finance & markets

Roman Shpek

16.01.2015 |

Perhaps, absence of new negative events and unpleasant surprises is the main positive things that can be expected in 2015 financial year.

There is no need to expect a significant improvement in the situation in Ukraine. There are no outside prerequisites for that. Reduction of Ukrainian exports persists, the situation in the east of the country remains extremely complicated leading to a strong decline in production of many industries both in the ATO zone and beyond its borders. At the same time the trajectory of economic development is literally covered in various risks.

I am impressed that the government and the NBU went from fantastic expectations of economic growth in 2015 to a much more realistic forecast of reduction of real GDP by another 4 5%. Yet so far the pace of work on the rise in 2016 2018 is depressing. The dynamics of the reform is unsatisfactory.

In 2015 cooperation with the IMF will play a decisive role in the life of the country. First of all, without loans from donors the currency balance the state simply cannot be drawn. Ukraine will have to pay more than US $9 bn for foreign currency loans, and the volume of foreign exchange reserves of the country will certainly be below this level.

Secondly, in terms of passivity of authorities the IMF becomes the main engine of reform. The fight against corruption, transparency and efficiency of public finances, formation of stable monetary and exchange rate policies all those are key strategic objectives for present-day Ukraine. And they are the keynotes of the program of cooperation with donors. But I do not really understand the logic: we will do something, blandish the IMF and then we will get a loan. That is, we take the loan and come up with the way to pay it back later. But Ukraine needs fulfillment of the terms of the Funds program a lot more than the IMF. How can private investors and lenders restore their faith in Ukraine if it would violate agreements with the major borrower on which its solvency depends entirely? The question is rhetorical.

In general, 2015 will be difficult for Ukraine and extremely important at the same time. The countrys fate will depend on the decisions it makes during the year and its confidence in implementation of reforms. The past year has demonstrated that the bar was set high. People will no longer tolerate small talks of stability instead of development, and at the same time the very existence of the state was jeopardized. I do not think that the danger was as acute in terms of successful economic policy in the previous years.

The last ten years were lost. Ukraines falling behind other countries in most economic indicators during this period has increased markedly, and the volume of the economy has not changed.

Instead of reforms Ukraine enjoys beautiful slogans and self-deception with great and small achievements, which the world somehow did not notice. The current situation gives a very distinct message: there might be no next chance to get out of the vicious circle of self-deception. We should keep this in mind making plans for 2015.

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