The economy of Ukraine today is going through quite difficult times. There is a negative trend in almost all economic indicators.
The need for austerity in 2014
Due to political instability, according to expert forecasts, the economy of Ukraine in 2014 should be within the framework of austerity, as GDP is expected to increase by only 3% with inflation rising by more than 8%. At the same time, nominal GDP will be very low (slightly above 7%). This will not allow indexing of social expenditures upward. Thus, the government prepares the population for a certain budgetary savings.
The economy of Ukraine, the forecast of its main indicators this year is only 3% growth. These figures are contained in the relevant government bill submitted to the Supreme Council. At similar rates of GDP growth (very low for modern economic conditions), the economy in the country will not be able to reach even the pre-crisis level. A similar situation will be traced for a couple of next years.
IMF tranches - way out of crisis?
Unfortunately, the modern economy of Ukraine focuses only on external borrowing. So, negotiations are ongoing with the IMF, as a result of which the first tranche will go to the state in May of this year. However, considering the directions in which these loan funds will go, you can see that they will simply be “eaten up”, since we are only talking about replenishing the country's reserve fund , as well as paying salaries and covering social needs. Nothing is said about investing these financial resources in the development of the Ukrainian economy, raising such industries as metallurgy and mechanical engineering. But it is precisely these industries that could bring considerable revenue to the state treasury in the near future.
Fiscal policy
In connection with the upcoming presidential elections in Ukraine (May 25, 2014), a lot of attention is paid by the current government to the field of taxation. At meetings of the Supreme Council, the next changes to the Tax Code and other regulatory acts governing the tax system are considered. Such measures can be considered populist and ineffective, as the Ukrainian economy will not be able to compensate for any decrease in the level of budget revenues by reducing tax revenues. In the current crisis in many countries, the main burden falls on the business sector. Yes, there is a possibility that a certain part of the business will go into the “shadow” or the withdrawal of assets abroad. But these will be units, and the main part will “tighten the belts” harder and will work on until better times.
The main burden falls on the population
It is safe to say that in the pursuit of financial resources from the IMF by the Ukrainian government, the main burden is shifted to ordinary Ukrainians. So, from May 1, 2014 gas has already risen in price for the population by one and a half times. The next step will be to reduce various
social benefits. In other words, all IMF conditions are met.
To summarize the above, it is necessary to note the following: the economy of Ukraine is in a rather difficult state, the way out of which is seen by leading economists only in the development of the main budget-forming sectors. Moreover, any expansion of production at the moment is possible only with the participation of the state, since now it is not necessary to wait for five years for foreign investment. In these difficult economic conditions, the support of the population is of no small importance, and the simplification of the taxation system for business should be in second place.