The Government’s Optimistic Scenario
The first and major issue on the agenda of the Cabinet of Minister’s meeting last Wednesday was the consideration of the Forecast for Ukraine’s Economical and Social Development for 2002-2006. According to Minister of Economy and European Integration Oleksandr Shlapak, this was the first time the government has worked out such a document, defining major tendencies of the country’s economical development in the near future with regard to the development of the world’s economy. As priorities in the state’s activities for 2002-2006 Mr. Shlapak specified the restructuring of the economy, investment and innovation policy, the financial market and bank spheres, tax and budget policy, social protection and employment as well as taking the economy out of shadows. In Mr. Shlapak’s words, the three conditions needed for achieving success in these directions are capital, labor, and technological development.
According to the forecast, Ukraine’s labor potential in the next five years will stay at a level sufficient for securing stable economic growth. Particularly, the number of workers aged between 15 to 70 involved in economic activity will grow by approximately two million, with simultaneous decreases in the unemployment numbers. Consistent economic growth will be secured first of all by active scientific, technical, and innovation activities. The total volume of resources allotted for the needs of science is expected to be 0,5% of the GDP. In general, in the period of 2002-2006 Ukraine expects to achieve the following average indicators: GDP will increase by over 6%, industrial production volumes by 6%, active growth of fixed capital by 9.8%, real salaries by 12.5%, while the inflation rate in 2006 will stand at 4.3%. However, the major achievement, Mr. Shlapak stressed, is the fact that such growth rates will allow to increase of GDP per capita by 50% by 2006.
However, the indicators quoted above can be achieved under the condition of implementation of the basic scenario of development. The government has developed an alternate variant also envisaging economic growth, but at a slower rate due to possible negative factors. In the Minister’s opinion, the second scenario might come to pass if Parliament fails to pass four draft laws on changes in taxation before 2004 and if the Tax Code does not come into force by 2005. Still, the document has not been finalized, and the government has ten days left to work on it.
The fact that the government is working so hard for long-term prospects is evidence of its confidence in the future, based primarily on the recent undoubted progress in the economy. In his opening speech at the meeting Prime Minister Kinakh made public some of the results of the government’s work in the first nine months of 2002. According to Kinakh, a positive tendency in production volume growth is remaining : compared to September 2001 it amounts to 6.3%. “Virtually all industries attained positive production growth rates this year,” the Prime Minister noted.
