To survive, Ukrainians began to spend money set aside for funerals

The stabilization of the hryvnia is temporary, and the equilibrium of the balance of payments was achieved due to the degradation of the economy, and this stability will not last long, says former Minister of Economy of Ukraine Viktor Suslov.

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“The NBU is very proud that our balance of payments indicators have improved,” the economist noted. – As of July 2015, the surplus of the consolidated balance of payments amounted to $438 million. At the same time, even the current account of the balance of payments turned out to be positive. The NBK says that since the balance of payments has been leveled and more currency comes into the country than goes out, this means that the most important prerequisite for stabilizing the hryvnia has been created. Theoretically, this is true, but in practice, not entirely, it is necessary to take into account how the balance of payments is leveled, firstly, due to the arrival of foreign loans from the IMF and donors, which have recently come to Ukraine with good frequency. But receiving these loans cannot continue indefinitely - the time will come when the funds will need to be repaid. Moreover, it is clear that the country cannot live at the expense of others.”

“The second factor in improving the balance of payments is the reduction in imports,” the ex-minister points out. – In July it amounted to 36,6%. This would be great if the country had an import substitution policy. But she's not there. Therefore, the result of a decrease in imports is a decrease in consumption and a drop in GDP. Therefore, such a decrease in imports is not positive and, according to official data, is accompanied by a 25% drop in retail trade turnover. All this is economic degradation.”

Another factor allegedly indicating the stabilization of the situation in the Ukrainian economy, the NBU calls, is that the population began to sell more currencies than they bought.

“The NBU is proud to announce that this year this excess has already amounted to $525 million, while in January-July 2014 the population bought $2,3 billion more currency than it sold,” notes Viktor Suslov. – But what is there to be proud of? This means that people no longer have hryvnia to buy currency. Secondly, citizens are forced to sell their individual foreign exchange reserves in order to survive. People take out their stash and start selling dollars little by little. Such a source of foreign exchange earnings to the market cannot be long-lasting.”

“I think that this is one of the main reasons for the improvement in the situation in cash currency,” the expert believes. – If a year ago it was impossible to buy it, now you can buy it freely. My pensioner acquaintances say that they had 3 thousand dollars saved for funerals, but now they have nothing to live on and they are selling them little by little. And there are many such pensioners. Thus, those factors that today are presented as factors for stabilizing the hryvnia are temporary, they are not strategic and promising. Not only our imports fell, but also our exports. Exports of mechanical engineering products fell by more than half, metallurgy - by 42%, etc. At the same time, unemployment is growing in the country and the government is forced to cut budget expenditures and increase tariffs,” he says.