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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

GOVERNMENT DECLARES WAR ON BARTER Is the list of exceptions ready?

3 March, 1998 - 00:00

First Deputy Prime Minister Anatoly Holubchenko declared recently that the government was ready to refuse mutual write-offs against the state budget.

The work group, formed by the Cabinet of Ministers of Ukraine, had to submit the plans for coal market reform by February 25. The stress had been made upon decreasing the number of barter operations, which in 1997 constituted 58.6% of all commercial operations. The energy market is about to suffer similar reforms. On January 25 the Energy Market Council approved a decision of the Cabinet of Ministers obliging industrial consumers to pay with money for 35% of the energy they receive.

According to Interfax Ukraine, the efficiency of heavy industrial enterprises suffered negative influence from United Energy Systems of Ukraine Corp. suspending its activity. The annual UESU turnover was estimated at Hr 20 billion (1997 Ukrainian GDP was Hr 85 billion). Such conclusions were obviously made after barter had turned out to have local specifics. The lowest barter trade volume was registered in those regions, where the retail dominates over wholesale, for instance in Kyiv only 9.4% of products were sold by barter, while in wholesale-oriented Dnipropetrovsk oblast the figure was 58.1%.

The State Taxation Service also develops administrative regulations. According to STS head Mykola Azarov, a special file has been opened on the large taxpayers and all of their operations will be placed under strict oversight.

Presidential aide Valery Lytvytsky was skeptical about the effectiveness of putting an administrative limit on trade operations. According to him, this is only a partial solution to the problem. He says we should cure causes of the sickness and not the consequences. The enterprises started doing barter operations because they did not have money. Then it turned out that they could use barter to make money, which means some enterprises may be interested in keeping it.

The portrait of a return to natural economy is augmented by the latest research of the National Academy of Sciences Institute of Economic Forecasting. According to Institute Director, Academician Valery Heits, there are some enterprises that manufacture products which cannot find consumers, causing debit-credit indebtedness and barter operations to rise sharply.

It is logical to assume that the Cabinet of Ministers is the first to analyze this academic research and the Prime Mininister realizes, that it is not possible to reduce barter operations number by simply forbidding them. However, it is possible to limit the number of those participating in barter operations. For this purpose the ban should include the words: "except for enterprises designated by the government."

 

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