PM Azarov's report on 100 days of government's work

Dear friends!

The Government’s activity for 100 days has been very eventful and objectively effective. Naturally, everyone wants to see changes as soon as possible, but an obvious contrast is evident - as in the previous two years people have seen mainly «talkative heads» instead of hard-working hands.

Our results are determined by the fact that after several years of playing in power we managed to form a real government in Ukraine. This is the team of the President of Ukraine that implements the choice of the people in favour of the country's renewal program. Unity of actions of the President, the coalition and the Government has created a unique opportunity to implement reforming that «have waiting for its time» almost all the years of our independence.

It is impossible to live further without reforms.

Starting point for the activity of the Government appeared to be much worse than we estimated being in opposition.

In terms of gross domestic product the country is rebounded at the level of 2005, fixed capital expenditures – 2004, industrial production – 2003, construction - 1996.

Monthly we are forced to spend on repayment of debts of the previous government amounts comparable to the cost of thousands of kilometres of roads, bridges, maintenance costs of all hospitals in Ukraine.

The country met 2010 without a law on the state budget. This was done by the previous government deliberately to manage public funds without control, in manual mode. They did great business in crisis and hoped that this wouldn’t come to an end.

I think the «showiness» (as opposed to efficiency) of the previous government will study investigation officers, not economists.

This must be done so that officials will not more take the power from the people.

So what have we managed to do with the dowry, which we got?

For the first time in the recent years the realistic budget was adopted, ensuring economic stability. However, for the first time within two years the minimum wages and pensions, living wages and relevant social benefits are raised. Everything, that opponents maliciously called impossible, is performing confidently and consistently, because the Government has gotten public finances under control, stopped robbery of the national budget, corruption business in public procurement.

This is the budget of recovery and social support for the citizens of Ukraine.

Foreseen by the Budget 2010 funding for education is by 15% more than in 2009; healthcare - by 8%; social spending - by 29%.

Real wages increased by more than 7% within the last five months, and by the end of the year will increase by 38%. (In 2009 real disposable income of the population decreased by 8.5% and real wages - by 27,4%).

Teachers received the bonus of 20%. They are for the first time in June paid 100% rise of vacation pay. Medicine staff received long-service bonuses of 10-30% of the wage (depending on years of service).

Within three months of the government activity wage debts are cut by almost 200 million UAH.

I want to note the increased income purchasing power has increased. For the first time since 2002 the country fixed the deflation (0.6%), whereas at the beginning of the year inflation amounted 3.7%.

But there are things that the Government categorically doesn’t support. Such shame that people went on strike, blocked roads to get their hard earned money as yesterday Kharkov private builders did, simply should not be. I have instructed the Minister of Industrial Policy to go in Kharkiv and solve the problem crucially.

It is not correct to speak about the termination of the crisis. It is too early. However, we began to deal properly with it: to stimulate domestic consumption to recover domestic production. That means that we rely on ourselves, and such approach is bringing results.

Industrial production growth showed that the economy comes out of recession. Gross domestic product within five months rose by 6.1%. Industrial production in Ukraine increased in comparison with the same period of 2009 by 12.6%.

The output of chemical and petrochemical industry increased by almost 30%, metallurgical industry - by 21.7%.

Construction industry began to recover, which during the period of “management” of the previous government had losses compared with bombing of buildings.

In the first quarter of 2010 1.5 million square meters of total housing were completed.

Three subway stations of the new Podil-Vygurivska subway line will be completed by the end of 2010. Totally six stations are under construction. In 2011 a construction of the new subway line «Troyeshchyna – Osokorky» (6 stations) will begin in Kyiv. It was restored building of the Podil-Voskresensky and Darnytsky bridges, Darnytsky railway station and bridge over the Dnieper in Zaporizhya.

We signed the Ukrainian-Russian agreement on the completion of two power units at Khmelnitsky NPP. The first stage of the Dnister Hydroelectric Power Plant, the third hydroelectric unit of the Tashlytska HPP, reconstruction of the HES OJSC «Ukrhydroenergo» are under construction.

The real economy has responded to real actions of the government.

The main thing: we found a «life buoy» for the economy of independent Ukraine. This is the revision of the enslaving gas agreements. The price for imported gas fell by 100 USD per a thousand cubic meters. Chemical and metallurgical industries are working steadily.

Thanks to the revision of the agreement with Russia, our state annually saves 4 billion USD. This is the cost of building of a new nuclear unit or 4 thousand km of highways, or a large bridge over the Dnieper. In general, the country will save 40 billion USD that will be invested in the modernization of the industry and infrastructure.

It is difficult to overestimate the restoration of good-neighbourly and partnership relations with Russia. «Reset» in the economic cooperation between our countries has given a «second wind» to domestic aircraft building, space industry, energy sector, nuclear energy, engineering industry, shipbuilding and so on. I would not like to ride before the hounds because practical results in such high-tech areas appear at least in a year or two. But this is the fact that we have already been provided with nuclear fuel, cheaper gas, offers for power and transport engineering, that we will soon begin forming teams of builders to build new nuclear power units.

Those, who have expected that this will spoil our relations with the European Union, have been making allegations again. After a five-year period of Ukrainian «chattering» Europe has understood that is dealing with the state that do not have to be pushed for reforms, but dealing with the European country which started reforms itself.

EU High Representatives stated that they are ready to form a free trade area with Ukraine, to sign the Association Agreement, to negotiate a visa-free regime. The EU finally expressed a clear interest in the modernization of the Ukrainian gas transport system.

World expert community objectively assessed a new course of our Government. For the first time during the global economic crisis Ukraine's rating is consistently growing. Over the last two months, the rating agency Standart & Poor's has increased the rating of Ukraine three times, returning it to the pre-crisis level.

The European Bank for Reconstruction and Development has improved the forecast of GDP growth in Ukraine.

Finally, Ukraine for the first time of its independence has really launched reforms.

The Parliament passed in the first reading a new version of the Budget and Tax Codes developed by the Cabinet of Ministers. When they are adopted as a whole, the budget for 2011 will be drafted on innovation basis.

Regions in 2011 will obtain an additional resource of 23 billion UAH, as regional authorities will receive eight national taxes and duties and 20% of profits from corporate income tax.

Business will feel a significant reduction in the tax burden: the number of tax will be taken a third, income tax rate will fall from 25% to 20%, VAT - from 20% to 17%. Small business will receive for the first time five-year tax holidays.

In addition, the Government decided to reduce by 80% the list of activities that require licenses and permissions. The Government has already submitted such bills to Parliament as:

- Simplification of state registration and termination of business entities;

- Introduction of electronic public register of business entities;

- The beginning of economic activities on the basis of the declaration, not permission.

Simplification of tax, licensing, regulatory procedures is the first step against corruption.

Second one consists in a tough legal treatment of officials’ actions. Now we are scrutinizing all «lucrative» areas: the State Reserve, Agrarian Fund, State Tax Administration, NJSC «Naftogaz of Ukraine» and other state structures.