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| Economy |
| Ordered to die. Ukraine does not have enough money for the state |
| 2024-01-19 |
| Direct Translation via Google Translate. Edited. by Denis Davydov [REGNUM] Ukraine enters the new budget year with a huge hole of $37 billion, which can only be borrowed from someone. True, the authorities are doing their best to instill cautious optimism in citizens. For example, in the draft budget for 2024, the deficit was $42.9 billion, that is, it was significantly reduced. And the Ukrainian Ministry of Finance even boasted that the uncovered need for international financing amounts to “only” $29 billion - they tightened up here, cut there, reduced salaries for civil servants. But, as Minister Sergei Marchenko emphasized, this is “the government’s problem, the embassies’ problem, the president’s problem.” And the president went to solve it. During a visit to Latvia a week ago, Vladimir Zelensky said that without Western funding, Ukrainian pensioners would die. “We buy a lot of things with our own money, but when there is no funding... We cannot help but give pensioners a pension. I'm not asking for pity, but without a pension, old people will simply die. We have more than 11 million pensioners - is there at least one other country like this in Europe?” — the president of what is considered an independent state, in which dignity has won, asked a rhetorical question. In Latvia, his listeners politely remained silent, where two-thirds of pensioners receive from 200 to 400 euros - below the poverty line. And today the Ukrainian authorities are faced with a very difficult question: where can they get money not for war, but for life? Since, with the payment of external debts, covering defense and other internal needs, it is necessary, according to experts, to find an amount of $110 billion. As they say, “Ukraine has never had anything like this.” GIVE ME A MILLION The second budget of Ukraine, adopted under martial law, is almost no different from the 2023 version: revenues will be 1 trillion 768 billion hryvnia, and expenses will be 3 trillion 355 billion hryvnia. The difference is that half of the amount is war expenses and the “partners” give this money. The second half was planned for other areas of the country’s life - social payments, education, healthcare and others. This half is precisely the deficit, and it is expressly prohibited to transfer funds allocated by foreign states for defense needs to other purposes. Ukraine must fight without stopping. Everything else from the point of view of its sponsors is deeply secondary. And the key donors, according to the Ukrainian Ministry of Finance, last year were the United States and the European Union. They received $30.5 billion, that is, 72% of all money received. The IMF, Japan and Canada gave a little more. But there is a nuance: of the total amount of $42.5 billion, grants (non-repayable financing) amounted to only 27%, or $11.6 billion. The rest are loans and loan guarantees. What needs to be given. Ukraine was also able to accumulate more than $15.4 billion thanks to domestic government bonds. Now the financial stability of the state, in fact, is completely in the hands of the States and Western European countries. In October 2023, the administration of US President Joe Biden requested $61 billion for Ukraine. This amount mainly provides for the purchase of weapons and their further supplies, but there is also direct assistance of approximately $10–11 billion. But, as you know, Congress is still holding this package did not approve; at best, it will consider the issue in the second half of January. The European Union also seems to intend to allocate 50 billion euros, but not for a year, but for three - from 2024 to 2027. If we assume that these funds will arrive in equal parts, then the annual amount will be 12.5 billion euros, or $13.7 billion. But there is no consensus in the EU; Hungary, which vetoed this support plan in December 2023, is against it, and Slovakia is in solidarity with it. If they fail to break them in February, the European Commission promises to approve a reserve budget for Ukraine. True, only by 20 billion euros. Generous Britain promised a billion dollars from the master's shoulder (in addition to the 2.5 billion pounds of military aid promised on January 12 by Prime Minister Rishi Sunak ). $5.5 billion is expected from Japan and another half a billion from South Korea. The rich country of Estonia, looking at the others, expressed its readiness to throw in a billion dollars, but so far it has allocated only $100 thousand last year. In addition, the main creditor, the IMF, according to the current cooperation program, must provide $5.4 billion in 2024. In general, everyone promises something (even the UN), but this is not certain. And you need to eat something right now. Therefore, the government is frantically thinking about how to get out of an extremely difficult situation. And he reaches into the pockets of citizens. THE COLLAPSE OF EVERYTHING Firstly, part of the personal income tax that traditionally belonged to them is taken away from local budgets. The joyful reform of local self-government can be considered officially completed; communities will no longer be able to cover their expenses. The second step is to increase the income tax of banks, to whom they explain that “this is for the military.” And the banks, despite assurances from officials about good earnings indicators, earned poorly. The number of loans issued to businesses, according to official statistics, fell 10 times. At the same time, the NBU recorded a sharp increase in savings on deposits of legal entities last year - by 41%. They don’t want to invest - the business is saving for a rainy day. Head of the Lviv Regional Military Administration Maxim Kozitsky The third is a reduction in salaries for low-level officials working in the regions, which has already led to a staff shortage. As the head of the Lviv regional military administration Maxim Kozitsky wrote in his column, only since the beginning of the year 148 vacancies have appeared there (19% of the limit number). The central authorities have not ignored either, and four out of ten departments in which salaries are being cut are the apparatus of the Ministry of Development of Communities, Territories and Infrastructure or vertical bodies of this department. Most of all, the government underfunds the State Agency for Infrastructure Rehabilitation and Development; slightly less than half of its salaries were taken away. At the same time, according to the draft budget for 2024, the Road Fund, which was a source of funds for the repair of roads and other infrastructure facilities, as well as the Fund for Liquidating the Consequences of Aggression were taken away from the vertical of the Ministry of Reconstruction. Billions of hryvnia will now be used to finance the war and produce weapons. At the same time, in most government bodies related to this, salaries, on the contrary, were increased. Finally, at the request of the IMF, Ukraine canceled the preferential tax and the moratorium on tax audits for businesses. The main attention, of course, is paid to gambling, manufacturers and suppliers of excisable goods, etc. However, everyone will be checked for the use of payment transaction registrars; the tax office is going to raise payments and checks for a long period of time. And this is at a time when, according to a World Bank report, 20% of Ukrainian businesses faced direct destruction, and 70% lost income. On average, enterprise income has fallen by half compared to 2021. Certain hopes are placed on foreign trade. Deputy Prime Minister for Economic Affairs Yulia Sviridenko assured that Ukraine has good prospects for increasing exports and logistics and additional export revenues could amount to $10 billion. But the problems on the Ukrainian-Polish border have not yet been resolved, Romanian farmers have been added to them, and the European Commissioner on agricultural issues, Janusz Wojciechowski openly announced his intention to block trade preferences for Ukraine within the framework of duty-free trade. All that remains is to act decisively. TAKE SOMEONE ELSE'S The golden dream of the Kyiv authorities is to receive 300 billion dollars of reserves of the Central Bank of the Russian Federation, frozen by all G7 countries, and another 21.5 billion euros remaining in the EU. Various officials raise this topic regularly, and even at the recent World Economic Forum in Davos they talked about it again. US Special Representative for Economic Recovery of Ukraine Penny Pritzker explained why it is problematic to confiscate Russian assets and give them to Ukraine. “The process of confiscation of Russian frozen assets is long and difficult, because it must be a collective decision of all states where these assets exist. In addition, we need a legal basis, ” she said. In the EU, the general consent of all 27 countries is required. And previously, authoritative publications explained that US attempts to pass a law allowing the use of Russian money would undermine Washington’s influence in the world and convince other countries that it is better to keep funds in independent banking centers and in other currencies, rather than in dollars and euros. Against the backdrop of the world's largest economies leaving the dollar, this is a real problem that undermines US influence in the world. Therefore, more sophisticated methods are being invented. For example, theoretical taxes are calculated on this amount. And at the end of last year, the idea of Ukraine issuing “reparation bonds” appeared. That is, securities will be sold on its behalf, which will bring profit if - and only if - it receives reparations from Russia for the damage caused by the war. “Interest payments may also be increased and will only become payable if Kiev receives compensation,” Reuters writes in this regard. At the same time, bondholders will not have contractual rights to Russia’s frozen reserves, and, logically, those countries where these funds are stuck should buy. Otherwise, what's the point of spending money on air? So far the brilliant plan has not worked. Therefore, in Kyiv they are thinking about continuing to trade in war bonds (that is, continue to borrow) and are going to beg for restructuring and deferments on debt payments. Because in reality, sitting and waiting for someone to give you money is a road to nowhere. But since this is where Ukraine is headed, any monetary drips given to a hopeless patient will only prolong the agony. |
| Posted by:badanov |
| #1 In addition, we need a legal basis I understand Fani Willis will soon be available. |
| Posted by: Grom the Reflective 2024-01-19 04:18 |