The hryvnia is under threat: Pensions paid due to the devaluation


Курс гривны под угрозой: Пенсии выплатят за счет девальвации

Loans Pension Fund emptied the state Treasury, and, according to expert opinion, the authorities will devalue the hryvnia, to pay pensions and to fill the budget. The consequences can be catastrophic – millions of Ukrainians go abroad, and the army dismissed impoverished officers.

To hold on until September

In July, the balance on the Treasury single account (TSA) declined to 78.7% from 9.3 billion to 1.9 billion UAH. This is stated in the report of the State Treasury service. The decrease for the month was 7.4 billion UAH. due to loans to the Pension Fund.

In July were recorded for the mass delays in the payment of pensions, and the Pension Fund explained that the shift of the schedule of financing payments attributable to the cash gaps income of single social contribution (ERU). Then, the state Treasury has allocated loans to the Pension Fund, for the financing of pensions in July.

Then, sent the money for the payment of pensions in August. On July 31, the Treasury has incurred for payment of pensions and other expenditure of the Pension Fund of Ukraine in the amount of 110, 4 million hryvnia.

Pensions in August promise to pay on time. Issue will begin with 4 numbers. But what will happen in September is not yet clear.

We will remind that since July 1, in Ukraine increased minimum wage and increased pensions. So, the cost of living from July 1 increased by 77 UAH and UAH 1777 per person. The subsistence minimum for persons incapacitated increased by UAH 62, respectively, pensions to such citizens increased from 1373 1435 UAH to UAH.

Experts stated the miscalculation of the authorities in the collection of SST, which accounts for about 60% of the revenue base of the Pension Fund. Say, six months of ERUs for the needs of the Pension Fund were collected only 89 billion, which is 15 billion less than planned.

Economist Andrei Blinov noted that ERUs in this year is going by 27.6% more than in the past (a key reason — the same wage growth). But it’s still less than planned.

“PFC is constantly taking short-term loans from Treasury to cover the proverbial cash gap. In January-June 2018 with CEN borrowed 45.4 billion hryvnia, quenched — 38.9 billion hryvnias. That is, at the moment, the Treasury lends to the PFC 6.5 billion”- the expert wrote in Facebook. He stressed that the monthly payment of pensions required to 29.3 billion.

Receipt of a single social contribution are the main source of replenishment of the pension Fund and approximately 40% of the pension Fund consists of budgetary subsidies.

A single Treasury account is a system of budgetary accounts of the Treasury offices, which are credited taxes, charges, other obligatory payments to the budget from which the bodies of the state Treasury are payments to entities that performed work or rendered services to managers of budgetary funds.

The minimum balance of the single Treasury account in 2018 stood as at August 1 1, 9 billion hryvnia, and the maximum was 20.1 billion UAH on 1 February. Similar to the current equity level of CEA was observed in December 2013, when the rate was 1.73 billion UAH.

After that Mykola Azarov’s government issued Eurobonds for $ 3 billion at 5% per annum, which bought the Russian Ministry of Finance. After receiving the money, the Azarov government has financed social spending. Now it’s called the “Duty of Yanukovych,” Ukraine disputes the necessity of repayment of the Russian Federation in a British court. Talking about the loan for the payment of pensions, the government Groisman does not.

To pay the poor due to the impoverishment

Economist Viktor Skarshevsky sure that the money for pension payments the government will receive from the fall of the hryvnia. At the same time fill the state budget.

“The government will fill the budget revenues due to the devaluation of the national currency. That pension will pay for the expense of the impoverishment of Ukrainians. Thus, the government will be able to execute the revenue part of the budget,” – said the Economist.

However, experts believe that the devaluation will have a negative impact on low living standards of Ukrainians. The ex – Minister of justice Elena Lukash wrote in Facebook: “Genocide for some reason called the reforms”. She listed: the budget Deficit of Ukraine in the 1st half made up 9.78 billion. Debts under the salary have exceeded 2.7 billion. – this is the highest figure for the last 10 years. Almost every 2nd family can’t pay for communal and applies for the subsidy. In 2017 it received of 9.62 million households – the highest figure during the years of independence. The crisis of non-payments for utilities reached almost $ 17 billion.

Ukraine has the highest inflation rate among European countries. “About 10 million Ukrainians left the country for employment abroad. Loss of the working population today is almost equal to the losses in the Great Patriotic War. The money migrant workers is the main factor that keeps the hryvnia from devaluation of the final”- says Lukasz.

Note that the workers in the first half of 2018 has listed 5.3 billion according to the NBU. (for comparison, foreign direct investment came only 1.2 billion). However, the authorities have a pressing need in the collapse of the hryvnia. Indeed, in the budget laid 29,3 rate of hryvnia to the dollar, and at a higher rate is not enough money.

Viktor Skarshevsky says that for 7 months of the state budget shortfall of 16 billion hryvnia. First of all did not get through customs as the dollar was 10% lower than budgeted.

 The collapse of the Hryvnia – the impact on national security

Sources of filling the budget was at the current rate. Skarshevsky stated the failure of the rent on extraction of natural gas, which caused a shortfall of 2.2 billion hryvnia, which was lower than the 16% of the required plan.

Also, the state budget shortfall in dividends from state-owned enterprises. First of all, we are talking about the “Naftogaz Ukraine”. The government allowed him not to pay in full dividends for last year. Instead of 30 billion UAH, “Naftogaz” paid to the budget of 11.8 billion. That is 18.2 billion hryvnia, than it should be.

“If “Naftogaz” has paid the full amount, then any deficit would not be. Accordingly, there would be talk, what the Treasury is empty”,- said Viktor Skarshevsky.

If the budget will be replenished due to the devaluation, the consequences can be unexpected for the authorities. So, with the current level of income for the first six months retired from the army 11 thousand officers and contractors who had combat experience, and another 18 thousand plan retires before the end of the year.

This is stated in the letter from the Minister of defense Stepan Poltorak, addressed to the Prime Minister Volodymyr Groysman – reported news portal Ukrainian Military Pages.

As noted, among those who left the army, 36% of soldiers described the reason for his departure low wages. So, in early 2016, the minimum size of the monetary allowance was 7 thousand. This amount was equal to about five minimum salaries, and nearly 1.6 average wage in the country. At the moment cash security of the military the first year of service — 7, 5 thousand hryvnia, while the average salary in the country — 8.7 thousand UAH.


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