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Survive the crisis: top 5 steps to save the Ukrainian economy

2 March 2017, 12: 24

Despite the fact that the economy of our country today is in a deplorable state, there is a way out – but only if there is a systemic vision and comprehensive solutions.

This opinion was in exclusive comments to “Word and Deed” was expressed by the Vice-President of the Academy of economic Sciences of Ukraine Anatoliy Peshko, evaluating the economic situation in the country and ways of overcoming of the crisis phenomena.

“When Ukrainian producers will sell the bulk of their goods in the domestic market, and export no more than 20-30% of their products, then the economy of Ukraine will have a stable growth and will not depend on financial and economic crises, systematically shaking the entire world economy”, – said the academician.

Restructuring of the Ukrainian economy
In the process of economic restructuring, emphasis should be placed on the use of policy and indirect government regulation. In other words, it is necessary to move to the creation of the so-called “economy of subsistence farming”, says Peshko.

“The point is that the development of the Ukrainian economy should be aimed primarily at industries and enterprises that will not less than 85% meet the needs of the citizens of our state. Imports of goods should be state regulated, ” he explains, emphasizing that imports should ensure the import of only new technologies, equipment for various sectors of the economy, developing on an innovative basis.

For example, he says, in the agricultural sector it is necessary to focus on the development of agricultural engineering, optimization of the system of the agrarian Academy of Sciences to generate new, more productive varieties of those crops that are most adapted to the Ukrainian climatic conditions and have the greatest demand in both domestic and foreign markets.

It is necessary to create favorable conditions for the work of chemical enterprises for the production of mineral fertilizers by reducing the price of natural gas in the production of products for domestic consumers. In order to revive the livestock industry, it is necessary to establish strict excise duties on the import of meat and dairy products from other countries. It is necessary to have such an excise tax rate, at which the cost of Ukrainian livestock products would be at least 20-30% lower than the prices of imported meat and dairy products, Peshko is sure.

The Ukrainian food market should be filled with high-quality domestic products (including organic production) by at least 95%.

Freedom of farmers
The state should return to agricultural producers VAT benefits and stop fiscal pressure on the agricultural business, the expert says.

“The banking system of Ukraine should provide agricultural enterprises with long and cheap loans for 10-15 years at 2-3% per annum,” he said.

All this, according to Peshko, will not only provide the domestic consumer with quality and cheap food, but will also allow Ukraine to enter foreign markets with much larger volumes of agricultural products with the highest added value.

“Such a policy will give a significant inflow of foreign currency into the country and provide a positive trade balance of our state,” the academician is sure.

It is the attraction of investments that is one of the key stages for the revival of the Ukrainian economy, he emphasizes.

The flow of investment and “natural economy»
“Ukraine needs to provide a preferential tax system for enterprises with real foreign investments. Low tax rates for such investors will help to increase the number of enterprises – producers and thus create new jobs,” Peshko said.

Thus, it is possible to ensure the growth of the purchasing power of Ukrainians, and, accordingly, the development of the domestic market, the formation of effective demand on it, which will have to be satisfied by domestic producers.

Trust collapse: “reset” of the banking system
In the issue of attracting investment, it is even more important and so far an impossible task to return the trust of citizens to the banking sector, the academician notes.

“Personal savings of Ukrainians should become a source of lending by banks of the real sector of our economy. This is possible only when the population, internal and external investors will be guaranteed security and stable profitability, as well as 100 percent protection against inflation of their funds”,-he is convinced.

Reform of the NBU
“The recovery of the banking sector largely depends on the National Bank of Ukraine, whose function, in fact, is to stabilize the banking system, ensuring a stable exchange rate of the national currency,” the expert emphasizes the importance of changes in the Central Bank of the country.

“There are a lot of challenges, but one of the most important is the need to further increase the transparency of the NBU and the degree of its accountability to society,” Peshko insists.

“The problem of exit from the crisis, bringing the economy of Ukraine investment with a view to its modernization – definitely challenging, but not beyond the holistic vision and a systemic approach to search for optimal solutions”, says the academician.

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