“Saving the drowning – the work of the very drowning ones”

“Saving the drowning – the work of the very drowning ones”

The people of Ukraine have finally realized that in the country not only is a deep political crisis (“the ranks” continue to steal, and “lower classes” continue to suffer), but also a catastrophic economic situation. In previous publications, I have repeatedly addressed the President and the Government to the “corkscrew”, however, our rulers do not hear us. Once again, I want to conceptually explain what needs to be done for the economic revival of Ukraine.

Fixing the national currency and preventing any hryvnia fluctuations against the dollar or euro.

The transition from the policy of prevailing imports to the development of domestic commodity producers (in our country the import reaches 70%, while it is known that if any country admits more than 14% of imported goods to its market, then the economy of this country begins to fall). The sad reality for our country suggests that in Ukraine at the beginning of 2015 there were only 845 thousand enterprises-commodity producers. While, for example, in Hungary, in which the population is about 10 million people, the number of commodity producers is one million. 500 thousand enterprises, which already speak about France – 8 million, UK – 10 million, Germany – 12 million, USA – 20 million. The number of enterprises in the country continues to fall catastrophically, closed as large, medium and small enterprises.

It is necessary that the Government, by attracting foreign loans, direct them not to be fed and abducted, but to lend to existing enterprises and to create new enterprises of commodity producers. It is impossible to spare a political or economic interest in breaking economic relations with the CIS countries and, above all, with Russia, as Russia occupies about 60% of the market for our machine-building, metallurgical and agricultural products.

Creation of favorable conditions for the development of the domestic producer. This requires direct and indirect state regulation of the economy. Since after the signing of the Association Agreement with Europe, we have no legal right to impose any customs or other restrictions on goods imported from Europe, we can protect the Ukrainian commodity producer by introducing a system of a fixed exchange rate of hryvnia to foreign currencies at a low level, for example, 10 UAH per dollar for critical imports (which includes medicines that are not manufactured in Ukraine, are vital: insulin, drugs for hemodialysis, powerful antibiotics, etc., but the same high-tech equipment tion for the oil and gas industry, agriculture, engineering). To oblige commodity producers and sellers, so-called goods purchased for critical import, to sell these goods on the domestic market with an increase of no more than 2-3%. This will reduce the prices for pharmaceuticals in pharmacies (and in general prohibit companies that conduct wholesale and retail trade to do domestically markup over 5-10% of the price of a commodity producer). This will reduce the prices for everything, including vital goods, and increase the purchasing power of the population. In addition, the sale of currency for importers importing goods, food or industrial goods into the territory of Ukraine should be carried out at currency auctions to be held by the National Bank. Exchange rate on currency auctions should be determined only by the level of demand (no restrictions). This will increase the National Bank’s revenues, raise the dollar and the euro, and, as a result, lead to high prices for imported goods, respectively, domestic goods will be much cheaper, and therefore, much more competitive and more affordable for the population, which will further increase demand. on domestic goods and will contribute to the development of the old and the creation of new domestic producers.

Ukraine should pursue policies to increase wages, pensions and other social benefits. It will also increase domestic solvency and demand for domestic goods and will promote the development of domestic commodity producers.

The Ukrainian government would be wiser not to take external loans and to put the country in the middle of foreign debts. It is much more advisable to change the banking policy in Ukraine, in particular: there must be at least 40% of state-owned banks in the country, and it is these state banks that should assume responsibility before the people to accept people’s money and multiply them in deposits, both in foreign currency and in hryvnia , regardless of any circumstances. This will attract tens of billions of dollars into the financial system of the country (as you know, about 100 billion dollars are in the hands of the population). By attracting this money, we do not fall into the bondage of foreign creditors, whose purpose is not the rise of the Ukrainian economy, but rather, on the contrary, its collapse!

When honest and responsible managers will be in power in the state, the tax system will be favorable, for example, to reduce taxes on dividends to 5%, to reduce taxes on income up to 10-12%, and to eliminate the value added tax (a source of megaculture). This will attract the money of domestic businessmen from offshore to the economy of their country. Countries in which there is no place for “revolutions”, coups, civil wars, and lawless domestic oligarchs.

There are still many instruments of direct and indirect state regulation of the Ukrainian economy, which can allow a country to recover from a severe moral-psychological, material and economic crisis. But for this country should be governed by domestic professionals who have proven themselves not only by scientific works in printed publications, but also by the results of their practical activities in the economy.

Public figure, Academician
and Vice-President of the Academy of Economic Sciences of Ukraine

Anatoly Peshko

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