Source: НВ
If a state of emergency is introduced in Ukraine and most non-strategic enterprises are shut down, it could have catastrophic consequences for the Ukrainian economy.
This is stated in a joint statement of the Union of Ukrainian Entrepreneurs (EUP), the European Business Association, the Federation of Employers of Ukraine, the Ukrainian Agrarian Business Club, Business 100 Magazine, IT Ukraine Association and SEA club Ukraine.
The statement said the business supports efforts by the president, government and local governments to introduce quarantine measures to counteract the spread of SARS-CoV-2 coronavirus.
“We fully agree that this is an extreme threat to the citizens of Ukraine and that maximum measures are needed to protect human health. At the same time, we believe that the introduction of a state of emergency with the shutdown of most non-strategic enterprises is premature and could have catastrophic consequences for the Ukrainian economy. Thus, if most companies are stopped, millions of Ukrainians will lose their jobs and the budget will be a large part of their income. The social consequences will be very negative, a large number of people, without accumulation and loss of livelihoods, may go out in protest with despair, and the financial and organizational resources to fight the virus in the state will be much less. Accordingly, the consequences of the pandemic will be truly critical, ”the statement said.
It is noted that as of March 22, Ukraine has already implemented a set of more stringent measures compared to the rest of the countries. These include, inter alia, the ban on international and long-distance traffic, significant restrictions on public transport, the closure of public facilities, including catering, concert venues, and retail chains.
“Countries where the number of patients per million people exceeds the figures of Ukraine hundreds of times (Germany – 286 patients / million people, the Netherlands – 246 patients / million people, Sweden – 191 patients / million people, etc.), use only part of the measures implemented in Ukraine. At the same time, Ukraine is planning a new significant expansion of the range of measures to the already existing list, which is comparable only to the ones introduced in the most affected regions of Italy and China, in particular, the ban on the activities of non-critical infrastructure enterprises is planned. This, in turn, will result in the loss of millions of jobs and significant budget cuts at various levels, ”the business associations said.
The statement emphasizes that other states are launching multi-billion dollar economic support programs because of the losses associated with the COVID-19 anti-proliferation measures.
“For example, in neighboring Poland, the economy is expected to spend 212 billion zlotys (1.37 trillion hryvnias). Ukraine does not have sufficient financial reserves, so if an additional set of quarantine restrictions are introduced and a large number of enterprises are stopped without an adequate economic support program, it will lead to a deep economic crisis and difficult social consequences that are difficult to foresee. Leading experts say that if quarantine is extended for several months, Ukraine’s GDP will fall by 9% in 2020, and the hryvnia exchange rate may reach 35 UAH / $. But if only strategic businesses remain, the consequences can be even more critical. Of course, it takes more time to estimate them in detail, but the actual loss may be estimated by a 40% drop in China’s GDP in the first quarter of 2020 compared to the previous quarter, reported by JPMorgan Chase & Co, ”the statement said.
The business community believes that in the current environment, it is necessary to focus on the following:
1) prevent significant loss of jobs;
2) fulfill the obligations to the IMF as soon as possible and to adopt the necessary laws to obtain financing, in particular the law on the impossibility of returning banks to ex-owners;
3) immediately reduce budget expenditures (stop financing state programs, etc.) and send released funds to combat the pandemic;
4) ensure prompt and effective verification of recipients of pension and social benefits and benefits, which will identify non-existent recipients and, accordingly, reduce the state budget expenditures;
5) centralize the use of funds in the local and state budgets to control their use solely to combat the pandemic;
6) the state must provide the state with tax-free minimum income to the workers affected by the introduction of quarantine measures;
7) suspend the imposition of any financial sanctions on all entities that have loans in banking and financial institutions.
“In view of the above, the business community appeals to the President of Ukraine, the Cabinet of Ministers of Ukraine and the Verkhovna Rada of Ukraine with a request:
Immediately involve the business community in the development of step-by-step actions to reduce the negative impact of the pandemic on the economy at both the national and regional levels;
make and implement decisions only after discussing and agreeing with the business community.
“The business community is well aware of the complexity of the challenges facing Ukraine today and are ready to cooperate with the authorities. We are also responsible for the well-being of millions of our employees and demand that the state do its utmost to prevent business shutdowns, which will lead to even more serious consequences and leave a large part of the country’s population without livelihoods, ”the statement said.
In Ukraine, as of March 23, 73 cases of coronavirus infection have been confirmed. Three of them are lethal. The country has quarantined until April 3. Crossing points at the state border of Ukraine for aviation, rail and bus transport are closed. Mass events are prohibited, schools and universities, shopping centers, cafes and restaurants are not open. In Kyiv, since March 23, public transport has transported only those passengers who go to work for businesses providing critical areas of city life.
Due to the risk of the spread of coronavirus, an emergency regime has been introduced in the Kyiv region, Kyiv and several oblasts since March 18 . Minister of Health of Ukraine Ilya Yemets supports the introduction of a state of emergency in Ukraine.