Our program of immediate steps on an exit from the crisis is based on simple and understandable principles. We proceed from the necessity:
• restoring confidence in the institutions of state power.
• revival of an economically strong state - a principle, elevated to the rank of a national idea. Ukraine should create its own national economic model, allowing it to constantly develop with high (not less than 6-7%) rates of economic growth and remain competitive in world markets, while gradually increasing the standards of living in the country.
• accentuation on the practical implementation of reforms: rapid victories that will be visible and understandable to the society, constant monitoring of the effectiveness of the implementation of laws, fixing clear criteria for the effectiveness of certain reforms, unreachability of which should trigger the mechanism of political responsibility of the government.
• substantial strengthening of the staffing of the reforms: the current facebook-activists and pseudo-reformers should be replaced by a team of professionals with a strong management experience at the state level and an understanding of how the real economy works.
Top 10 steps:
I. To stop the war and ensure peace
To ensure full implementation of the Minsk agreements. To establish a permanent ceasefire. To start an intra-Ukrainian dialogue and reconciliation. To hold elections in Donbass on Ukrainian legislation. To stop the total recruiting campaign. To facilitate the return of refugees. To amend the Constitution, which will ensure the reunification of the territories and the restoration of the full-fledged work of the Ukrainian authorities in Donbass. To hold an accelerated economic integration: to remove transport, energy, financial and social restrictions on the work with regions. The funds released after the end of the war should be directed to social payments and restoration of Donbass.
II. To immediately make changes to the budget for 2017, which will ensure economic development and social justice
Due to a revision of the unreliable macro forecast, cuts in the costs of war and the state machinery, it is possible to receive additional 98 billion UAH in the budget. The OPPOSITION BLOC suggests sending these funds to additional indexation of social standards; to increase social benefits, spend on health and education, subventions to local budgets for providing housing subsidies to the population, support regional development and stimulate economic growth. Due to these payments, the economy will receive an additional boost to growth through stimulation of domestic consumer and investment demand.
III. To cancel draconian pension reform
To cancel the increase in the special length of service (for 5 years) for state employees - doctors and teachers - and for the period of insurance for workers in particularly harmful production conditions. To cancel the 15% tax on retirement pension for working pensioners. To raise the threshold of pensions from 3 to 10 minimum wages, after which 15% of personal income tax is collected for all pensioners. To abstain from accepting new pension initiatives under the IMF program, which worsen the conditions for retirement.
IV. To increase the accessibility and quality of social services (medicine, education)
To adopt a unified strategy for health care reform and start implementing it. To approve the package of medical aid guaranteed by the state legislatively and provide it with real financing. To introduce a system of remuneration for health workers, depending on the volume and quality of work. To introduce a system of reimbursement by the state of the cost of certain prescription drugs. To provide every child in school with free textbooks. To guarantee a place in the kindergarten for every child. To stop cuts of state employees (first of all teachers and doctors) within the framework of the memorandum with the IMF. To reduce the VAT rate to 7% for socially important goods (including bread, milk, cereals).
V. To carry out a tax reform: reduce tax pressure and set incentives for activating the economy
To leave the base rate of personal income tax of 15% and a progressive scale, keep the tax social benefit at the level of 100% minimal payments. To lower the rate on the corporate profit tax from 18% to 15%. The simplified taxation system for small and medium businesses to leave unchanged for the next 3-5 years. To save until 2025 a special regime for agricultural producers with a gradual change in the proportion of VAT distribution between special accounts of farmers and the budget. To provide for the withdrawal of all reinvested profits from taxation. To eliminate debts for VAT refund. To simplify tax administration. To eliminate the tax police. To reduce time and costs when passing customs procedures.
VI. To go from the dead-end model of development on the basis of external governance and build up the national debt to the model of an investment-attractive state that is constantly evolving
To increase investment. To attract until 2020, no less than 40-50 billion dollars of foreign direct investment. To provide a share of gross accumulation of fixed capital (investments) in GDP at a level of at least 25%.
To adopt a new privatization program. To abandon the fiscal approach to privatization. The rate for the arrival of strategic investors, which can ensure the loading of production capacities, to transfer of new technologies, create new jobs. The privatization of the agricultural land should be preceded by the adoption of legislation on the land market, the completion of the formation of the land cadastre, the delimitation of the land of state and communal ownership, the formation of a system of fair land valuation, and the introduction of antimonopoly restrictions in the process of its sales and concentration. The issue of privatization itself should become the subject of an all-Ukrainian referendum.
To restore the export. To increase exports to the EU: to increase quotas for duty-free imports under the FTA agreement with the EU (primarily cereals and poultry meat); to accelerate the adaptation of EU technical standards and regulations; to reduce the cost of business to adapt to European standards. To stop the trade war and increase lost exports to the RF/CU: to ensure the uninterrupted transit of goods through the territory of the Russian Federation. To resolve problematic issues on differences in technical regulation of the EU and the CU; to achieve the lifting of the food embargo and the restoration of the most-favored-nation treatment within the FTA with the CIS. To create an export credit agency to promote Ukrainian exports to new markets.
To go to a sensible state sectoral development policy: to restore and restructure the basic industries, to stimulate the development of sectors of the economy with high added value and innovation. To create a network of regional research and production clusters (including industrial parks). To launch new financial mechanisms to accelerate growth, including by creating a state development bank and a political risk insurance fund in attracting foreign direct investment.
To carry out supporting reforms to improve the investment climate: judicial reform, strengthening the protection of property rights, to conduct deregulation (first of all, to improve the effectiveness of bankruptcy procedures; to reduce the cost and timing of accession to the energy networks, obtaining construction permits; to introduce the practice of regular regulatory guillotines at the central and local levels), to create a single web portal for administrative services, implement public-private partnership projects to improve the quality of infrastructure.
VII. To ensure energy security of the country and heat in Ukrainian homes
To increase the production of natural gas to 30 billion cubic meters per year, return to the level of coal production (80 million tons). To reduce tariffs for thermal energy by 30-40%, based on losses in networks and t° in the premises. The moratorium on raising tariffs for housing and communal services until the full indexation of salaries, pensions and social benefits.
The current procedure for the granting of subsidies should remain unchanged. To finance energy efficiency measures - to give affordable loans to the population for increasing energy efficiency (meters, replacement of boilers, windows, facade insulation, etc.) at 5% per annum, and not 20-25% as suggested by the authorities.
VIII. To restore macroeconomic and financial stability
To reduce the national debt to 60% of GDP in the long term and facilitate its maintenance. Already, to take out new external loans only if they are directed to investing in economic recovery, to make changes to the deal on restructuring the national debt (to facilitate payments on derivatives after 2021). To stabilize the banking system: recapitalize the remaining banks, increase the efficiency of removing troubled banks from the market, accelerate the clearance of problem assets, simplify bank mergers, enhance the protection of creditors' rights and the safety of deposits. To ensure the predictability of foreign exchange policy: gradually remove currency restrictions, use currency interventions more effectively, develop currency risk insurance instruments. To reduce inflation: reduce the consolidated budget deficit to below 3% of GDP (starting from 2017), stabilize exchange expectations, strengthen antimonopoly policy to prevent unjustified price increases.
IX. To start a real fight against corruption at the state level
Start a real regular check of civil servants’ declarations - compare declared income and property with their expenses and lifestyle. The rules for electronic declaration must be fulfilled by all state officials, regardless of their position. To provide “quick wins” in the work of the new anti-corruption bodies. To immediately conduct an objective investigation of high-profile facts and suspicions of senior government officials in corruption, provide the results of such an investigation and punish the perpetrators. To start a transparent system of electronic public procurement, the savings from which should not be a meager 5 billion UAH in 2016, and a minimum of 100-150 billion UAH.
X. To carry out a reform of local government and decentralization
To amend the Constitution, securing the right of local councils to form executive bodies of power on the ground. All the main spheres of vital activity of territorial communities should be in the sphere of responsibility of local self-government bodies. To consolidate in the Constitution the right of local communities to hold deliberative referendums and plebiscites. To strengthen fiscal decentralization: adopt updated standards for the provision of social services and, on this basis, revise the system of interbudgetary transfers; To secure reliable sources of income for local budgets (personal income tax - totally, 50% of the profit tax), own revenues of local budgets (i.e without taking into account transfers) should be at least a third of the consolidated budget.