuta stressed the differences in estimates of the fall in real GDP of Ukraine in 2020: “The government forecasts a decline of 4.8%, the NBU by 5%, experts by 6.5%, the IMF by 7.7%.” Also, according to him, estimates of inflation differ significantly, which are constantly changing for the worse.

“The current crisis in Ukraine may lead to budget defaults and increase in deficit of more than 7.5%, increase in public debt, as well as in the unemployment rate to 10-11%,” Anatoliy Maksyuta said. “As well as the irreversible loss of labour, the growth of import dependence due to the cessation of production, further deformation of the structure of the economy towards raw materials and services, the loss of markets due to protectionist policies.”

According to Tamara Solyanyk, Program Manager “Leadership in economic governance” USAID, the Ukrainian government should emphasise the promotion of small business: “This is about 7 million citizens who feed their families.”

“The easy way (spending cuts, emissions, populism) is not an effective way out of the situation,” ICPS economic analyst Yegor Kiyan said. “The difficult way is to increase the efficiency of the state.”

Yegor Kiyan proposed ICPS` recommendations for the authorities how to overcome the crisis, including debt restructuring under IMF programs, receiving tranche to fight coronavirus, dialogue and progress on cooperation programs with the IMF, avoiding speculation on default.

“It is necessary to revise the state budget taking into account government programs, order the resumption of production to avoid development asymmetries, preserve independence of the NBU and support the hryvnia exchange rate,” the expert concluded. “As well as the transparency of government decisions, constant dialogue in the state-society-business system, avoiding staff changes in key ministries.”

Source: ICPS