The April inflation at 3.1% means that the Cabinet of Ministers of Yulia Tymoshenko cannot cope with the negative processes in the country’s economics, regardless of the reassuring statements reiterated by the government.
President’s Chief of Staff Victor Baloha said this in a statement on Thursday, according to the President`s press-office.
He noted that, as for him, the inflation recorded in April is too high, because, traditionally, namely April inflation processes always near zero. In particular, last year, the April inflation was zero, in 2006 it made up minus 0.4, in 2003-05, it made 0.7%. “So, only gullible people may be consoled with the enthusiastic government’s reports about the decline in inflation. In truth, no traces are indicating that the inflation will be curbed in two-three months”, the President’s Chief of Staff believes.
Considering the current situation, the Cabinet of Ministers should urgently submit to the Verkhovna Rada amendments to this-year’s State Budget, with corrected macroeconomic and social showings, first of all, the living wage level. The amendments should base upon the current economic conditions and the forecast of economic processes development in Ukraine. The amounts of pensions, social grants-in-aid, and other payments, depend namely on the correct calculation of the living wage.
Instead, V.Baloha emphasizes, the government makes a series of decisions that threaten the Ukrainian economics with serious problems. “Thus, to achieve a short-time positive effect, they apply measures with a slow undermining effect. In particular, the government allowed to import meat and sugar in Ukraine from abroad without levying the customs duty. The volume of imported production, which will be thrown at the internal market, is kept a secret. The supplies will be carried out only by the State Reserve, other importers were removed from participating”, the President’s Chief of Staff noted.
“Everybody can notice a double monopoly: economical (the imported meat and sugar will be supplied by one and only structure), and political (the State Reserve is headed by a BYuT representative). But, it could be worse. In reality, the unlimited inflow of foodstuffs at the internal market will knock out the native producers. In fact, the Cabinet of Ministers expects to create an illusion of saturating the market, with slowing down prices through the mass food products intervention. All this happens to the accompaniment of statements about overcoming the crisis by a team of professionals. However, this paradisiacal pleasure will not last forever, and a significant undermining of the native food industry capacities will become the payment for it. Besides, these actions of government are contrary to the demands of President to protect the native producer”, V.Baloha believes.
V.Baloha also commented on the Wednesday’s resolution of the Cabinet of Ministers on introducing the Single Tariff Network for budget sphere employees, which was earlier planned to introduce at November 1. In his opinion, in such a way, the budget will shoulder an additional burden at hundreds of millions of hryvnias, which will be paid for increased salaries and social payments. “This step indicates that the incumbent government is preparing to resign considering the perspective of the election. The Yulia Tymoshenko’s Cabinet of Ministers will certainly reckon the growth of salaries among its final merits for people. Of course, it will be a beautiful PR-masking of the crisis processes, which will appear in the economics in autumn as a result of the inefficient policy and poorly thought-out decisions. Clearly, the responsibility is out of question”, V.Baloha is convinced.
The President’s Chief of Staff criticizes the anti-inflation efforts of the government, saying that they only deepen the negative developments in the economics and cause economical disproportion. According to him, “indeed, the grain and sunflower oil export quotas were not canceled, despite the government’s statements. As of today, hundreds of tons of grain have accumulated in ports, storehouses are overloaded with sunflower oil. At the same time, the retail prices on bread and sunflower oil are not reducing, and storehouses are not prepared for the new harvest”.
The Cabinet of Ministers, instead of restricting the cash turnover, unsecured with commodities, is trying not to hold the funds that must have been directed at production of commodities. As a result, banking credits to agriculture have trimmed by 40%, and interest rates in banks have soared. “The effect similar to that of a man with a short blanket: if he covers legs, his head feels cold, and when he covers his head, his legs freeze. The Cabinet of Ministers has not proposed as yet any program of anti-inflation, anti-crisis measures”, V.Baloha said.
