| Strategic Goals of Government Policy |
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- Human development;
- Reduction of the poverty level and increase in the nation’s wealth;
- Increase in competitiveness of national economy;
- Ensuring of the rights and freedoms of the individual, the citizen, society and the state;
- Ukraine’s integration into the European Union.
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| Main Steps of the Government on the Start of the New Policy |
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- Non-deficit budget and severe expenditures restraint;
- Foreign debt restructuring, allocation of funds for social development;
- Stability of hryvnia under floating exchange rate — reliable reference point for businessmen;
- Availability of banking credits.
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| Directions of Social Sector Reform |
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- The President approved the Government’s Main directions of social policy till year 2004;
- Minimum wage was raised to 118 hryvnas starting on July 1, 2000;
- Funds for mandatory state social insurance in case of unemployment and accident were created. Laws on pension insurance and social insurance in case of temporary loss of health were drafted;
- Indexing of income for state financial support to single disabled citizens was implemented;
- Minimal social standards to be implemented starting in 2001.
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| Quality of People’s Life |
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- of real GDP by 5,0% versus January-June last year;
- real incomes by 11,6% in January-June (last year 11,8%).
Real cash income of population
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| Directions for pension system reforms |
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- Pension indexing;
- pension expenditures by almost 800 mill. hrv. versus the same period of 1999;
- First steps were made to implement pension system based on level of contribution;
- Personifying registration of Pension Fund revenues was implemented in 550 districts and cities of Ukraine and involved 18,9 mill. people (around 90 percent of all employed).
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| Social Security |
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- Expenditures on education, health care, social security 1.5 percent as % of GDP, versus January-May last year;
- almost twice the financing of State Social Security System for disabled versus 1999;
- 2,9 million families received subsidies for communal services, totaling 176 mill.hryvna per month;
- 2,8 million families received assistance for children totaling 50 mill. hryvna per month;
- 24 centers for rehabilitation of disabled children, 284 programs for support of orphans and disabled children are now in place;
- 278 hostels for elderly work on a permanent basis and 725 territorial centers of social services now in place providing services for 570,000 elderly at their homes.
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| Pension Indexing |
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| Paying Down Wage and Pension Arrears |
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mill.hrv.
| June 1, 1999 | June 1, 2000 | 01.06.2000 as % to 01.06.1999 |
| Wage arrears* | 7013,5 | 6355,6 | 90,6 |
| Wage arrears in Government sector of the economy | 2817,8 | 2171,4 | 77,1 |
| Including out of budget funds | 857,9 | 482,1 | 56,2 |
| Wage arrears in Non-government sector | 4195,7 | 4184,2 | 99,7 |
| Excluding agricultural sector | 2255,9 | 2052,6 | 91,0 |
| Pension arrears and pecuniary aid arrears | 2175,1 | 1059,6 | 48,7 |
| Stipends arrears and cash security to students, cadets, pupils | 94,7 | 15,7 | 16,6 |
* as of 10th day.
Source: Ukrainian state Statistics Committee.
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| Development of Education |
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- New content and structure of general secondary education with 12-years time-framework;
- Guaranteed provision of textbooks for new university entrants starting on January 1, 2001;
- Long-term credits at low rates for higher education (1500 places for next school year);
- expenditures on education by 0,4% as percentage of GDP versus over 6 month of 1999.
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| Employment and Labor Market in January-June of year 2000 |
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- almost 4 times rate of increase in registered unemployment;
- youth unemployment by 4% since the beginning of the year;
- overall amount of registered vacancies by 1,5 times since the beginning of the year;
- of unemployment benefits from 47,6 hryvnas in January 2000 up to 51,85 hryvnas in June;
- full paying down of the unemployment benefit and financing of employment programs.
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| Economic Growth |
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Economic conditions in the 1st half of 2000 have been the most encouraging since the beginning of reform process.
Indicators | ²st half of
1999 | ²st half of
2000 |
GDP (January-May data) | -4,5 % | +5,4 % |
Industry | -1,1 % | +10,8 % |
Leaders in growth Light
Food
Woodworking
Non-ferrous
Ferrous
Engineering | -2,9 %
+4,6 %
+13,3 %
+1,4 %
-3,5 %
-5,3 % | +33,8 %
+30,6 %
+34,6 %
+20,9 %
+18,6 %
+9,1 % |
| The amount of sectors (out of 10 main sectors) that their production has increased | 4 | 8 |
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| Sectors - Leaders in Growth |
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% change to the same period of last year
Creation of Macroeconomic Conditions for Growth. Balance and Predictability of Government Budget
- Budget consolidates all non-budget resources and funds, including social insurance;
- Number of budget fund trustees is reduced by 3 times;
- Commission of local authorities expanded;
- Control over revenues and expenditures increased;
- Elimination of non-cash tax payments.
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| NBU Interventions and Exchange Rate |
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| Macroeconomic Objectives for the 1st Half of the Year are Implemented |
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- Production increase has ensured budget revenues and allowed to increase social payments but ...
short-term factors are being exhausted:
- Inflation is higher than devaluation (January-June 18,7% versus 4,25%);
- Imports substitution opportunities are shrinking;
- Recession of 1999 has been overcome and production levels of 1998 have been reached.
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| Risks to Future Growth Prospects |
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- Problem of nonpayments persists;
- Limited progress to date in reforming key sectors of energy and agriculture;
- Financial and banking systems remain weak;
- Moderate progress in restructuring and production modernization.
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| Government Actions Towards a More Competitive Economy |
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- Improvement of the legislative base for the implementation of competitive relations in the energy, agricultural and other markets;
- Implementation of procedures on resumption of debtor solvency and declaration of bankruptcy;
- To support business and promotion of enterprises that form the “growth centres” in the economy;
- Attraction of investments through the expansion of cash privatization and insurance market development.
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| Energy Market Functioning |
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- Elimination of non-cash form of payments for energy;
- Collection of money for consumed energy now comes up to 34,2%;
- Use of clearing account for energy payments will increase control over them;
- Diversification of oil sources in Ukraine; financing for oil pipeline “Odessa-Brody” and oil terminal “Pivdennyi” construction;
- Tax privileges for imports of diesel and crude oil;
- Implementation of tenders for oil, gas and coal.
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| Agricultural Sector: New Conditions of Functioning |
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- Reforming of collective agricultural enterprises based on property rights;
- Introduction of market mechanisms in the system of providing rural area with materials and machinery;
- New mechanisms of Agro-Industrial Complex crediting: offsetting of the part of commercial banks credits by Government by 175 mill. hrv. (50% of NBU interest rate);
- Remained credit liabilities as of June 1 are 689 mill. hrv.; by 76,7% since the beginning of the year (over 1999 – by 18,5%);
- Writing off and restructuring of preceding years liabilities of enterprises that were reformed;
- Activation in forming and functioning of agricultural market infrastructure.
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| Reforming of Agricultural Sector |
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- 11276 entities were reorganized , and 13279 new agrarian entities were created based on them;
- 6,2 million people received certificates that prove the right for land share;
- 5,6 million people (90 percent) set up agreements for lease of land shares and 4,05 million people (64 percent) for lease of property.
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| Tax Burden Reductio |
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- Elimination of highway-user tax and centralization of amortization fund resources in year 2000;
- Tax Code envisions:
- profit tax from 30 down to 25-20%;
- VAT from 20 down to 17%;
- personal income tax from 40 down to 20-10%.
Source: Ministry of Economy of Ukraine, Monitoring of the Implementation of Cabinet of Ministries of Ukraine Program “Reforms for Prosperity”. |
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