A Press Conference
14 September 2009
A Press Conference at Glavred-Media
A press conference on the topic of “Raising the Social Standards: Do Our Wishes Match the Means?" was held at the Glavred-Media media holding’s building on 14 September, 2009.
The press conference presenters included:
- Iryna Shcherbyna, Director General of the Institute for Budgetary and Socio-Economic Research;
- Hanna Herman, People’s Deputy of Ukraine.
The press conference focused on a recent initiative by the Regions’ Party calling to raise the social standards. IBSER was invited to present an independent expert opinion with regard to a possible impact of such an increase on the balancing of the State budget in 2010.
IBSER experts believe that such a suggestion is worthy of consideration from the economic perspective. On the other hand, if increase in social benefits takes places at the expense of “non-fiscal influence on the budget revenues,” and also if the budget revenues are boosted through issue of additional money supply rather than restructuring the industry and supporting the banking sector, “any raising of social standards” will, in the final account, lead to another surge of inflation, and as the result of this, to further impoverishment of the population.
The expert believes budget revenues do not result from economic recovery, mostly, these are inflationary receipts. The State budget of Ukraine is being fulfilled nominally, since in reality all the key sources of budget revenues, such as VAT, tax on profit, and import duty "have decreased significantly compared to last year's revenues." This is indicative of the fact that "the printing press has been turned on."
According to the data of IBSER experts, even based on the results of seven months of 2009, the average national nominal and real personal income decreased by Hr 100, and “taking into account the rising prices, we can realize for how much the population's purchasing power has declined," Ms. Shcherbyna said.
She underlined that raising of social standards without a simultaneous support to the real sector of the economy “might give a negative effect to such an effective mechanism for support of the population.”
Ms. Shcherbyna has also noted that without reorienting the economy, no budget would be able to help the country. The only advice for the 2010 State budget: Structures must be changed, programs under which money are channeled into the real sector of the economy must be revised — these must not be simply the funds provided to support the payroll, even though this is also a necessary step. First of all, sectors in the economy will need to be reoriented, and Ukraine must clearly define the prospects for its place on foreign markets. If it is not done today, the country might join the outsiders of the economic progress, and then, no budget would be able support resolution of any social problems.
Besides, no reforms have been implemented in the sectors of public health, education, and social security for years. Thus, the only option is a clear national strategy with regard to the role of Ukraine as a state in foreign economic and internal economic processes.
The press conference presenters included:
- Iryna Shcherbyna, Director General of the Institute for Budgetary and Socio-Economic Research;
- Hanna Herman, People’s Deputy of Ukraine.
The press conference focused on a recent initiative by the Regions’ Party calling to raise the social standards. IBSER was invited to present an independent expert opinion with regard to a possible impact of such an increase on the balancing of the State budget in 2010.
IBSER experts believe that such a suggestion is worthy of consideration from the economic perspective. On the other hand, if increase in social benefits takes places at the expense of “non-fiscal influence on the budget revenues,” and also if the budget revenues are boosted through issue of additional money supply rather than restructuring the industry and supporting the banking sector, “any raising of social standards” will, in the final account, lead to another surge of inflation, and as the result of this, to further impoverishment of the population.
The expert believes budget revenues do not result from economic recovery, mostly, these are inflationary receipts. The State budget of Ukraine is being fulfilled nominally, since in reality all the key sources of budget revenues, such as VAT, tax on profit, and import duty "have decreased significantly compared to last year's revenues." This is indicative of the fact that "the printing press has been turned on."
According to the data of IBSER experts, even based on the results of seven months of 2009, the average national nominal and real personal income decreased by Hr 100, and “taking into account the rising prices, we can realize for how much the population's purchasing power has declined," Ms. Shcherbyna said.
She underlined that raising of social standards without a simultaneous support to the real sector of the economy “might give a negative effect to such an effective mechanism for support of the population.”
Ms. Shcherbyna has also noted that without reorienting the economy, no budget would be able to help the country. The only advice for the 2010 State budget: Structures must be changed, programs under which money are channeled into the real sector of the economy must be revised — these must not be simply the funds provided to support the payroll, even though this is also a necessary step. First of all, sectors in the economy will need to be reoriented, and Ukraine must clearly define the prospects for its place on foreign markets. If it is not done today, the country might join the outsiders of the economic progress, and then, no budget would be able support resolution of any social problems.Besides, no reforms have been implemented in the sectors of public health, education, and social security for years. Thus, the only option is a clear national strategy with regard to the role of Ukraine as a state in foreign economic and internal economic processes.
Prepared based on materials of the Glavred-Media Website.
Glyanec