ukraine will be a great place in 2010, as prime minister yulia tymoshenko sees it. inflation will be tamed. the currency will be stronger…
ukraine will be a great place in 2010, as prime minister yulia tymoshenko sees it. inflation will be tamed. the currency will be stronger. the budget deficit will shrink. the economy will be healthy.
and she will be president.
is she living in a dream world on the presidential part, the economic part, or about everything?
fantasy world, say her political rivals.
“i have never seen such a budget, one built on such a faulty and botched macroeconomic basis, and i hope i never do again,” oleksandr shlapak, a top aide for president victor yushchenko, told 5 kanal tv channel on sept. 16. “this is a budget of election promises, cunningness and cowardice, for which future generations of ukrainians will have to pay.”
the great thing about making predictions for 2010 is that no one can prove them wrong until the time comes. it’s all the more fortuitous in ukraine, which has no universally respected independent financial watchdog. that means all prognostications become grist for the political mill ahead of the jan. 17 presidential election.
the closest thing ukraine has to an international arbiter is its lender-in-chief, the international monetary fund, which has already doled out nearly $11 billion in loans to the nation in exchange for thus far unfulfilled promises of fiscal probity.
connie lotze, deputy chief of media relations for the imf, wasn’t saying what the international organization thinks of tymoshenko’s proposed 2010 budget. “an imf mission discussed ukraine’s budget as part of the staff visit in early september and will continue these discussions during the next mission in mid-october,” lotze said.
tymoshenko unveiled the government’s draft budget on sept. 15, in an 80-minute speech broadcast live by ukrainian state television [ut1]. hundreds of officials, state workers, parliament deputies and foreign emissaries attended. thousands more tuned in.
she read out lots of numbers. this year’s budget deficit will not exceed 5 percent. the draft budget for next year envisions an hr 47 billion ($5.7 billion) deficit, or 4 percent, in line with imf demands. the plan assumes revenues of hr 285 billion ($34 billion), expenditures of hr 324 billion ($40 billion), real gross domestic product growth of 3 percent, an average exchange rate of hr 7.5/$1 and annual inflation at 9.7 percent.
market analysts have questioned whether the government can raise $4 billion more in budget revenues than the hr 239 billion ($30 billion) forecast in the current budget. many experts have expressed growing doubts in recent weeks about whether ukraine will be able to meet its foreign debt commitments ($100 billion, public and private) this year and next without more support from international lending institutions.
ukraine is among the countries hardest-hit by the global economic downturn. last november, the imf agreed to a $16.4 billion emergency loan. ukraine has so far received $10.6 billion. the final two tranches have been held up pending imf review of the government’s plans.so far, anyway, international lenders have taken a benevolent stance towards ukraine’s political chaos, although no one knows – or is saying — when such patience will run out.
in her speech, tymoshenko said that 2009 had been “a trying time both for the world and ukraine.” few politicians want to be in her shoes, she said, because “most of them are finding it easier to criticize, humiliate and discredit” the cabinet of ministers.
“i have no regrets that our team is in power in such a difficult time, facing such tremendous challenges, since we know all the problems that we are facing and have found new ways to resolve them which nobody has ever learned from any books,” tymoshenko said.
“i think that it is the first time we and the rest of the world have gone through such a crisis.”tymoshenko said that ukraine’s industrial output fell by 16 percent in january and then again in april “when the second wave of the crisis engulfed ukraine.”
looking on the bright side, tymoshenko said most sectors of ukraine’s economy are now showing signs of recovery. “retail trade is picking up and the construction sector is starting to get back its legs, little by little,” she said.
the prime minister said that her government’s proposed 2010 budget is conservative and contains no unfounded rosy forecasts.
but shlapak said tymoshenko has been consistently and deliberately wrong in her forecasts.
he said the government earlier forecast real gross domestic product growth in 2009 at 0.4 percent and inflation at 9.5 percent. instead, the gdp will shrink 12.9 percent this year and annual inflation will exceed 16 percent.
shlapak’s boss, vera ulianchenko, who heads yushchenko’s secretariat, told interfax-ukraine that the budget proposals were not “put together in conditions of transparency” and were “substantially different than what we [yushchenko and tymoshenko’s budget negotiators] had discussed.”
leaders of the moscow-friendly regions party, which is touting the presidential candidacy of ex-prime minister victor yanukovych, waxed livid.
“the draft budget proposed by government will not only fail to get the country out of crisis but will worsen the existing problems in the economy and social sector,” iryna akimova, an economist and member of the regions party parliamentary faction, said.
yanukovych has ordered members of his faction to block parliament from enacting any legislation until the 2009 budget is amended to increase social payments, salaries and pensions. “we have no other way out, there is no other option. if we lack the necessary strength [to get our way] in parliament, we will gather the people,” yanukovych told political supporters on sept. 11 in a rally in kryvyi rih.
of course, many regard yanukovych’s attempts to increase social payments during a fiscal crisis as just more political grandstanding. but that’s another story.