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Oleksandr Shlapak: We are Sure That We Will Manage to Bring Common Sense Back to the Ukrainian Economy

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Kyiv, 10 March 2014 – Oleksandr Shlapak, Minister of Finance of Ukraine, said that despite the complicated situation in the country, the government is meeting its obligations in full and in time with regards to making protected budgetary payments, such as salaries, pensions and social subsidies, payment of energy and utility bills etc. Also, there are no delays in receiving revenues from the regions, and social subsidies are being paid to all regions of Ukraine without any exceptions. Mr. Shlapak made a special emphasis on the fact that that the Crimean Treasury is functioning normally, saying that all scheduled payments were transferred to the peninsula on Friday.

According to Mr. Shlapak, the main goals for today are:

– Keeping the financial and economic situation in the country stable, given the current difficult conditions, by relinquishing governmental programs, capital and operating expenses;

– Cleaning the Augean stables, i.e. bringing the Ukrainian financial system to order by simplifying procedures for the conduct of business, balancing state programs to reveal the existing corrupt schemes and prevent new ones from occurring, identify the guilty persons, form professional teams at all levels and restore the work of non-governmental organizations whose main aim is to control the actions of the government.

Oleksandr Shlapak noted that an unprecedented economic stagnation has taken place in the country over the last 22 months. Furthermore, over the recent years a 15-fold increase in debt has been observed with the proportion of mandatory deductions reaching 91.2% and social payments being made at the cost of new foreign loans and burning through the gold and foreign currency reserve. The apparent budget deficit in 2014 is UAH70bn while the latent deficit is UAH50bn. In addition, only this year the country has to return approximately USD10bn of external debt. To stabilize the situation, the ministry is preparing a package of documents which will help significantly reduce budgetary expenditures, primarily by way of stopping any expenditures for governmental authorities at the central and regional levels (purchases of equipment, vehicles, cell phone fees etc.). Financing restrictions will also apply to the police, state security service and prosecutor offices. The only exception is the army whose financing is planned to be increased by the Government. In general, expenditure cuts will apply to 300-400 various items.

Commenting on the pace of changes, Mr. Shlapak said that within 2-3 weeks the ministry is planning to submit draft changes to the budget which, once approved by the Verkhovna Rada, will make it possible to begin concrete negotiations with IMF on the provision of a 15-year loan with the annual interest rate of 2% payable starting from year six. In contrast with the Russia’s proposal which was accepted at the end of the last year, this one has no political implications since it does not require any strategic changes, such as the sale of Ukraine’s gas transportation system.

In response to the questions about engaging international experts to reform the financial system, Mr. Shlapak said, ‘we are being contacted by various experts and organizations who offer their assistance in reforming the budget system of Ukraine, including the IMF, World Bank, experts from Germany and Switzerland. We are sure that we will manage to make the changes for which Maidan has been standing.’

Oleksandr Shlapak is the current Minister of Finance of Ukraine since 27 February 2014.  From 1998 to 2010 he served in various public positions: head of the group of advisors to the Vice Prime Minister of Ukraine for Economy (1998-2000); deputy Minister (2000-2001), Minister of Economy of Ukraine (2001); Minister of Economy and European Integration of Ukraine (2001-2002); Member of the National Security and Defense Council of Ukraine (2001 –2002); Deputy Chairman of the National Bank of Ukraine (2003-2004); Head of the State Treasury of Ukraine (2005-2006); Head of the Social and Economic Development Service at the Secretariat of the President of Ukraine (2006-2007); First Deputy Head of the Secretariat of the President of Ukraine – representative of the President at the Cabinet of Minisers of Ukraine (2007-2010). In 2010 – 2014 Oleksandr Shlapak worked as Vice President of IMG Internaional Holding Company LLC and continues to serve as Co-President of the Polish-Ukrainian Chamber of Commerce and Vice-President of the Association of Taxpayers on a pro bono basis.


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