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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Monetary Monkeyshines?

30 March, 1999 - 00:00

Premier talks emission

By Yana MOISEYENKOVA, The Day
On Tuesday the Cabinet of Ministers was full of such events and made such
statements that I thought the President was right when he said that "the
government deals with everything, including criminal cases." Prime Minister
Valery Pustovoitenko, starting with a seemingly customary presentation
of "a number of measures to stabilize the financial and economic situation,"
said that these measures involved the beginning of gradual emission in
order to pay off budget debts.

A little later the apparently shocked (according to eyewitnesses) National
Bank (NBU) Governor Viktor Yushchenko called upon the government "to forbid
itself to speak about destabilization of the Ukrainian money" and added
he "feared a changed governmental course" that could cause the hryvnia
to decline. The Premier said he was in favor of a stable hryvnia. Is it
clear to anyone what is going on?

It is not to be ruled out that this is clear to stock market operators.
According to them, the Premier is again planning to reduce the hryvnia's
value, thus lobbying the interests of exporters (incidentally, the hryvnia
may be said to have gone down instantly by as many as 5 kopiykas against
the earlier daily 1-2 kopiykas). Thus as of last Wednesday morning, the
official rate was Hr 3.86 to $1, and the unofficial rate was Hr 4.20. Why
the Premier needs this is a different question. What is interesting is
how "a word or two" from the Premier could so unsettle the currency market
as it did the country, and the pensions so dear to Mr. Pustovoitenko's
heart will not be worth a red cent. But who, except maybe the electorate,
is worried about this shortly before the presidential election?

Another version (from parliamentary anterooms) of the Premier's statement
is also almost customary: a new attempt to hound Mr.Yushchenko out of the
NBU governor's seat (Verkhovna Rada says he must go "of his own will" so
as to avoid unnecessary IMF queries). And it is not only Parliament that
seems to suspect (or want?) this. Mr. Yushchenko himself, who controls
day and night the currency market situation, seems to have his nerves on
edge. Otherwise, how can we explain why the once superbly diplomatic banker,
in response to the Premier's attempts to govern even the banking sphere,
reminded him aloud (!) that last year banks extended Hr 1.5-billion credits
to cover the budget deficit, with half this amount NOT RETURNED. (This
country is also paradoxical in that the banks keep silent about this: they
may have written off amounts not returned as simple bribery.) There was
no clearly expressed reaction. The ministers must have been "digesting"
the Premier's proposal to impose "a state of special rule" on the country.
Mr. Pustovoitenko imagines this as follows: one must cut back tax and budget
payment privileges, impose the HIGHEST EVER trade surcharges on the value
of DOMESTIC and foreign products, establish a single list of deadbeat firms,
and allow enterprises to open only ONE settlement and one hard-currency
account.

We may suppose the IMF might well lapse into a coma on learning of the
new administrative program. And the former will hardly be appeased by the
Premier's words that this is "only putting things in order for the time
being." The last thing we need on the eve of EFF loans being unfrozen (the
IMF Board of Governors meeting is planned for March 26) is a "curfew" as
a peculiar feature of Ukrainian democracy and a display of our uninterrupted
movement down the road of "presidential" market reforms.

INCIDENTALLY

Presidential adviser Valery LYTVYTSKY refrained from comment,
asking us to calm ourselves and our readers, for "the Premier did not speak
about an unplanned emission. A planned emission is in the budget of any
state. The President opposes an unplanned emission because he understands
it will be followed by unplanned inflation. Such steps do not fit in with
a certain policy. All NBU steps are directed at liberalization of the market.
The National Bank has taken correct and powerful steps. These will be followed
by other well-balanced decisions."

Another presidential adviser Anatoly HALCHYNSKY reminded Interfax-Ukraine
that Leonid Kuchma had stated his opposition to any emission as early as
the beginning of March at a workshop on economic development. "It is very
important to the people to believe that whatever the circumstances, Ukraine
will not choose an inflationary path of economic development," he said
then.

Advisor to the NBU governor Viktor LYSYTSKY told The Day
this year's budget envisions a Hr 1.5-billion increment of the money base.
"This indicator has been agreed to a thousand times with all, including
the IMF. I personally think that a directed emission is a great evil. It
does not solve the essence of the arrears problem. We all know that the
domestic debt is large (according to some data, Hr 8 billion - Author).
In this connection it is clear that to give money only to some would mean
hurting others. It is impossible and dangerous to give money to all at
once: the market will react immediately, with prices skyrocketing. In other
words, money will depreciate. This is common knowledge. I think when the
Premier talked of emission, he must have meant the reorientation of its
increment toward social payments."

 

Premier talks emission
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