The restoration of economic growth in Ukraine is unsatisfactory: according to recent data by the State Statistics Service, in the 2nd quarter of this year, the real GDP increased by mere 5.7 percent compared to the 2nd quarter of 2020, even though the Q2 2020 GDP had fell by 11.4 percent compared to the same period in 2019. Given the above, MP Serhiy Lovochkin sent an inquiry to Prime Minister Denys Shmyhal and called for measures aimed at accelerating economic growth, especially during the finalization of the draft bill of the state budget-2022 by the Cabinet.
The politician cited data that the real GDP of the European Union in the second quarter of 2021 increased by 2.1 percent compared to the previous quarter, in the UK — by 4.8 percent, Latvia — by 4.4 percent, Hungary — by 2.7 percent, Poland — by 2.1 percent, Slovakia — by 2 percent, Slovenia — by 1.9 percent, Romania by 1.8 percent, while Ukraine’s real GDP had decreased by 0.7 percent.
“One of the main reasons behind the situation is extremely low volumes and lack of consistency in state support for the development of the economy and its basic industries. This is evidenced by the draft State Budget-2022 bill prepared by the Cabinet in which expenses on ‘Financial support for agricultural producers’ are proposed to be cut to 4.4 billion hryvnia, which is by 100 million hryvnia less than this year,” the inquiry reads.
The MP reminded that in 2019, almost 5.8 billion hryvnia was allocated to support the industry, and before the special VAT regime was cancelled, the amount of direct and indirect support exceeded 20 billion hryvnia. It is proposed to keep the volume of state support for the coal industry at current year’s level, which deprives the industry of the opportunities to significantly increase the supply of the nation’s energy sector with domestic coal. Budget allocations for export support have been minimized: their volume in the draft State Budget-2022 remains at the current level, 14.5 million hryvnia, which is 3.5 times lower than in 2019.
“These norms of the government’s draft bill of state budget-2022 question the possibility of the real GDP growth of 3.8 percent as set by the Cabinet of Ministers for next year. For economic growth to have a stable foundation, it is necessary to significantly increase budget support for the coal industry and agriculture, to offer cheaper loans for basic industries as well as small and medium-sized businesses, to support exports, innovations, science, energy efficiency, and infrastructure development,” Lovochkin said.Follow @serhiylovochkin