Ukraine has prepared a fantastic stimulus for the economy

Prime Minister of Ukraine Denis Shmyhal in early June was supposed to represent in Parliament the programme of action of the government. This historic document on eight small pages he repeatedly praised in April-may. But something strange happened. Smigel in his speech to the Parliament spoke about the Herculean efforts of his government in the fight against the pandemic coronavirus and the tremendous progress in this fight. Emphasized presented by the government for the programme "stimulating the economy to overcome the effects of coronavirus" (the program incentive). Then asked never presented the action plan of the government to send back for revision.

Was that with the numerous claims against the underlying government program, which looks like a cheap indulgence, because its adoption would give to the government of Smugala one year of immunity from dismissal, as the Prime Minister would agree. But the incentive program described as designed to "government analysts and expert centers."

Time this beautiful document was developed by the "best of the best", it is worth to be studied.

According to the results of his study suggests several conclusions. It for the most part is not about the program, about another "fun" (except a power block). "Best of the best" know how to decently use PowerPoint or similar program. Targets outside the energy sector, drawn by the "fun", to achieve no plans, because they are contrary to earlier approved by the government of Smugala the draft Memorandum with the IMF, and not supported financially. The practical meaning of the program lies in its energy unit, which aims to reduce the costs of Ukrainian and multinational players in the energy market and shifting them to the Ukrainian consumers.

New priorities in government, which appeared in connection with the coronavirus, the incentive program has identified three:

To exit the economic crisis is crucial, of course, the last.

Ukrainian industry, even in its current pathetic state provides 23% of jobs, 31% of added value, 31% in taxes and 58% of export revenue.

The first item of the plan of development of the industry in incentive programs marked protection of Ukrainian goods, works and services from their imported counterparts. In principle, logical. Even if you take the public procurement (i.e. procurement from the budget or state-controlled enterprises), from 800 billion a year about 650 billion goes to foreigners. Such "openness" in use, essentially public money, there is probably no country in the world. But the measures proposed to achieve this look ridiculous: anti-dumping, the use of WTO mechanisms and the like. All it is practiced today. But under a system of bonded treaties concluded by Ukraine (from WTO accession to free trade areas not only with the EU but also with anybody else), but still under the control of the IMF, effective mechanisms for a country to use simply can not.

The second point implies that sectoral incentives.

According to the authors, in 1990, the share of Ukrainian industry (including construction) in GDP reached 55%, significantly higher than the similar share in Russia, Czech Republic, Romania and Poland. Today 23% is the lowest rate among the five countries. Added value in Ukrainian industry per employee in four and a half to seven times lower than in the compared four countries. At the same time Ukraine is the only country in which labor productivity in industry compared to 1990 decreased — almost twice!

But about the catastrophic state of the Ukrainian industry is known and so. Interesting that it is proposed to change through sectoral incentives.

If we exclude the slogans and initiatives of local importance, the bottom line is invited to:

These initiatives cannot be implemented. Other distinct is not offered.

In fact, in relation to the industry in the incentive program over nothing. Next, the authors moved on to other industries which are in as new priorities not previously mentioned...

In the matter of stimulating development of the agricultural sector, the main issue which is purely raw orientation, initiative is even more anecdotal.

In addition to chicken and sunflower oil, Ukraine exports to world markets almost exclusively grain and industrial crops without any processing. More recently, however, from the Tax code cleared the only rule which stimulated the processing of rapeseed and soybean, that is even more consolidated commodity status. Livestock in Ukraine is not even stagnating, and rapidly samolikvidirovalsja. For postmaydannoy years, the number of cows decreased from 2.44 to 1.78 million, and pigs from 7.76 to 5.76 million head (figures of 2013, excluding the Crimea and future LDNR). For comparison: in Russia during the same period the number of cows decreased from 8.43 to 7.96 million head, and pigs increased from 19 to 25.16 million.

All this grim situation Smigel offers to fix by a stimulation of remote sales of agricultural products and establish distribution channels for small farmers. That is not at all.

Exactly the same lack of clear initiatives for proposed options for encouraging the development of transport, services and so on.

Only the section dedicated to the stimulation of energy, full of clear promises which clearly demonstrate that Smigel not only was one of the managers of Rinat Akhmetov, but in some way they do.

For the development of the industry is invited to:

And a number of other smaller initiatives. They are not classified as stimulating energy development, and to the category to increase the profitability of doing business for energy and mining companies.

I think the rest of the stimulus programs are a smokescreen. In reality, the document was written for the power block. And just its objectives and targets can be agreed with the IMF, and implemented.