“The Government Should Not Set Tariff Prices”: Key Points From Oleksiy Honcharuk’s Interview

On taxes, privatization, smuggling and how he views his predecessors.

New Prime Minister of Ukraine Oleksiy Honcharuk gave a major interview to Ukrainska Pravda.

On the controversial reappointment of Avakov

“Why was the decision made to keep him now? The country is at war. In wartime, a person who oversees the entire law enforcement bloc in the government, given that the government is quite young, with many people lacking additional experience, and given that Mr. Avakov took part in ensuring honest, transparent elections, his role in this was to a certain extent”.

“One of the reforms that did not happen — is police reform”.

“We tried to find a balance between the professionalism of narrow specialists, managerial and leadership qualities, and an impeccable reputation”.

On banks and the National Bank

“We need cheap money in the economy. Where to get it? The banking system is in principle ready to lend to both business and the population. Mortgages may appear in Ukraine. Next year they could be 12-13%, and we understand how to do it.

We will work with the National Bank without influencing it administratively. We will work in partnership, building normal relations with them. We must understand their expectations, and they must understand ours”.

On tariffs

“The government should not interfere in pricing with administrative decisions at all, even for energy resources. When a politician starts interfering with the price, it leads to two things: inefficiency, corruption and populism. This should not happen”.

On business

“It is no secret that raiding is flourishing in our country. Companies are being re-registered, registries “blink”, and all this has continued for a long time. Therefore, the new Minister of Justice, who was presented yesterday, is a person with vast experience as a consultant to the World Bank group. He understands these problems very well.

The owner must be protected. If the owner is protected, if mechanisms protecting creditors’ rights work, we will reduce the lending rate by another couple of percentage points”.

“Next — competition. Those who play by the rules should win. Right now our tax system is also unfair. It is designed in such a way that the conscientious taxpayer loses. You are forced to optimize in order to compete with others, and that is wrong.

We plan a deep reform of the tax system in the spring. It is a harmful practice and, as a rule, it should not happen to complicate the tax regime in the second half of the year. That is, theoretically you can simplify, but complicating is definitely not allowed”.

“Businesses spending hundreds of hours filling out paperwork nobody needs must become a thing of the past. Paper GDP, that is, when activity takes place just to fill in some form, must become a thing of the past.

Simplification of labor relations is ahead. Because right now hiring someone in our country is like adopting them. People are afraid to hire anyone, because then you can’t do anything about it. If the person doesn’t suit you and you made a mistake, you end up paying the money. So people are steering away from legally hiring anyone”.

On the census

“We will conduct [the census]. It was already planned for December of next year. But we are studying the possibility of holding it this year”.

On the fight against smuggling

“Smuggling is something we must overcome this year. There is Max Nefedov. I trust him, I consider him a very strong manager and an honest person. Therefore I believe that this year smuggling as a systemic phenomenon will become a thing of the past.

According to various estimates, the volume of smuggling reaches billions of dollars. Therefore, besides harming competition, smuggling is also a major harm to the economy. We expect that this could provide additional resources to implement the president’s slogan of overcoming real poverty”.

On infrastructure

“Ukraine must invest in infrastructure, education and technology. If you invest in infrastructure, then that money returns to the economy, and it brings additional money with it”.

“This year it is incredibly important for us to build the road to Mariupol. This is task number one. Because this is a Ukrainian city that is now a kind of logistical island. It should not be like this. The preliminary date is October 18; we plan to open this road.

On digitalization

“We must digitize the entire country as much as possible this year, as far as that is at all possible”.

On the reforms of predecessors

“The medical reform is unequivocally the right move. The education reform, the New Ukrainian School, is unequivocally the right move. There are management questions. The idea is right, but how it was implemented, we will now look at inside the ministries. Honestly”.

“I generally believe that over the past five years the country has been moving in the right direction, but very slowly. Most of the reforms were distorted by individual corrupt private interests. That is my overall assessment”.

On privatization

“A large privatization is needed. My personal position is — the less the state is in the economy, the better.

Of course, some enterprises will remain strategic. As for Ukrzaliznytsia itself, there is a part that should not be in private hands. It should be divided. There is a model where it is split into operators of three different parts. That is a separate complex story”.