"Ukrainians after a brief euphoria again begin to decompose, losing the sense of statehood"
Guest Ukraine News - From-UA - economist Yaroslav Zhalilo
On November 17 edition of the online publication Ukraine News - From-UA was a famous Ukrainian economist, president of the Center crisis research Jaroslav Zhalilo . With our guest we talked about the reasons fall of the hryvnia, the possibility of stabilization of the Ukrainian currency in the near future, as well as how to be today and where it is profitable to investors to keep their savings.
Kira: - Hello, Yaroslav A.! How many people in Western Ukraine will remain unless canceled visa to Europe? And how this may impact on the economy of Ukraine?
Jaroslav Zhalilo: - Hello. I am glad to using modern technology to answer questions Ukrainians. Today more than ever it is important for economists to talk about what is really happening in the Ukrainian economy to avoid a variety of rumors and speculation.
The question asked Kira, not really up to me and, frankly, a bit provocative. In Western Ukraine, will the people who live there, work or do not work. I do not think that the abolition of visas will result in a net outflow of people from Western Ukraine to the European Union.
First of all, there is need to have a source of livelihood. There you can make some time, but are unlikely to be many live permanently.
Will increase if the volume of labor migration? In a sense, of course, will increase, because the problem of employment in the Ukrainian territory is preserved, while the European Union is, in principle, needs fresh labor force, although we know that the markets are too limited, especially on the slogans of Central and Eastern Europe, there is also there is a surplus of labor.
How will the abolition of the visa regime? Activated trip, cross-border trade and cooperation, increase the volume of labor migration. But to assume that it will be some huge volumes, I would not, because today a resident of Western Ukraine is the opportunity to work in Europe and with the current visa regime, because it is for these areas are quite liberal.
Oleg: - Good time of day. Tell me whether it is possible to put a deposit in US dollars and whether to do it within the amount of the guaranteed return, if you live in the Crimea? If possible, which banks may be: the state or those who have passed the stress test NBU?
Jaroslav Zhalilo: - Recently, we have in banks has some regulations that allegedly infringe upon the rights of those who live in the Crimea, in fact they attributed to non-residents.
We have the law on which the Crimea is considered a special economic zone.Accordingly, those who live there, moved outside the Ukrainian tax and other spaces.So I'm not sure that the person with the Crimean residence permit can now put the contribution.
Basically, I think that definitely makes sense to keep money in the pod is not, under the pillow, and in a glass jar, and carry a normal bank, which is at the top of the rankings.
Take the top 10 banks - that is enough, and not just save the money from different criminal threats, but also to get a certain percentage. I agitate for ensuring that people do not lose confidence in the banks that are in the list of the best. We expect a merger, acquisition, liquidation of banks that we have too many when our economy.
Igor, Kharkov: - Is there a guarantee that the exchange rate has stabilized before the new year? What you need to do and ready for this in the National Bank? If you are willing, then why is there still not done?
Jaroslav Zhalilo: - There are no guarantees, because today the dynamics of the hryvnia, unfortunately, is associated with a large number of non-economic factors that are generally outside the influence of Ukraine, the Ukrainian government, not to mention the National Bank in particular.
I believe that today the regular currency panic fall of the hryvnia is directly linked to the political and military risks. Two key risk: the risk associated with the first military operations in eastern Ukraine. And this risk is perhaps the most important, because people really understand that there is a war, and the prospects of this war is not defined.
If, God forbid, will be the development of military events and the promotion of Russian troops into the territory of Ukraine, it is no guarantee on the course, no one will, and no one can predict the prospects of the Ukrainian economy. This can be done by building a common graph to Excel, taking the daily dynamics of exchange rates, it usually is on the site of the National Bank. If you build this graph, it will be very interesting, because it is very clearly reflected bursts course that arise in relation to major risks, which were in the territory of Ukraine in recent years. Last November, the start of the event on the Maidan, the tragic events of 19-21 February, the beginning of military clashes in April, in the east, the intensification of the military situation and the intervention of Russian troops in the south of Ukraine in August.
Interestingly, before the burst of the practical events, when expectations are already picking up and everyone knows that it is maturing and growing uncertainty, just in this period is the maximum burst rate, ie, hryvnia falls sharply. Then some stabilization and strengthening of the course, but then rises to a new plateau. Here's a another surge we see now, which is still associated with the abolition of the peg of the National Bank.
The second non-economic risk - this is the situation in the politics of Ukraine related to the fact that we were the parliamentary elections, but also formed a coalition, has not yet formed a government and, therefore, not articulated priorities of the new policy.This uncertainty always leads to tension in the foreign exchange market.
Economic factors, of course, also affected, but just in this sense, the National Bank may provide some assurance. Firstly, there are administrative tools that are stored and cut off part of the possible speculators from the market. Secondly, I believe that the factors in the fourth quarter of the year may contribute to a stabilization of the course - this increase in inflows from exporters, especially exporters of agricultural products, the discharge of excessive currency to those who purchased in the previous month.Hryvnia traditionally needed at the end of the year, businesses and citizens expect some additional revenues from the European Union.
We know that in the near future is expected tranche plus a positive decision on granting large tranche from the IMF early next year. These factors will contribute to the strengthening of the economic sphere, and the National Bank has such tools, but we need political will. Such vibrational policy of the National Bank, which is highly uncertain and rushes from rigid fixation of administrative measures for the release, and announces the release in advance, arousing unhealthy excitement and panic. She certainly does not promote confidence in the hryvnia, and then in addition to having the tools you need to still the political will, policy coherence, and lack of self-interest.
I am not going to blame anyone, but I, as an analyst, I can say that these swings in the policy of the National Bank clearly have potentially corrupt "capacity".
Arkady Ivanovich, Kiev: - Mr. Zhalilo, tell me, how to be an ordinary investors today, who is the currency on deposit? Collect as much as possible, or wait "miracle" that the economy is stabilizing and the rate including? Where do today is most profitable to keep the money and what exactly it might be the banks?
Jaroslav Zhalilo: - Banks will not be called explicitly, the more naperechet I have not listed. You can visit the website of the National Bank and see the top of rankings, there are now more stress tests pass, but rather, it is tested for biznesovoy banks.
I think that is still profitable to keep the hryvnia currency and in such banks. I do not believe a miracle that the economy is stabilizing. Of course, stabilize, if not the war.Mix all the war plans, and destroy all forecasts. I even recently not undertake to predict the exchange rate dynamics, because the bursts occur outside the predictive capability of the economy.
Depositors should try not to panic, because depositors panic, perhaps, the chief whip and a threat to themselves depositors. Panicking, they rip banking stability and themselves deprived themselves of the opportunity to get their deposits or interest on deposits in due time.
No bank in any country of the world is not able to immediately return all the money to depositors. This is contrary to the nature of banking. Different countries have different standards, but traditionally 10-15% of contributions he can give, and it will be a problem. Therefore, arousing panic and participating in it, the depositors themselves cut off the branch on which they sit. If we keep on the banks of the second and third level, which once tempted good percentage, then there need to think about how to translate the contributions to the higher quality banks. But often it is quite difficult to do because the issuing banks may be delayed.
Julia: - Where is the limit to the idiocy of the government, which destroys the Ukrainian economy, and how do you assess the actions Yatsenyuk and his team?
Jaroslav Zhalilo: - I generally avoid such characteristics of a medical nature, because I'm not a psychiatrist, because this forecast, having a medical name.
If we carry on the activities of the government, of course, the government Yatsenuk great hopes. Frankly, hope after the Maidan, the need for reform and a willingness to make this reform was. We must realize that the government is working very hard conditions in connection with military operations and the situation in the Donbass.These conditions disrupt economic things, we know that one inflow of economic security associated with the supply of coal, which stands, not to mention the fact that you just need the cost and management actions associated naturally with the war.Alas, it is often written off that reforms are not carried out.
I think that the time corridor, when society will reform narrows sharply, and much we have missed. A number of reforms we will be forced to have an unpopular character, iewill lead to a certain period of life to poor people, lower living standards, etc. This is natural and it was possible in the first months after the euphoria of the Maidan, when there is a new government, then President-elect. Then it was possible to do.
Today, many people lost faith in the current government, and secondly, the war has depleted many resources that can be reallocated to the blow was not so painful. Third, the credibility of the government itself, which has proved itself as a government-kamikaze, then stay alive and healthy, it is also somewhat poissyaklo.
Rebooting power associated with the new parliament and the new format of executive power, maybe something will give and, although, frankly, the version that was announced by the "Popular Front", maybe it was very moist and still inconclusive Friday, but I have not much confidence caused.
I think that this time the corridor is rapidly lost, but at the same time, understanding the problem of the government, already unpopular reforms are extremely dangerous. You can once again create a wave of public protest, and today I am ready to assert with full responsibility: provoking social protest on the grounds of dissatisfaction with the government, authority, etc. is a component of a hybrid war being waged against Ukraine and purposefully formed. Once the conditions have been created, this tool will definitely involved. Therefore, it is not necessary to require the government to at the same time it started somewhere, it is also in very unenviable position - is not insanity, it's really deep stress.
Alex: - What do you predict the dollar after the new year and how it will affect our economy?
Jaroslav Zhalilo: - I predict the rate since the fall of 2008 and I must say quite successfully. On the background, when I regularly asking when the dollar will be 20 USD, I said that very soon, and the last five years, I was able to get to the point.
I stopped to predict courses from the moment when the war began and the maidan, because these are the factors that I, as an economist is unable to predict, and it completely changed the situation on the currency market.
If we abstract from the war and say that like conflict frozen and we hope that will not be developed further, then I would have predicted a certain appreciation until the new year. At level 13 UAH per dollar, I think the course will not return, but 13.5-14 until the end of the year - this situation is quite normal, even, perhaps, in a fairly high risk of war, if they do not escalate.
Next year depends on the policy of forming a new government and its behavior, the level of social protests and military action. If these factors were not, we would have every reason to strengthen the hryvnia, and I would argue that the rate of 12.5-13 until next year would be realistic. But I do not say because I do not think that non-economic risks will be.
If there is no catastrophic situation in non-economic areas are not anticipating a significant collapse, figure 20, which is called - is too extreme figure, and exchange rate stability, I do not predict. Fluctuations are possible within 1-2 hryvnia, and the final outcome of these oscillations depends on too multivariate situation. I do not predict a catastrophic collapse, and hope that the policy will be enough work to keep him. This is a very difficult question.
Ina: - A huge problem is that Ukrainians are learning to live again without the state.Repeated situation of the 1990s or the state wiser?
Jaroslav Zhalilo: - The question as to economists and to the citizen. Very accurate and good question. Indeed, it is very clearly observed that, alas, the Ukrainians after a short period of euphoria again begin to decompose, ie again not develop a sense of nationhood.
The story so happened that the Ukrainians, in principle, there was a sense of nationhood, they are always in the majority of its history at the level at best, government size, and as a result, the traditions and the very weak statehood and mentality narrowed to the limits microsocium. So I think that the main task of the state today - trying to regain its credibility.
Years of previous government strongly undermined the credibility of the state and its ruined. Frankly, that there were reciprocal movement on the part of society and independent structure, and through the media, too, was conducted very active on the destruction of the state of perception in the minds of people. This discrediting of the state, the good, the power to provide all possible, all of the soil, all the reasons that this situation occurred. Under this dual influence arose what we call institutional crisis, and one of its components - is that in the mind, in the values of the people are so separated themselves from the state, which, in fact, become his enemies. And wherever one looks today (activity of the same associations of entrepreneurs or business), all say that they have defended the rights of the state, have reduced taxes and inspections, ie they oppose the state.
Among ordinary people say that the government has not given them anything, everything that happens to them or, contrary to everything happening. This is an extremely dangerous trend. Unfortunately, it must be noted that the events of the Maidan is also undermined confidence, in spite of everything, created the "potency", ie the background to the formation of the new state. But they destroy the relationship to the state as an institution even more, and "potency", alas, fully utilized not because too deep and long was the period of destruction.
Ukrainians, unfortunately, once again learn to live without the state, but in this matter laid some optimism - Ukrainians are learning. I think that it is through the self-organization of civil society, as it is in the last year has received a tremendous impetus to the development and revival can be expected.
State - is the highest level of civilization of a society (society - as the best representative, enjoy the most confidence). But society must organize to pick up on their shoulders that State. Therefore, the self-organization has to be, above all, on the level regions. Regional communities are much more confidence and the Ukrainians, the more traditional sense of unity on a geographical basis.
When the previous government, we worked quite a lot with different regions, and there was a problem with the prospect of power, trust authorities at the highest level. At the level of regions formed healthy forces, healthy new elite, the relationship between the government and the regional society - what's called a mass in our Constitution.Therefore, I believe that it is at the regional level of local communities will be formed that from which then grow a new confidence in the state. So if the Ukrainians are learning - this is good.
Reader: - announced that from December 1, residents of areas ATO will not receive a pension. My mom lives in Uglegorsk - a city like Ukraine, but there is no way the government presented neither the mayor nor the mail or bank. The commander of the battalion based problems of the citizens did not bothered. In light of the statements Denisova, tell mom will receive a pension?
Jaroslav Zhalilo: - I can not answer because I do not know about the intentions of the Ministry of Social Policy and other government agencies.
Of course, the commander of the battalion, which is based there, shall not engage in the social problems of the region, it has quite different problems, and God forbid that he normally engaged by them, not counting the physical extermination of people.
I have not yet had the opportunity to read the presidential decree, which was adopted on Saturday, but as I understand it, when it comes to territory controlled by the Ukraine, then there must be formed institutions that provide financing. If uncontrolled territory, respectively, it can not even be temporarily displaced person shall not be registered as a displaced person and re-register the pension.
Probably will be revised district boundaries, respectively, areas of pension and social structures. Extremely low efficiency of the government in these military conditions.Slowly solved exercise social issues of displaced persons and people in the liberated territories, military, etc. It is not clear what is the reason, but the bureaucratic wire negative impact on humans and on the actions of the government.
I hope that these issues did the new government will take longer, since the statement came not only from the minister of social policy, but here already and the Prime Minister in this regard noting. We need to examine the regulatory framework. I believe that, in principle, the question in such a format that the State waives its social obligations to the people who are in the territory, temporarily controlled by the Ukrainian authorities, it is still wrong.
If we decide that it is Ukrainian territory and Ukrainian citizens, the state in any case has no right to abandon their commitments. Moreover, it must comply with its maximum personal commitment to every citizen and find a way to do it. Today, such technology is available, we know that the majority of social benefits already paid on the card.
I find it unacceptable to say that they close the card accounts, cease to transfer, unless the person does not register on the territory of Ukraine under control.
If people will find the opportunity to receive money on cards, temporarily leaving etc. - All that we can do for these people. But we did not do the main thing - we failed to comply with them the rights to the territory in which they live.
I believe this is the primary responsibility of the state, but, alas, it happened that it could not fulfill her - to ensure the protection of people from outside the parish strangers wishing evil on the revitalization of internal elements that wish destruction.The state is not made, but it should at least provide a social responsibility.
I think it is very wrong and destructive it is to preserve the unity of the country's decision to considerable complication of social benefits for the Ukrainian people, who are on temporary uncontrolled territory. Most methods are needed to solve these problems.
Denis: - In view of the fall of hryvnia, how to be the people who depend on imported drugs? After all, prices grow significantly. In Georgia, at the time just canceled all the licensing of imported drugs and other drugs extortion and thus reduced prices. They just trusted the US regulators and the EU. Is it feasible scenario with us?
Jaroslav Zhalilo: - Response of two parts: from the people does not depend on the abolition of licensing and other fees. I think people need to think about what may, there is the possibility of switching to certain domestic counterparts, although it is often not possible and it's just bad for your health.
A State, of course, should pay attention to what the problem is, and it must somehow be addressed. Possible adoption of international certificates, which would guarantee importantly - security to the people who consume these drugs. As far as I know, now enter a lower VAT on medicines, but this does not impact on limiting the growth of prices in pharmacies. Perhaps you need to check-monopoly Committee.
Many drugs on which people depend, are bought by different government programs and conducted on corrupt foundations. How many of these schemes will be cleared today? Some say that it does not quite succeed. Control of public procurement and monitor the adequacy of prices for purchased medicines - also extremely important.People - to endure, and the state - to tackle the problem of these people, because it is a very important issue.
Svetlana: - What are your predictions for the pricing in housing?
Jaroslav Zhalilo: - I am not an expert of the housing market, but, in principle, as I understand, housing market prices have fallen significantly, and closer to those levels, but here are wearing disturbance factor, it certainly is in place and will certainly continue to act anymore.
This factor is related to the fact that quite a large mass of people tends to move from areas of ATU in dense city. Surely this will increase the demand on the housing market, and will raise prices. It is difficult to decide something. Perhaps the state could reduce some of the problem by creating a fund for social housing and to offer it to those who are not ready to buy, but they need shelter, because they - displaced persons.
I think that by the boom, which was in the housing market five years ago, when prices peaked, we probably will not return until too low incomes.
During the first 9 months of this year in building our minus non-residential sector, the housing - 10%. I suspect that this is due to the individual building. Offer reduced, and build apartments - a long period, the foundation is not laid, and this means that in 2-3 years this house will not be put into effect. The fall in construction lays prospects of slow growth of housing supply in the future period.
Yuri: - Perform whether banks terms of deposits of individuals in 2015?
Jaroslav Zhalilo: - Run. Of course, there are banks that are unable to perform, then the payment will be at the expense of Guarantee Fund. But we hope that the situation has stabilized, set the vision and interest in investing, will be held the strengthening of the banking system.
This means that some banks will simply buy larger Ukrainian, and can, and foreign banks and, accordingly, the obligations to depositors will also bathe too long. This is by no means a risk, on the contrary, if your bank someone buys, it's a big plus, and means that the larger partner took responsibility for the fulfillment of obligations.
Eugene: - How do you comment on the accusation, "Savings Bank" in cooperation with the separatists? Is it true that all the Donetsk branch of the "clogged" dollars?
Jaroslav Zhalilo: - Do not know, no information. They find that it is arranged separatists -Themes no longer sure. There was information that ATMs "Savings Bank" worked on the issue of the occupied territories, in principle, it could be some agreements.
We talked about the social responsibility of the state to the people who were there, it can be assumed that such an agreement was, and it positively. I do not think that is strongly supported by the separatists. They have someone to support, and, in principle, they cover very rich (those who fled from us and who live outside the country).
Catherine: - I ask you to share forecasts: how will this financial year and what it takes to start working for our government in 2015?
Jaroslav Zhalilo: - New Year should begin with the adoption of the budget. And today, as I understand it, the long period of the budget takes place, but without the formation of the new government does not make sense to make it even up for discussion.
The budget will probably be very poor because the money went to the military operation, on the defensive actions and retooling. And in this area, I think, a very important task of the government - the most help to ensure that this money on unproductive goals still played a role stimulator of economic growth.
This is possible if we, for example, will make the purchase of military equipment and ammunition Ukrainian producers. This is possible if we are to establish normal tools transparent food supply on social channels and for the needs of the military. This is possible if we ensure transparency and efficiency of public procurement system, because often there when the money allocated, but they just hung out for the simple reason that the official procurement procedures is not triggered when the body armor vitally needed military and tender lasted two months, and government mired in its own bureaucracy.
The second most important thing related to security analysis. We understand that Ukraine's dependence on Russia for gas need to interrupt. But today we hear such optimistic statements that a couple of years will be able to give up the gas. Well, if we can, but it needs to do a lot, given that we still do not have our own supplies of Ukrainian coal, and how long it is pretty hard to say.
I think that is a very big challenge for the Government and for the introduction energoinstrumentov energy efficiency and the introduction of alternative energy sources. And here the focus should be fashionable, but still, unfortunately, not only cost-effective solar and wind farms. I'm not saying that they do not need to develop, just as long as it's a toy.
The third point - it is a social sphere in the broadest sense of the word, because people today are in a difficult situation: a sharp decline in living standards are already evident, even if the official level of income for the nine months was down about 8%.Plus the price dynamics little predictable. Until the end of the year inflation, according to various estimates, up to 25% may just grow. Already today we have 19% in 10 months.
Social protection programs and the availability of these programs is those who are in need, and accordingly, a tool for achieving the target character. Why broadly questions of price and antimonopoly control? And in this muddy water are wanting to get fat. This non-monetary instruments of social protection, institutional mechanisms of social protection, assistance - this is extremely important.
Finally, a very important point, which has dropped out of the attention of the government and the president - is the question of the new regional policy. Despite the fact that we always talked about the need to expand the powers of the regions, the need to provide opportunities impetus to local development, expansion of development tools at the local level, the more we have a living example of separatist tendencies, which including reinforced by the fact that the regions were too zatsentralizovany.
Following these conversations, it is calm, and the implementation of these processes until there is very weak. I believe that the government needs to pay attention to it, because only after the revival of the regions of Ukraine will rebirth. Only with the revival of regional authorities to begin a revival of power in the country and in the whole state.All of this - on the background of the need to implement the provisions of the agreement on Evroassotsiatsii.
We have a clear plan of what we need to do this requires a functioning government and special parliament. It is good that we have these obligations and incentives, because, on the one hand, this will spur reform and adjust and will not allow the government to relax or to succumb to the current problems delaying reforms. A government, on the other hand, it will be imperative because a prerequisite today - for financial assistance from the European Union, and secondly, the condition that at the end of next year it is decided that we form a free trade zone with the European Union , the introduction of which is deferred for a year.
As for what will happen to the economy, I think, if there is no development of the war, that will be a good year. Already pleased with the results of the third quarter, expected worse. If GDP is about 5% for three quarters, then I do not know what depth must be a failure of the fourth quarter, so we went to the previously projected 9%.
The fall was less profound than expected, and this situation is already happy.Especially because usually busy fourth quarter traditionally occurs: results of the action of the agricultural sector and a lot of activity at the end of the year, shall draft and I think people are slowly adapting to what is happening and can better plan their consumer activity.
Maybe give a stimulating effect the measures which shall be credited to finance military operations because it is the other side and it's really quite a strong demand in the domestic market.
Mina 6% of GDP - is also a figure for Ukraine is extremely difficult, but in our situation we can rejoice even that was not as bad as expected. If it be so, there is reason to say that will be supported by the stability of the banking system.
The National Bank does not need to lose its control function. If the foreign exchange market, these functions are performed mediocre, the banking market regulation and stability of the banking system, in principle, pretty well. At least, the banks did not fall, and that's good.
I do not think these forecasts optimistic. To wait until there is no disaster, unless the situation in the sphere on which we can not influence. Can affect other people, but it is far ...
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