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Rebellious Age. How the Government Wants To Reduce the Pension Fund`s Deficit

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The sources in government say that they will not raise the retirement age, but will expand the circle of contributors to the Pension Fund. CASE Ukraine`s CEO Dmytro Boyarchuk commented to the ‘Focus’ magazine on whether this policy is justified.

… According to Dmytro Boyarchuk, CASE Ukraine Center for Social and Economic Research`s CEO,  the impact of fiscal instruments of filling the budget will be limited. It is impossible to consider the economy as a static unit, as it is done by the Cabinet of Ministers. That is, they hope to collect up monthly UAH 60 million more revenue simply by imposing 200 thousand entrepreneurs of an additional UAH 300 tax per month. A simple arithmetic does not work here. ‘The economy is a living body. This additional burden will simply destroy someone`s meaning of entrepreneurship’, Boyarchuk says.

When talking about standard solutions to the problem, Dmytro Boyarchuk emphasizes limiting the rate of growth of pensions, actively assisting citizens’ incomes and improving the demographic situation.

It is not necessary that the failure of raising the retirement age in the short term can put an end to cooperation between Ukraine and the IMF and would make it impossible to obtain the next tranche of funding under the extended program. ‘There are many other important reforms in the IMF list, which, when implementing it properly, the Fund may like. For example, the land reform’, Dmytro Boyarchuk comments.

Read the full article [in russian]

February 7, 2017