Ukrainian depositors of the former USSR’s Savings Bank will be able to receive up to Hr 1,000 ($200) in compensation through the state-owned Oschadbank beginning Jan. 11
eginning Jan.11, Prime Minister Yulia Tymoshenko said during a Cabinet of Ministers meeting on Jan. 9. Earlier this month Oshchadbank announced it will compile a registry of depositors who lost their savings and opened a telephone hotline to field questions.
Compensating former Sberbank depositors who lost all their savings after the USSR collapsed was a central issue in the Yulia Tymoshenko Bloc’s election campaign and one that has received much attention since Tymoshenko’s return to government.
The total volume owed to Ukrainian depositors is estimated at over Hr 120 billion ($24 billion). Political opponents and some analysts criticized Tymoshenko’s plans to pay back the lost savings as “populist” and dangerous for Ukraine’s economy. Tymoshenko, however, promised to resign if the government does not repay the lost savings in two years. Her government plans to reimburse Hr 6 billion ($1.2 billion) through direct payments this year.
An additional Hr 2 billion ($400 million) will be virtually compensated as reciprocal payment for housing and communal utility debts. According to the procedure, depositors will receive up to Hr 1,000 ($200) three days after inclusion into Oschadbank’s registry.
Along with monies already earmarked for compensation in the state budget, the government plans to raise additional funds through privatization. Vasyl Yurchyshyn, director of economic programs at the Razumkov Center for Economic and Political Studies, a Kyiv-based think tank, noted that privatization has not been successful in the past three years and relying on the sale of state assets to raise extra funds is problematic. Nevertheless, the government’s compensation mechanisms seem to be quite sensible, despite presenting certain risks, Yurchyshyn said.
“Compensations are accompanied with increased pensions and social transfers, and it may lead to higher cumulative effect, which in turn may cause inflation and result in higher prices,” said Yurchyshyn. He added the government should pay more attention to non-cash mechanisms of reimbursement, like state bonds and securities and should closely monitor the compensation process.
