The IMF does not drive us in a losing position, that we don’t know where to move


МВФ не загоняет нас в заведомо проигрышную позицию, это мы не знаем, куда движемся

Vlashchenko: Today week events we are discussing with Finance Minister Alexander Danyluk.

Hello, Alexander. You freaked everyone out, saying that Ukraine may not have enough money to hold the next Eurovision. You kidding?

Danyluk: I’m not scared, but encouraged that we approached this issue responsibly so in the last month before the competition we did not solve the question where to take money where it should be a competition for whose account, etc. This is a very important event for the country, it must be approached responsibly, and I as Finance Minister should raise this issue and to make the budget money as much as possible, effectively used. And even better, so we raise money not from the budget, and from those who receive direct benefits from this competition, business, advertisers, etc.

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– And what amount is needed?

– In Sweden it cost about 40 million As it seems, perhaps, a little money, but you have to understand that we need to save every penny. This is a responsible attitude to Finance, and I will stick with this position. This does not mean that I am against the Eurovision. I am opposed to the wave of euphoria taxpayers ‘ money is spent inefficiently.

– How and when will start to work Office reforms at the Ministry of Finance? What key tasks can be solved by your office this year?

– The main task of the Office of reforms is to implement a few priorities that I see in the routine, which is brewed in the Ministry. I have experience in the implementation of fairly complex projects, so I understand that without the creation of such experience, without the involvement of people who are able to see a task from beginning to end of the process and know how to implement it, to hope for a positive result impossible. Therefore, such an office is created, and the tasks that I put before the Ministry, is to launch a new budget process to launch a medium-term forecasting; to reform tax administration; to correct the situation in customs. The Finance Ministry should be the engine of reforms in the country and in the Cabinet. This is the right role of the Ministry of Finance, because we have so many tools and if you know how to use them, we will not slow down reforms but rather to create the preconditions for such industries as medicine, education, culture. With the right approach the Finance Ministry can help these areas to develop, to reform.

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– At the last meeting of the tax Committee of the Verkhovna Rada there was a proposal on the dismissal of the Roman Nasirov. What is your position at the head of the fiscal service?

– When I came I understood that there is a General dissatisfaction with the work Nasirov. A public rating is not high. But come to political office and then to respond to the ratings, I think, wrong. I now put key tasks, and if to the realization of these tasks I see the resistance then I will initiate my resignation. Yet now we are discussing how will the reform of the SFS, as will change the processes, and I see the interaction. When it will be implemented, we will see how Roman is configured to reform. I don’t want to give a rating to the image, I want to give a rating for action.

– What are the prospects for implementation in Ukraine of the OECD’s action plan “to counter the erosion of tax bases and the withdrawal of profits from taxation”? As far as the tax authorities are ready to cope with such a high level of administration that we have today?

– At this stage are not ready. And a lot of other things we are not willing to do is to give them additional powers to reform the service. Service issues: the quality of the people and a certain motivation of these people is not quite fair to work with business. A lot of people will need to change. But there are also public policy, have plans that are imposed on the service. Therefore, service very hard. On the one hand, there are some internal inconsistencies, and on the other hand, need to implement the plan. In order to service earned effectively, it needs to fundamentally change. The model can be a model police.

– Where will you get the resource to change the tax service?

– I came, and I have my own political objective, which fully shares the Prime Minister. Reform of the SFS is its integral part. For me, this is priority No. 1, and I’m going to practice every day. In fact, additional resources are not needed. The service is bloated and consumes itself a lot of resources. The final service model needs to be three times less than now. It should not work for every company, and to use the risk based approaches. Yes, these people should be better paid, but it will be a service that will generate more income. Honest income to the budget. Not those who are already paying, and their booster any prepayments or penalties, and those that are now in the shadows. The resources are there, and that the cost and content of service now and the cost of those resources, which are now in the shade and not just fall into the state budget.

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– You support the whole course of your predecessor Yaresko on full implementation of the objectives of the IMF? Can we debate, engage in any negotiations with the IMF, if we are talking about that at the moment Ukraine is unprofitable, for example, as in the case of timber, logs?

– I have a few principles, which are based on my professional path. First: any agreement that is taken, you need to perform, because it is the task of the state. With the IMF we have every three to four months is the revision of the new negotiations. I’m in negotiations with the IMF nothing is connected. I will probably be your approach to this. The IMF does not drive us in a losing position. We, unfortunately, don’t know where we are going. We must understand what we want. The IMF is our partner in the way, but if we don’t understand where we’re going, we won’t go far. Besides no one job will not do. And now we are taking loans, not the first year, and got them for about 70%. Part of the debt we restructured and start to pay them (large payments), since 20-years. And we can pay them in two ways: at the expense of our growth and resources that we ourselves generated, and attracting external financing from the market. And this is not donor money. You need to look several years ahead and to understand what we need for the 20th year to become a growing economy that will be able to raise money on international markets. We should become a true partner for investors and also for those who provide us credit. And in this, the IMF should help us. But with the pace of how we now move, with the IMF, we will not become partners. And this is not a problem of the IMF. This is our problem. Therefore, I hope the team of government, that we will now show a different pace of progress in reforms.

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Business wants tax reform, which would give him a chance to breathe. This is possible today?

– Reducing tax burden for me priority. Here you can move in different ways. On the one hand, it is possible to further reduce rates, another direction is to focus on the administration. Now the business is dissatisfied with the administration. This is exactly what they face – as the IRS collects taxes. Sometimes it is unfair, sometimes very difficult. Therefore, it is necessary to simplify procedures, the need to eliminate opportunities for abuse. There is a certain sequence, and I cannot as the Minister of Finance to go on reducing interest rates, knowing that the SFS ineffective. They already effectively use the solutions that were adopted earlier. A further reduction to the budget will do nothing. Therefore, it is important that the GFS has changed.

– Why do we have such a high tax on the wage Fund?

– Our budget is less than just does not pull. We have a very large cost, and we can’t afford to continue to decrease the income from taxation. If we talk about payroll tax, we expect the effect of the legalization. This effect will not happen instantly, it happens over one or two years, and it is very important who administers the taxes. People need to understand that if they do not legalizers, they will have a problem. And now, while they have the opportunity to negotiate, they will not be legalized, and it will be just a hole in the budget.

– Many people don’t legalizers after all not from good life…

– I understand that perfectly, but there are those for whom the principle is not to repay their debts and not pay taxes.

– Whether to develop the industry without government?

– We now have a unique situation. I had many meetings with investors, and they understand that Ukraine is competitive in terms of labor cost. They know that our workforce is well educated, professional, and because of devaluation we have become very attractive for investment. So there is more market-based reasons why will come here investment. In order to make the economy, it is necessary to remove the blood clots. And blood clots is that too many companies are in state ownership. I don’t believe that the state can be an effective owner. I for the speedy privatization, because I see what is happening with our businesses. When an entity is a state, but de facto is not so, in practice someone de facto control of the enterprise, draws all the juices, but nothing investing. And fight to the investment occurred at the expense of the state. And when the enterprise is in private hands, then you’re investing in. So the first is privatisation. The second is to improve the investment climate here. Money the country has not come, so you first need to improve the investment climate, and then think about some benefits. The investment climate – that is, how does the law enforcement system, regulatory authorities, courts. If we have a bad investment climate, these benefits will go into the pocket is not quite honest people.

“Last year Ukraine managed to write off part of the external debt, but with 2021, we will have to pay the creditors from 15 to 40% of GDP. If we can raise the issue of revision of these commitments?

– We need to get used to the fact that we are not in a vacuum. We are a state and we have people who represent the state. Restructuring – this was the position of Ukraine. We have agreed with our external partners on such terms. I don’t see how to revise these terms and conditions. I think that we need to find other tools, but they exist, and for a review see neither possible nor appropriate. We must always make responsible decisions, thinking about how it will affect our future.

– The law 4542, which proposes to exempt from taxation all pensions, regardless of size, however, retained tax for working pensioners. Don’t you think that there is a contradiction there?

– The question now is that we can now afford to do. We need to properly carry out pension reform to remove all injustice. We have no global understanding of what should be. We really need a fair pension reform. We need comprehensive reform.

Banks is currently implementing a corresponding service, which will Fund the budget items. This is done to control public funds. Such things do lead to effective control?

– I always approach the issues comprehensively and does not believe in point solutions. I am now much engaged in the question of public Finance, and is an opportunity for me, as Minister of Finance, to implement all what I was thinking…. This will be the indicator of my success.

– Last year, Gontareva said that none of the big Bank system is not “will fall”. But the fate of the “Delta” indicates the opposite. Why NBU can support the big banks?

– Firstly, the NBU has limited resources. And is a key reason. Second, the national Bank should be responsible for a healthy banking system. If he sees a problem Bank that it may begin to fall, and he has no resources to support it, then there is no other solution, how to send the Bank into liquidation. To Gontareva is a very difficult task, and every decision she is given very hard. It depends on a healthy banking system. But if we have a healthy banking system, in the end, we will resume the lending that is needed now and the people and the business.

– After what happened with the national currency, there is no trust from both sides.

Is a temporary phenomenon. There is no credit – will not be the banking system.

– How do you assess the level of government administration of such large banks as “Private”? How can you put obstacles for getting funds towards irrecoverable loans?

– It is more a question to the head of the NBU. “PrivatBank” – a very creative Bank, and they use all possible ways to circumvent regulation. And NBU puts them in a very rigid framework, in order that they decided the systemic problems that exist in the Bank. The national Bank knows about it, and clearly sets for “PrivatBank” certain limits, but “PrivatBank”, being creative, trying to get around them. Not always want to live in this framework. But they have no choice.

– The Ministry of Finance owns the structure, which is engaged in the recovery of precious metals, stones during major criminal cases?

– The law provides for the establishment of such institutions. If it is under the Ministry of Finance, I this task will execute fast enough.

– The best book about the financiers?

– “Black Swan”.

– Is it true that your candidacy was considered for the post of Deputy head of the AP? This place was given for shymkiv it.

True.

– You regret that you have not got on this place?

– At that time spared. In fact, the life is long.

– Who personally invited you to work in the government Groisman?

– Was initiated by the President, and invited Groisman.

– Do you feel my friend Levochkina, under whose patronage you once worked in the coordinating center for external reforms?

– I don’t consider him a friend. We have had a working relationship. For me a friend is more than a job.

– Then you have built a plan to reform the country. Will you use best practices of the time, or they are outdated?

– Use all these best practices. We just never PR, but I have a very strong team. By the way, everyone in this team are my personal friends, because we went through a very difficult time, and due to the fact that we have our own values, our vision, we have managed to preserve the team and create a Foundation for the realization of reforms, which for many years have not been implemented.

– Is it true that when a new government was formed, you asked each Ministry to write how they see their mission?

– Yes, I requested that every Ministry said what their priorities are.

– What are the priorities of your Ministry?

– Become the engine of reform.

– Is it true that your wife and children – the citizens of Britain?

– Yes.

– And you do?

– No.

– Why?

– I long thought, but still decided to keep for themselves the possibility of a political career in Ukraine. I did not apply for citizenship, and my wife and children filed.

– What amount of cash you always have?

– I rarely carry cash.

– Where was the last time you were at the theater or at the concert?

– The last time I was at the theater in London, where he performed with Belgian dance group. My wife is a theater Director, and she is engaged in non-traditional theatre.

– Will you initiate a replacement of the leadership of the national Bank?

– I really appreciate the work of Valeria Gontareva and what she does. I think she’s a fearless man.

– What kind of charity would you be happy spending money?

– On theater activities.

– What is useless to ask?

– To appoint someone.

– If you had the option to call in the past, who would you call?

– His grandfather.

– What are the three defining signs of modern Ukraine.

– Confusion, patriotism, growth as a nation.

– Thank you very much, Alexander.

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