The ninth wave Groisman: Who will cover the new wave of the crisis

Девятый вал Гройсмана: Кого накроет новая волна кризиса

In the frenzy of economic activity Volodymyr Groysman “burns”, Arseniy Yatsenyuk quiet giggles. For superability citizens on Wednesday, April 27, at the Cabinet meeting, the Prime Minister explained that Ukraine has obligations to the IMF (and not to “cheerful” Ukrainians) in the framework of the extended Fund, according to which gas prices from may 1 will be 100% fit its value.

In this context, what macroeconomic risks by the end of 2016 see? First of all, God forbid, not to collapse completely to the economy of Ukraine. Further – to keep under control unemployment. Not to exhaust reserves. To keep afloat banks and corporations with highly leveraged. Accordingly, to prevent a sudden surge of inflation.

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Now popularly explain to the Prime Minister Groisman, if rising prices, falling wages, it will increase unemployment. This is stagflation: a decline in production plus inflation. This is a serious economic disease. Rising gas prices do not cure it. So, no doubt, as Yatsenyuk before his resignation, and will now help officials by increasing their salaries, and will also raise pensions to pensioners. These two categories of citizens are the most numerous and basic to support the current government.

However, while nobody knows what will be in 2016 in Ukraine, but everyone expects early parliamentary elections. Therefore, the ruling elite will continue to target social spending on these voters to solve their electoral tasks. And again no one will implement anti-crisis measures, which means that the economy is in manual control and will continue to fall.

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And with these new Ministers, we will deal with the fact that our expenses will exceed our revenues. Our multimillionaires in power all of us are taught, or rather, already used to the feeling that we should be happy even hundreds of thousands of sponsorship from Romania. Moreover, these same high officials in Brioni with inimitable self-congratulation quickly and easily transferred from the recession the corporate sector to the population.

Recall, Yatsenyuk acted as follows: the first stage – a collapse of investment, the second is the drastic reduction of salaries, third – savings on employment. And for some reason my colleagues thought that this wave of the crisis Yatsenyuk is the most powerful. However, Aivazovsky I remember that the strongest is the ninth wave. And if at all we after may 1 will cover the tsunami from Groisman?! Clearly, the worst is ahead. Apparently, after may 1, the epicenter of the crisis will be to actively move to such quality indicators as access to health services and medicines, the anxiety level in the society, mortality, degree of alcoholization of the population, the structure of the consumer basket.

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How to solve these problems? So what must we do? First of all, move on to another structure of the economy, focusing on the countries of Eastern Europe. This must have to change the institutions, including political ones. But what is ahead and what is behind, may now prompt Leszek Balcerowicz. For me personally, one thing is clear: the will of society and state should be United. This is especially true because Prime Minister Vladimir Groisman in the short term there is no choice, none at all.

Why? Because a further reduction in government spending will further squeeze domestic demand and generate further reductions in revenues. And the equilibrium point can be achieved at the level of a much deeper recession than it would be if the Cabinet has spent the budget in large volumes. But Groisman already just can’t support a program of budgetary incentives. It will be a heavy blow to the potential exit from the prolonged recession. What’s next? I am convinced that the best solution to stabilize the situation with the subsequent exit on a trajectory of growth is not to try to pay the debts and to declare a default.

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In this regard, thinking on the subject, could not answer fellow Americans, and it is difficult to understand why we exist in the most complex and expensive way. Why to a fork in the Ukraine chooses the most optimal way? At the same time, it is hoped that in this war we will win. And will the new economy, investment will come. But, again, we win again the most cost-effective way. In all our wars we win the most difficult, resource-intensive and too expensive.

For example, yesterday ended a two-day Forum of exporters in the Ukrainian chamber of Commerce. Particularly vivid impression left from meaningful conversations with Chinese colleagues and, in particular, with Liu Jun, counselor for economic Affairs at the Embassy of China in Ukraine. And what do you think, previously announced as speakers Groisman and Kubiv were here? Alas. For all the government “sweated” Ksenia Lyapina. It seems that it is more other in government is responsible for export. And she holds the position of Chairman of the State regulatory service of Ukraine.

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My foreign interlocutors also told me that if our economy verhandelingen if the property sverhkontsentratsiya if taxes too much, finally, if monetary policy causes a bunch of issues, it is called running with weights. Roughly speaking, too late to drink Borjomi, when the kidneys (banks and enterprises) fell off from the economy. The government has not transformed, so in the next couple of months the government will have the “pleasure” to encounter a very harsh assessment of the market.

Finally, the current situation is a half-step to a real default. But changing the composition of the Cabinet is the real harbinger of a great default, which can happen. And the first scandal of offshore newly minted Minister of Finance – this is another move in this direction for the evaluation of our Western partners. As our Finance Minister can now speak about fight against corruption and the crisis, if we are even more immersed in the financial and state crisis?! It makes one think and the IMF representatives that the methods that have been selected in 2014, is not effective.

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But we have good opportunities for USA, EU and China to create for themselves in Ukraine spare the labour market. We’re afraid of something? Or the Cabinet does not know how to do it? Therefore, the Prime Minister Groysman obliged to say that he intends to do the Cabinet, his national idea. After that, to build effective work of the state apparatus to develop concrete measures to rescue the economy. And the main thing – to respect and understand people for whom the government is supposed to work, protecting the interests of the state. When it finally start fighting with the big theft by officials, the money to “white” flowed in the budget, and not “black” in their pockets.

But, unfortunately, only MPs and Ministers – first guys in a dying village – remained the expectation of the growth of our markets. The rest are not in trend now, waiting for the sad fate. There is no motivation among the participants in the market. Recently, I enlightened one of my old friend the businessman, summing up: “in our country, the lack of wage growth and a sharp increase in inequality increasingly spreading opinion that the collapse of the economy, benefit only the elite of the Maidan”.

In short, will not be an evolutionary stage of development, will continue the process of rapid destruction. And in this collapse now there are a lot of stakeholders. As we lived on a volcano, on it and continue to live. Output power not sees. If previously, when the government of Arseniy Yatsenyuk we lived in conditions of permanent aggravation of the crisis, but now due to the lack of the program of the Cabinet of Ministers Volodymyr Groysman we are not just in a situation of a deep recession, and the unpredictable state of development of this major crisis.

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Although the alternative to the current economic policy in Ukraine is. There is also global experience, in particular the Polish and American markets, which proves it (what I studied in Warsaw and in Washington). But such economic development of Ukraine does not meet the interests of those who today we have political and economic power. Therefore, I said to my foreign colleagues, dear citizens of Ukraine, you must deal with defending its interests through political and social methods to build trade unions, civil society organizations, supporting their party. Then the economy will not collapse and will develop. But with other goals and reaching results – not those that are now. So tell me, truthfully and frankly.

Alexander GONCHAROV, the Director of the Institute for development of economy of Ukraine

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