Minister of economy designates the course: fiscal and monetary expansion are defined as priority as well as protectionist measures

UKRAINE - In Brief 27 Jul 2021 by Dmytro Boyarchuk

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There is one thing I can hardly pass by. Yesterday Vice-Prime Minister and Minister of economy Oleksiy Lyubchenko published a series of articles (in different media, see the links https://cutt.ly/RQtKuzc, https://cutt.ly/mQtNYrt) describing his economic views and also outlining the course for Ukraine’s economy. Frankly speaking, it was no surprise to read those considerations from a person who spent all his professional life in fiscal service. However, it’s really disappointing and alarming to read those things from a Vice-Prime Minister who was authorized to supervise economic development. Mr. Lyubchenko is talking about fiscal expansion fueled by monetary stimulus as the source of building the economic prosperity of Ukraine. He claims that primary deficit should be 4-5% of GDP until the economy shows sustainable growth. Mr. Lyubchenko says that Ukraine should keep negative interest rates until we see GDP steadily growing 4-5% per year. A lot of ideas to stimulate some sectors through fiscal instruments. No need to say the IMF will not like this approach. But who cares about the IMF? $2.73 billion from new SDR allocation is coming anyway. What is really disturbing – the Ukrainian leadership (I doubt Lyubchenko dared to present his personal views) has an absolute mess in their heads confusing the temporary anti-crisis measures they are observing globally with possible instruments for developing sustainable growth. What’s more, my steady concern – that impermissibly easy access to external funding will spoil Ukrainian authorities and distort their perception of reality – has finally come true. Since nothing happened during the worst days of the COVID-19 crisis, there wi...