That’s the official estimate of how much the government will have to find to boost pensions by Hr 100 per month and to pay back Hr 1,000 to people who lost their savings in Sberbank when the Soviet Union collapsed.
In a country where pensioners live from hand to mouth, an increase in payouts is welcome. But where is this money going to come from?
As Jakub Parusinski describes in his analysis in this edition, Ukraine is already struggling for cash. Yanukovych’s refusal to raise gas prices has cut off lending from the International Monetary Fund. Russia has indicated it is not prepared to offer a large discount on the gas price. International lending is only likely to be available at a punitive rate.
These handouts are an irresponsible pre-election gimmick.
By raising payouts without laying the groundwork, Yanukovych is putting the cart before the horse. It is a desperate measure to shore up his party’s sagging popularity ahead of elections.
They would make sense if they were the culmination of a strategy to boost economic growth and budget revenues implemented during the two years Yanukovych has been in office.
Instead, the authorities have preferred to fill the budget coffers by squeezing small- and medium-sized businesses for cash.
Economic growth has been over 4 percent for the past two years, which is a weak recovery given the 15 percent plunge in 2009.
The small number of economic and administrative reforms that have taken place have been poorly received by investors.
By raising payouts without laying the groundwork, Yanukovych is putting the cart before the horse. It is a desperate measure to shore up his party’s sagging popularity ahead of elections.
The opposition is hardly better. We have heard no coherent critique of the plan from them, no strategy for lifting the country’s economy, just the usual blather about fighting corruption and so on.
Ukrainians should not be fooled by the kopecks that Czar Yanukovych is casting down from his golden carriage. They are a symptom of the weakness of the country’s economy two years into his term, rather than its strength.
