OREANDA-NEWS. January 06, 2011. Opening speech of the Prime Minister of Ukraine Mykola Azarov at the Cabinet of Ministers session, dated January 5, 2011

Today we hold the first session of the Government in 2011.

Without exaggeration, this is a special year for Ukraine.

Firstly, 2011 is the Jubilee year. We will celebrate two decades of existence of our country.

What the country would come to the anniversary with? How will we celebrate it? It depends on us, on all the hard-working people of Ukraine. It is important to formulate the goal, to set tasks and pinpoint the direction and movement phases.

I see, given the mobilization of our efforts, that until August Ukraine will finally overcome crisis - as in the economy, so in the public consciousness. We set ourselves the ambitious task and if we deliberately solve it, then we would celebrate the anniversary worthy.

Second, for twenty years the state for the first time began to live following the fundamentally new rules of economic activity, fiscal and social sphere. Starting January 1, tax code, budget code, Law on the Judiciary and status of judges, changes to laws "On state aid to families with children, in respect of payment of maternity benefits", the basics of social protection of disabled people and others came into force.

All 28 laws are in force, including 13 in finance and economy, 4 in the social sphere.

2011 opens a new chapter of life of the state – chapter of radical transformation and modernization.

I draw the attention of all members of the Cabinet of Ministers on the need, above all, to focus on the investment programs. On them depends what Ukraine will become in the anniversary year and what will be in subsequent years.

We must build the investment programs on the principles of public-private partnership. Every minister, every head of department and region have, together with the heads of state enterprises, with entrepreneurs, to identify short-term programmes for the current year, which, however, will become a "bridge" to the medium term - 2-3 years - investment programs.

At the same time, I emphasize that we give priority to investments of innovative character. If you are not close to innovation, technological backwardness of our industry is the death sentence for the country. Take, for example, the steel industry. If within the next few years we do not solve the problem of innovation restructuring of this sector, the pace of updates of metallurgical industries in the world will not leave any chance to native plants to hold the markets. Without modernization of Ukrainian steel industry there are no prospects.

Therefore, in the acceleration of investment and innovation processes the Government is ready to provide substantial and maximum support. Moreover, we have such a powerful tool to interest investors, as the Tax Code, which previews the accelerated depreciation of fixed assets, exemption of income that is directed to upgrading of production, tax exemptions for priority economic sectors. In addition, we have significantly simplified the conditions for starting and doing business, reduced regulatory procedures.

Government and the Bank would determine the amount of credit funds, which this year could be allocated for investment and innovative renewal of national economy. These programs can be significantly enhanced by credit resources, both of public and commercial banks.

That means that the state has created conditions for manifestation of business initiative and will continue to improve the investment climate. State support for innovation and investment development should be of even more substantial scale.

We look forward to intensive expansion of investments, primarily domestic business. The modernization of the country is not possible if the owners of our companies are not engaged in production updating, introduction of advanced technologies.

I ask the First Deputy Prime Minister - Minister of Economy Andrei Petrovich Klyuyev to take under the personal control the whole complex of extremely important and major issues related to the program to modernize our industry.

I ask him to submit to the government consideration a year program of investment and innovation activity by 21 January.

In terms of the domestic market, it is also extremely important to ensure orderly development of infrastructure. Actually, this is the accompanying process of modernization of industry. Developed infrastructure is the magnet for investment. Therefore, the infrastructure projects that we began to realize last year should receive logical continuation and completion. Thus, the task is to develop these projects in 2011 at a faster pace than the last year. This year we have to complete in general all the projects for Euro 2012. Without stopping we have to start new projects, create serious reserve for creation of infrastructure facilities in the coming years. Covering few years, our roads, interchanges, railways, airports have to receive entirely European appearance and be, of course, of European quality.

The Vice Prime Minister - Minister of Infrastructure Borys Kolesnikov should focus on this task.

Last year we were unable to recover in construction. However, after almost 60-percent drop in 2009, we have managed to overcome the negative tendency in construction industry.

We must now accelerate the pace of recovery of construction works. We must not only to "finish" the unfinished projects and question-ending project, but also to lay a solid foundation for the building - primarily of housing, hospitals, schools, kindergartens, i.e., the social infrastructure that will ensure normal living conditions of our people. Construction is another decisive sector of the domestic market, which, together with infrastructure is a catalyst for investment and growth processes related areas. By building "momentum" of the sector personal responsibility is for the Vice Prime Minister - Minister of Regional Development, Construction and Housing Viktor Tikhonov.

2011 is a watershed year in terms of social transformation. We must find incentives for innovative transformation of the pension system. To describe the current vulnerable state pension I would offer only two facts.

First: in 2010, support from the State Budget for the Pension Fund amounted to almost 60 billion UAH. Salary with benefits to all the budget employees made 52 billion UAH.

Second: only the first two weeks of New Year to ensure the uninterrupted payment of pension from the State budget we must provide the Pension Fund of about 9 billion UAH. This is more than all the revenues in that period. And the most important, such an extraordinary burden on the budget does not give our pensioners a decent living.

Therefore, creation of an effective pension system is the urgent problem of our society and priority task for the Government. This set of issues is the personal responsibility of the Vice Prime Minister - Minister of Social Policy Sergiн Tigipko.

One modern philosopher formulated the following paradigm: the strength of the bridge is calculated by the thinnest support, and quality of life by the most vulnerable groups. I think we have to listen to this thesis and to develop indicators of life, which will objectively reflect both for our society and the world the state where we are.

I cannot but to pay attention to the problems of the agricultural sector. On the one hand it definitely is an advantage of Ukraine, on the other hand that is the most deficient economy sector.

Last year, we stopped a catastrophic reduction in livestock production. Moreover, for the first time in recent years we managed to increase livestock production.

This year we have to ensure the accelerated development of that industry.

Spring field works are not far off, and so the Ministry of Agricultural Policy is responsible for creating appropriate conditions for seeding, signing forward contracts and empowerment of the market of agricultural products. In particular, the year will be marked with the construction of agricultural wholesale markets. For the first time we actually begin to create conditions under which agricultural manufacturers can go directly to the buyer and thereby remove the intermediaries’ "cheat" price.

The Ministry of agricultural policy has concentrated significant financial resources and the Government respectively, uncompromisingly, asks for their competent, efficient use.

Personal responsibility for this lies on the Minister of agricultural policy Mykola Prysyazhnyuk.

In my opening speech, I cannot describe all the tasks our Government faces. I stopped only on high priority topics given the economic development.

Why is this priority? Because only economic growth, which we would reach this year, would determine the quality of life in our country. If the economy develops rapidly, with the same rates wages and pensions would increase. We will create more funding for all areas of life.

Thus, our main task is starting the first day of the new year to give a clear signal for the development of all spheres of the country.

Today we have the summed up first results of the 2010 budget. Despite our opponents’ panic predictions, despite extreme decline in 2009, budget revenues made last year 99%. The deficit we kept within 5%, after reckless 15% deficit in 2009. Through effective external funding, we have to reduce domestic borrowing by 30 billion UAH. This means that we stopped vicious practice of leaching credit resources, which could be used by domestic companies.

This allowed us to finance the absolute social obligations of the state.

Facing huge difficulties, we have got out of the crisis. However, unlike most European countries, which have cut social security benefits, we fulfilled the social standards.

Social payments, which are protected, were 12.5% or 23 billion UAH more than last year. We paid about 23 billion UAH aid to families with children, 1.6 billion UAH for subsidy for housing and communal services to poor families, 2.5 billion UAH for Chernobyl programs and more.

On the agenda.

For the smooth implementation of the Law "On the State Budget of Ukraine for 2011" today we will issue a Government resolution, which regulates the central treasury services of the central executive authorities being in process of liquidation or reorganization.

We continue passing regulations aimed at implementing the provisions of the Tax Code.

Among these documents - the Government resolution, which approves annual quotas within which ethanol used to produce medicines will be delivered at "zero" rate of duty.

In addition, to implement the state's dividend policy the Cabinet will approve the basic standards of income part deduction of business organizations, whose authorized capital is the state corporate rights. I draw attention of the First Vice Prime Minister Andriy Klyuyev, as well as of the State Property Fund Chairman Alexander Ryabchenko, that the adequate funds are transferred to the budget unsatisfactory, and we will not tolerate such a situation.

Pursuant to the Law of Ukraine "On the reduction of debt to the pension fund of the companies having strategic importance, and of the mining enterprises and restoration of pension rights of workers" to the Cabinet members consideration are submitted:

Ø order on debt payment instalment for compulsory pension insurance for the companies having strategic importance for the economy and national security;

Ø order on pension fund loans debt relief given at STA expense on the amount of debt relieved from payment of fines and penalties for coal-peat enterprises. I would note that the debt was created by decision of the previous Government, while the Pension Fund has not received proper receipts. We managed to untie this knot.

In addition, we will approve the plan of actions to protect the interests of national manufacturers on international markets.

We will consider changes to legislation aimed at strengthening control of mortgage contracts and mortgages of land and property rights.

In general, during 2011 we will make a considerable work in the field of land relations. This is improvement of existing legislation (drafting the law "On Land Market"), delimitation of state and municipal land property and of powers between local authorities and executive authorities concerning lands management within settlements.

In addition, the Government will consider additions to the list of narcotic drugs, psychotropic substances and precursors, which introduces their new species, and changes to the maximum allowable amount of these substances contained in medicines.

These changes are aimed at bringing this list in compliance with the international treaties.

Recently, the Government adopted the Concept of integrated border management, aimed to ensure the appropriate level of border security of the state in accordance with European standards. Today we will approve the action plan for its implementation, which would bring a new level of international, transborder and interagency cooperation.

Besides that, today we will consider draft resolutions of the Government, which proposes to arrange matters of the Unified state register of court decisions in accordance with the provisions of the criminal procedural legislation on secrecy of pre-trial investigation.

Thank you! We start with the issues on the agenda.