Volodymyr Lanovyi: It's time to pay bills

Author: Sergei KomissarovPhoto: InterMedia consulting

It is such impression that leaders of the State just lost a moment when financial snow-slip felt on heads of people. That's why citizens have panic moods and form a queue near windows of currency exchange offices. Every person have a bundle of currency notes. People have only one question: to change hryvnia or not for evergreen dollars?

The IMC addressed Volodymyr Lanovyi, former Minister of Economy, doctor of economic sciences to explain the situation.

- In your assessment those what happened on the currency-financial market had to take place or we could have escaped such dramatic situation?

- In recent times the National bank and the government have become weak. Total unconcern has begun.

But this didn't happen... because the administration of financial system of Ukraine in recent time leaves much to be desired.

I want to stress that inflation can't dominate over interests of the credit system. And at the same time, it can't dominate over practice of exchange rate change.

The aim of the National bank is to reach moderate inflation, to support sufficiency of the credit system and decrease interest rates of banks. And the main think is to try to obtain the stable currency exchange rate.

-Who will bear responsibility for financing crisis in Ukraine?

- Bureaucrats never bear responsibility. The biggest punishment for officials, starting from minister's advisor and finishing with generals of police, is a discharge from office. The problem is that Ukraine is not a legal State.

Of course, somebody must bear responsibility for the situation which occurred recently in the bank-financing sphere. The responsibility must be for the fact that the economy is not financed while there are money in the Ministry of Finance and the government.

And nobody bears a responsibility for this in Ukraine.

- How the further drop of hryvnia rate could be stopped?

- The National bank must form definite conditions in our finance system. The fist one - it is important to guarantee stability of finances. The second - it is important to guarantee stability of currency taking into the domestic economy and sufficiency of foreign currency credits. The third - the low interest rates and future reduction of taxes and growth of budget investment expenses must be.

- How will you explain the fact that finance crisis in Ukraine coincides with political crisis? Is it a chance?

- There is some connection. As the beginning of finance crisis is a derivative of social populism.

All parties which participated in elections in 2007 used it. The Party of Regions increased social payments, pension fund financing. The Party of Regions didn't estimate finance consequences of these measures. It's a pity, that the National bank wasn't properly firm and "overheated" the economy.

Thus, it means that the policy in this sense has led to some intensification of finance problems. But we orderly and sequentially went to this intensification, as out economy regularly lost positions in the world and on the inner market.

- To your mind, after what has happened with our financial-bank system, is it possible to return the trust of population to hryvina? Or will it be very prolonged process?

- It's a pity that leaders of financial-monetary system of Ukraine lost trust of citizens. Two-three years ago the leader of the National bank made a speech through the mass media and said: "We will surely fulfill what we stated. Our word is firm. The situation in our country with hryvnia will be this or that".

And this word was fulfilled. And now let's remember that half a year ago leading fantasists of the country stated that hryvina will be in a definite corridor. And suddenly in a week the exchanged rate dropped to 4.7 hryvnia per a dollar. And everybody kept silence.

This is the worst what the National bank could do.

- To your mind, why the State can't fulfill its institutional obligations before common citizens?

- Corruption does not let out State to fulfill institutional obligations in financial sphere. Sudden drop of hryvnia against dollar showed that our state is weak. As decisions which are taken at the highest State level must be effectively fulfilled - quick and dynamic, and in practice it doesn't take place. Thousand of decisions are taken. But they are fulfilled neither at legislation level, nor though organization systems.

That's why our Ministry of Finance, Tax administration, police and judicial system are weak. They do not fulfill their functions. Otherwise, in a row of cases these organs help criminals. As criminal give them money. And nobody protect the suffered or poor people from the above mentioned organs. That's why I can state: Ukraine is a week State.

The deepest reason of these processes is hidden in oligarchisation of the Ukrainian economy.

When oligarchs captured resources of our economy, they have started to establish their own rules of game. In many cases the Ukrainian officials are supported by oligarchs. That's why they inform them which conjuncture for metal or transport will be, which taxes will be, how the exchange rate will differ. These are oligarchisation which weakened institutions of the Ukrainian State. It is necessary to weaken economic role of oligarchs, to raise professionalism of ministers, and then the economy will start working.

- What can you advice common citizens in conditions of today's financial instability?

- All claims to the National bank. Two weeks ago its leadership could make a plan how to lead hryvnia rate against dollar at the rational level. But they did nothing.

I hope that officials will learn a lesson from this situation. And we will return to the exchange rate of 5.3.-5.4 hryvnia per a dollar.

And I will advice common citizens: to abandon panic moods. In near future the exchange rate against dollar will surely stabilize.