Ukrainian Prime Minister Arseniy Yatsenyuk said that he is facing “a totally dismantled government machine” from ousted President Viktor Yanukovych.
“This is a war-time government,” Yatsenyuk said,
speaking at an investors’ conference in Kyiv sponsored by Dragon Capital. “We
prevented Russian military operation in the eastern and southern parts of the
country.”
At the same time, since taking power after Yanukovych
fled on Feb. 22 in the wake of the EuroMaidan Revolution, Yatsenyuk said that
Ukraine’s government has been able to sign a political agreement with the
European Union as well as convince European partners to “unilaterally apply all
economic aspects” of the association agreement.
Moreover, Yatsenyuk said, Ukraine’s government is
restoring talks with international investors, donors and financial organizations
and noted that the Verkhovna Rada “passed an amended budget that can pave way
to economic recovery.”
Yatsenyuk said that the biggest challenge is selling Ukrainians
on the need for “painful economic reform,” but he believes the government can
convince the people of the wisdom of doing so.
“Everything needs to be reformed, from energy to
constitution,” he said. “We expect a version of the new constitution to emerge
in the next two weeks.”
He called the macroeconomic picture “not as good as
could be, but it’s not as bad as we feared,” Yatsenyuk said, with the expectation
this year of a 3 percent drop in gross domestic product with a flexible
exchange rate for the hryvnia.
“The government is very tough on cutting. The public
sector will be cut down 10 percent,” he said. “This will reflect on
unemployment data, but it’s the price we have to pay.”
He also talked about ways to reverse the flow of
pipelines from western neighbors, such as Slovakia, which he said could supply
Ukraine with up to 20 billion cubic meters of natural gas for $350 per 1,000
cubic meters. That would supply the nation with more than half of its annual
needs at a cheaper cost than Russia wants to start charging.
“The Slovaks can easily reverse the flow, this is not
a technical issue, this is political issue,” he said.
By denouncing the Black Sea Fleet agreement with
Ukraine, Russia paved way to increase the price charged to Ukraine by another $100,
to $500 per 1,000 cubic meters.
He called the agricultural sector “a key driver for
the Ukrainian economy” that will be supported with credit from commercial and
state banks.”
More importantly, he said that Russia must realize
that Ukraine “is an independent state, and Russian can have relation with Ukraine,
which will be a member of the European Union in the long-term prospective, and
to observe international norms,” which were violated by the Kremlin’s
annexation of Crimea.
He said the annexation will never recognized, but
expressed hope that a contact group can solve conventional issues like economic
relations, trade issues and energy.
He said that, apart from International Monetary Fund
lending, Ukraine “needs to change the security and stock commission, to make it
independent.”
In the future, he outlined a number of overhauls:
changing the general prosecutor’s office, passage of a transparent public
procurement law, development of a new tax code, end corruption in refund of
value added tax, and appointment of a new chairman of the anti-monopoly
commission.
Energy efficiency is high on the agenda, since he
called for “the highest consumption of energy per $1 of GDP,” he said. He said
that, besides finding sources in the West for energy to lessen reliance on
Russia, Ukraine will have to develop a liquefied natural gas terminal capable
of providing the nation with a few extra billion cubic meters of gas each year.
He called for continuation of higher green energy tariffs to spur the development
of renewable sources, as well as use meters on every household to encourage
conservation as the government increases utility rates to the market price.
He said that the poorest five to eight million
households will receive some sort of subsidy to offset the hardship of price
increases.
