Five strategic tasks. What the Ministry of Finance is targeting in 2016


Natalie Jaresko
Minister of Finance of Ukraine

In the end of last year the Verkhovna Rada adopted a number of initiatives which the entire team of the Ministry of Finance had been long and persistently working on.
Reduction of the payroll tax, reduction of rent fees for the natural gas production in Ukraine, verification of social welfare recipients, better targeting of social welfare payments, significant reduction of public spending (without taking into account the financing of the Pension Fund’s deficit)… - these are only some of our accomplishments in last year which were also supported by the Parliament.
Our plans for the current year are not less ambitious. We want to see a rapid economic growth of Ukraine, and we want to see a free economy with minimal state interventions and equally favorable conditions for all businesses.
To do this, we will be striving to achieve a number of targets.

5 strategic tasks for the Ministry of Finance

Our first target for the current year is to fight corruption in all areas where the Ministry of Finance is in charge.

First of all, we must be focused on our tax and customs authorities; in this area we must comprehensively revamp the State Fiscal Service. This is our most critical, important and, unfortunately, complicated task for 2016.

The reform of the DFS is already under way – we launched it in June last year, when we adopted the two-year reform plan for the DFS.

Some points from this plan we have already fulfilled. Thus, in November 2015 the Cabinet of Ministers halved the number of the regional DFS offices, which makes it possible to reduce the number of employees at our tax authorities by almost 17 thousand persons.

However, there are much more tasks left which we must finalize significantly faster than we used to do.

They include the following:

а) Three draft laws already submitted to the Verkhovna Rada must be adopted to implement several important steps in the reform of the DFS. These are our draft law No. 2176а,2177а, 2178а
b) We must reform our Office for big tax payers. It must have our best people who should be employed just like our new policemen were, i.e. "from the scratch".
c) Automation of the workflow at the customs and tax authorities to a maximum extent. This step requires significant funding for the development or purchase of the necessary software.

The Ministry of Finance is currently negotiating with the governments of other countries to arrange technical assistance for Ukraine in this matter (not funding, but equipment, software and specialists).

The second strategic task of the Ministry of Finance in this year is, just like I have already said today, to discuss a comprehensive tax reform with citizens and the Parliament and to implement it with the most comfortable timing for business and citizens, i.e. by July 1, 2016, latest.

Our third target is to secure effective and targeted use of taxpayers’ money, to further improve the budget discipline and to reduce the public finance deficit. This includes the following:

1) Verification of social welfare recipients. The verification system is already in position, it works, and we already see the first results. We will be keeping our citizens posted about our progress here.
We know that this system will help us save significant amounts of public money and use them to help citizens who are really in need.
2) Implementation of the zero-based budgeting approach.
The state budget of Ukraine used to be elaborated on the basis of the previous respective year with corrections made according to the financial capacities of the country. Now we want to elaborate the state budget "from the scratch", analyzing each separate cost line and engaging our society to decide if we need to provide funding for respective areas or not.
3) Broader use of the web portal for the tracking of public spending E-Data.
4) Creation of a department – at the Ministry of Finance – for the assessment of fiscal risks related to state-owned companies.
Our fourth task is to further strengthen the banking sector of Ukraine with the focus on state-owned banks.

Here we expect the Verkhovna Rada to act fast to adopt the legislation implementing best international practices in solving the issues of bad loans to companies as well as an effective mechanism to solve the issue of loans in hard currency received by debtors for the purchase of their single residential property.

We mean our draft law No. 3555 on financial restructuring as well as the draft law on the restructuring of hard currency mortgage loans which we are going to submit to the Verkhovna Rada within next days.

We are also convinced that the state-owned banks must be reliable and strong, they must have a clear development strategy and effective management. Very soon we will submit the Development Strategy of the state-owned banks to the Government and to our public for examination.

Finally, the fifth target of the Ministry of Finance for 2016 is to increase investment resources available in Ukraine by gaining new loans from our bilateral and multilateral partners.

These investment loans must first of all be used for the development of the transport and municipal infrastructure of our country.

I am sure that these reforms will pose the next important milestone on our way to improve the transparency of the public finance, to reduce the role of the state in the economy and to liberalize the economy in general.

The overall objective of all above steps is a fast and sustainable economic growth of our country aimed to secure prosperity to each citizen and to the whole society.

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