Avakov suggests tripling budget deficit, initiating debt restructuring

Arsen Avakov, the internal affairs minister and one of
the most influential members of the cabinet, presented his own vision on
economic measures that the government should take to fight the upcoming budget
crisis in his blog on Mar. 22. Among them, he suggested augmenting the budget
deficit by at least UAH 200 mln (from the initial plan of UAH 96 bln, or 2.1%
of planned GDP), revising budget expenditures to exclude non-critical items
(though not to cut state-sponsored investment projects), initiating talks on
restructuring external state debt, offering compensation for those who are not
able to work due to quarantine measures, as well as offering some utility
payment exemptions. He also calls for reaching a soon deal with the IMF for an
extension of cooperation beyond the preliminarily agreed upon EFF loan program.

The 56-year-old Avakov has served as internal affairs
minister since February 2014, making him the most experienced high-ranking
official in Ukraine. At the same time, he is among the most scandalous
politicians, having a large disapproval rating among the public and being opposed
by the Western-backed NGO community. 

Alexander Paraschiy: It seems
like Avakov is voicing those ideas that the PM or president cannot express
openly. Definitely, the government will have no option but to substantially
increase the budget deficit, but currently the sources of such financing do not
look clear. At this stage, it’s too early to foresee whether the government
will have to implement all the measures listed by Avakov, as much will depend
on the timing of quarantine measures and the spread of infection in Ukraine.
Most likely, the coming two-three weeks will show whether Ukraine will have to
implement any extraordinary measures regarding public finance.