OREANDA-NEWS. July 15, 2010. Mykola Azarov: Dear members of the Government! There is a crucial issue on the agenda. The Government should consider and adopt a memorandum on cooperation with the International Monetary Fund. Thus, negotiations on a new standby arrangement for Ukraine practically completed. I want to thank all members of the Government, primarily to Sergiy Leonidovych Tigipko, for active work with the International Monetary Fund.

In which conditions we began negotiations with the IMF three months ago? There was an economic recession in foreign markets. Since April demand and prices for major Ukrainian export products (metals and chemicals) gradually have been decreasing. The situation in world financial markets has been also complicated. You remember the budget crisis in Greece, financial complications in Spain, Portugal and other countries of the euro area, the euro fall. All this has led to growing cost of foreign borrowing for developing countries.

The internal situation, despite the positive trends in the economy, hasn’t reached the pre-crisis level. Yes, we all have seen restoring of construction, production but inertia of a two-year recession is very severe. The crisis is still in Ukraine.

At the same time, budgetary expenditures, on the contrary, significantly increased compared to 2009 and even the pre-crisis year. This was due primarily to the fact that our Government had to pay astronomical debts of the predecessors who funded the budget mainly by borrowings. In addition, our economy was battered by the gas deal signed in January 2009. As under the terms of the contract Ukraine faced each quarter Russian gas price increase. This is despite the fact that in Q2 Kharkiv agreements foresaw 100 USD discount per 1,000 cubic meters. Price formula adopted in 2009 still identified the rise, although not as significant as it would without the discount. That is, the recovery was hindered and therefore budget revenues.

We must tell people the truth: in such circumstances we had no other choice but to negotiate with the IMF to provide Ukraine with financial support. It is necessary for overcoming the crisis, implementing structural reforms, modernising economic potential, energy saving, creating new jobs. IMF financial support will help Ukraine to withstand the impact of continuing global turbulence.

During the negotiations with the IMF mission the Government defended his vision of the recovery, as well as measures of social protection. But the creditor's position is always stronger than a weak country that needs support. Therefore, this memorandum (which actually provides more loyal items for Ukraine than those that were in secret signed in 2008 by our predecessors) is today the only possible compromise for the benefits of our country. The sides made each other concessions.

I will not hide: obligations undertaking by Ukraine are quite complex, but they all satisfy our own vision of development. Tell me: is it not in our interests to reduce the budget deficit this year by 5% and next year by 3.5%? Can you continue to live in debt? That is no alternative, we must get public finances under control, strictly save money, save energy, carry out reforms. There is simply no other way to become a developed European country.

All EU countries are keeping this way. Items set by the IMF are not exclusive especially for Ukraine, they are typical for European countries that overcoming the crisis. Today Ukraine is joining the European way, the general direction of overcoming the global crisis.

Dear colleagues, the Government will consider extremely important and urgent issue of strengthening social protection of citizens due to the fact that the NERC decided to organize gas tariffs to bring them gradually closer to real costs.

We can not and we will not act as our predecessors who forced the independent power market regulator to reverse its decision, and pretended that the problem was solved. Our Government keeps within the law, while responsible for balanced, sustainable operation of the whole national economy under any circumstances and consistent with normal market principles.

Therefore, we must do what is necessary and caused by the current situation: provide citizens with the maximum possible social protection, offsetting part of their costs for housing and communal services. A decision, that we are to approve today, is aimed primarily at reducing the part of the family budget in low-income families sent on utility bills.

According to the current decision the Government compensates to citizens such costs for utility services: if they exceed 20 per cent of total income for the working age and 15 per cent for the disabled.

The Government will significantly expand the list of families that can use the state aid through grant for housing and communal services. There will be offset by costs that exceed 15 per cent for the working age and 10 per cent for the disabled.

Second: we greatly simplify the procedure for allocating the state aid. Offices of the Pension Fund Office have to calculate grants on the basis of its own data base of pension recipients. I emphasize, therefore, for families that consist solely of pensioners, the amount of subsidies will be automatically charged so that the costs of such families for utility services won’t exceed 10 per cent of total income.

However, the social services should send a message of opportunity to reduce costs for utilities to each family with working citizens in order to save the family budget. It should explain how to make an application for grants, fill in a declaration on family income.

Bureaucratic procedure for subsidies will be simplified. It is necessary to explain to every citizen that the Government introduces a grant application. That means that under a new order, a person should not go to housing offices, enterprises and various institutions to collect endless documents. All required documents should be prepared and made by the social services. I say once again: no other documents except an application and earnings certificate should be required. As for pensioners, offices of the Pension Fund must undertake all necessary work.

Social services are to process the given information and provide an appropriate grant.

The Government sets one and a half month for all this work on giving the target state aid for utilities. Before 1st September every family in the country must be informed about new opportunities for receiving the state aid, saving the family budget, and avail of the opportunity provided by the Government.

Difficulties may arise due to the fact that holiday period is at the peak. Nevertheless, we have enough time, as well as sufficient organizational and technical resources. I call on all ministries and agencies, local administrations and regional government agencies, all involved in organizing additional social protection to complete this large-scale and meticulous work on time and with maximum attention to the people. We will assess the performance according to the final result: from September 1 every citizen who needs the state assistance, must receive it.

It is also extremely important that all necessary work is to be carried out without the confusion and complaints from citizens I warn that the Government will essentially come to an evaluation of this work with the people. We will take rigorous actions against those who treat it without responsibility or indifferently.

According to him, if this phase will take place with the understanding and support of people whom the government would protect from overload, then it will open the way for reform of housing and communal services, to ensure that these services would be in Ukraine of high quality and meet European standards.

I want to stress: what we are now dealing with is a difficult matter of correcting enormous populist socio-economic distortions, "patching holes”. Clearly, this is not an easy thing and people should understand and feel that in reality it is the only way to a new quality of life. Outdated disease at the last stage could not be treated sweet pills and bravura march.

If we receive understanding and support of those people protected by the Government from further stress, then we can start reforming the housing and public utilities, receive the services of the same quality as in any European country.

Another side of this process consists in preparing national economy and especially housing to permanent work during the autumn-winter period. I mean a comprehensive preparation: the replacement of heating systems, boiler repair, insulation of buildings, to provide vaccination to seasonal infections and establish the necessary supply of drugs.

I emphasize that our Government was forced to cut budget expenditures in 2010, but we didn’t limited one iota of resources meant for health care and other social matters. So we have every right to ask for winterization, as they say, "in full".

First Vice Prime Minister Andriy Klyuyev was instructed to organize next week an extended meeting on preparation to the autumn-winter period. At this meeting we need to identify priorities, areas of risk, to approve goals to be achieved in the 2010-2011 on the quality of municipal services, sustainable transport work, preventing diseases, etc. People should know and see for what they give money earned by the sweat of their brow.

At the same time I instructed to develop a medium-run plan for 2011-2012 for these areas - also with goals, tasks, milestones, a target-program structure. It is impossible to solve longstanding problems during one or two seasons. It is profanity.

Wage arrears are one of such problems. We've removed the issue from the agenda in 2004, but since 2005 no one dealt with this problem systematically. We again had the mission to eliminate this shameful phenomenon. I emphasize that the President of Ukraine keeps under personal scrutiny issues of pay arrears of wages, and requires daily work of the Government in this direction. So I draw attention of Vice Prime Minister Tykhonov as coordinator of the process.

Dear members of the Government, we have on the today’s agenda the decision on strengthening the labor market and reducing unemployment. In addition, we are expanding the list of professions and specialities, for which employers will get grants for young people first job. We encourage crating jobs for working professions, education and teaching, mining, construction and agricultural fields. This will help young people who received a diploma to get a job and also start a career.

Furthermore, we will consider the main directions of state employment policy for 2010-2011.

Also plans to approve the minimum standards for the population provision with solid fuel and liquefied gas, and limits of their cost, which will form the basis for the calculation of benefits and housing subsidies.

We will also consider the payment of lifetime payments for participants of the battles, the citizens who have been subjected to harassment, which have special merits to the motherland.

The release of the 2010 book production under the program "Ukrainian book" would be considered. "The State budget provides 33 million UAH to run this program, it is times more than it was previous years".

Allocation of funds for implementation of priority measures on emergency relief.

In addition we will address the effective implementation of national programs of reform of Housing and "Potable Water", construction and repair of roads of state and local significance in the context of preparations to Euro 2012.

We will look at the list of electric power facilities for construction and renovation of which nearly 700 million UAH will be provided, the geography of their location is wide - Crimea, Mykolaiv and other regions.