Remarks by Prime Minister of Ukraine Arseniy Yatsenyuk at a session of the Gov't on November 26, 2014

My greetings, respected members of the Government!

Pursuant to the Constitution of Ukraine, the Cabinet of Ministers of Ukraine divests itself of its powers before the newly elected Verkhovna Rada of Ukraine. Tomorrow is due the first meeting of the newly elected Ukrainian Parliament and today we are having the last meeting of the current Ukrainian Government which has relevant Constitutional powers.

It would be objectively justified to tell, what we had, what we have done, while the plans, I think, will be revealed by the next Government.

The core plan is to prolong what was launched by the current Government, the basis that we have built. This basis must become a fundament for a large Ukrainian house. The work is difficult and complex, but it is a general task for the entire Ukraine and this task can be fulfilled only on condition that the President, the Government, the new parliamentary majority are supported by the people of Ukraine and each of them does their job together with Ukrainian citizens.

In fact, it took nine months and these nine months have passed as if there were nine minutes.

The situation was characterized as extremely difficult. It hasn’t changed much. But throughout these nine months everyone of us was doing what he could, was doing what was necessary and didn’t spare an effort to keep the country under control, in order to make changes in an area, a direction each one of us was responsible for.

Certainly, getting back to the time nine months ago, when the country had been completely looted, lacking a public government system (the President had fled, the Government had fled, the reserves had been plundered, the gas had evaporated somewhere, the funds had been distributed among the pockets, the army didn’t exist, but we had the Russians). This was the country we received then. And it is a great merit, first of all, of the Ukrainian people, who realized the complex situation and that the Ukrainians supported all those unpopular austerity measures, hard measures which were taken by the current Cabinet of Ministers of Ukraine.

In fact, over the last two decades none of the government has found themselves in such adversity, as no Government was a military Government. Actually, Ukraine is at war with a nuclear state, affected by the Russian military aggression. Hence, it has been and still remains the main threat and the main sign of what difficulties our country is facing and what challenges we should overcome.

The Russian military aggression entailed occupation of Crimea and the situation when we temporary lost control over the Autonomous Republic of Crimea, as well as over certain parts of Donetsk and Luhansk regions. This challenge is for us to fight and this challenge will remain for a new Government, the President, the Parliament and, in particular, for us, the Ukrainian citizens.

I would like to tell objectively about the major improvements over the past nine months.

What has been done during the nine months apart from recovery and regaining control over the country, apart from the fact that the start, at least, started functioning and commenced to stand solidly on her feet.

Certainly, the primary and the most essential is the Agreement with the EU. We signed the Agreement, we ratified the Agreement and commenced implementation of the Agreement on the political association and economic integration with the EU member states. 

Concerning an economic aspect, Ukraine was granted unilateral access to the European markets. We can sell our goods in the EU and there is the first positive showing - exports of Ukrainian products to the European member states have grown by 12%, and it means plus USD 1.5 billion.

Second is, of course, a free visa regime. We have transferred to the next stage of a free visa regime and in the framework of realization of our policy called to simplify visa regime – introduction of biometric passports. There have been allotted UAH 150 million for relevant terminals and approved patterns of biometric passports. That is one of the key tasks - the execution of our basis principle on free travel of citizens – a visa-free regime with the EU member states.

The third is that there appeared the structure of the Government, which corresponds to the request of our Western partners. Each Ministry appointed Deputy Ministers on European integration, within the Government there was set up a European Integration Office. We have had also several joint meetings with our partners from the European Commission.

Our course towards the European Union is not easy, but it is pursued by the entire Ukrainian nation. This course is crucial for our country, and this way is irreversible, no matter what Russia and Putin are doing.

I would like to focus on economy and finances. Objectively, the Russian military aggression hasn’t just hit the Ukrainian economy but caused serious losses to the country. It has undermined any investment attractiveness of the state, so, because investors are very cautious people and to invest in a country where there are Russian tanks and Russian terrorists is a risky business.

Therefore, the Government has resumed its cooperation program with the IMF, the World Bank, the European Bank for Reconstruction and Development, the European Investment Bank. Today, private investors are not ready to invest in Ukraine, but international institutional investors help Ukraine cope with financial problems.

I’m very often asked about the amount of credits and on what they [credits] have been spent. I can publicly announce the sum of credits received by Ukraine from our international finance organizations.

Ukraine received in general US$8.6 billion from international financial institutions. Do you know how much have been spent on the debts that we didn’t do, as well as on the interests on these debts? US$9.1 billion.

Moreover, US$1 billion 670 million we spent on the debts of Naftogaz Ukrainy, namely Eurobonds that we repaid a month ago. Such arithmetic, my dear friends.

Today, I have ordered the Ministry of Finance. I want the whole country sees from whom we received the money as well as lenders who received this money. We are grateful to our international investors for assistance, as without their support we would have failed to repay our external debts, which are huge. Thus, we are carrying the main burden of financing the state budget and the financing of social expenditure went.

There were different forecasts regarding economy decline as well as budget deficit. Economy was assumed to fall to minus 10%: "Today we expect minus 7%, but not minus 10%. 3% is a serious log that we managed to achieve.

However, this is still a downward trend in our economy that is going down due to Russia’s military aggression, huge budget military expenditures, and that [economy] is partially destroyed by Russian terrorists, mainly on the eastern territories of Ukraine. Despite the fact that the industrial output - caused by bombed mines and enterprises– is minus 10%, we managed to collect by 5% more revenues to the state budget compare with the data in 2013.

It is my clear answer to the question whether we managed to close partially shadow and corrupt schemes. Yes, partially we did, including through de-shadowing trade in petroleum products and excise taxes on petroleum products, through tough tax measures primarily aimed at large profitable business or how we call it in Ukraine oligarchic business.

For some reason or other, all the predecessors had failed to raise the rent for ore, oil and gas, despite the fact that they had had a majority in the House and declared good purposes. We did it. Thanks to that, we increased revenues to the state budget.

We are holding the state budget deficit at the level of 4%. For a country that is at war, which has been totally looted, budget figures for revenues by 5% more than in the previous year and the deficit within 4% are acceptable.

On the VAT refund. Despite the difficult economic situation, we are refunding VAT to our producers and, moreover, we have introduced a public reporting system.

On a number of other measures undertaken by our Government. A total of 28,000 people have been let go as a result of the reduction in costs of keeping Ukrainian public officials. There were two stages of checks Some 40 top public officials were fired from the Cabinet of Ministers during the first stage. We have fired some 500 people in the second stage of lustration.

Of course, the social issue was and is very difficult. Our achievement is that we have paid all pensions, all salaries, all social benefits. This is despite the fact that now Ukraine has temporarily displaced persons, which had never happened before. Approximately half a million persons have been registered as temporarily displaced, and they get extra help – up to UAH 2400 per family. They also receive assistance for treatment, they should be settled. This means hundreds of millions of hryvnias allocating from the state budget because people are suffering, and we must prevent a humanitarian catastrophe.

Objectively, when this Government took office, nobody promised any improvement. In this year we paid what we could pay. Greece decreased some social expenditure by 40%, while we did not cut anything.

I would like to single out an energy issue. I just remind you that nine months ago the storages of the NJSC Naftogaz of Ukraine were empty. They contained 5 billion cubic meters of the so-called buffer gas. We increased these reserves up to 17 billion cubic meters of gas. Now the low temperatures have forced us to consume 2 billion. That is, we have in storages approximately 15 billion cubic meters of gas.

So, what have we done? We have pumped up 12 billion cubic meters of gas throughout the nine months. It is difficult, but the batteries are kept warm.

I always tell that there won’t be warm enough, but we will not freeze. Now I can say that there will be heating, just remain attentive. Gas shouldn’t be wasted, as those measures we took to raise tariffs haven’t yielded a result: in connection with devaluation of the national currency, we could not compensate for the deficit of company Naftogaz.

What is meant under the deficit of NJSC Naftogaz? The rates do not correspond to the market prices but gas needs to be paid for at the market price. With this aim we have allotted from this year's budget UAH 103 billion for NJSC Naftogaz of Ukraine to buy gas, so that a fare difference would be paid, between that paid by the population and the real cost of gas. Apart from that, out of this sum worth UAH 103 billion we paid USD 1 billion 670 million to repay the debt of NJSC Naftogaz of Ukraine.

What are our other improvements? We have managed to deprive itself of the Russian gas dependence. Not completely, even Europe cannot completely free itself from Russian gas dependence. But in cooperation with our European and American partners we have replaced by 60% the natural gas deliveries from Russia with gas from the EU member countries.

Not to mention that by refusing, and it was my personal principal position in June, then from persistent Russian proposal regarding a gas price, which included the so-called temporary discount that, in fact, would be USD 500 anyway, we have saved USD 0.5 billion. As the gas we are buying from our European partners is cheaper than gas we had to buy from the Russians. USD 500 million is the sum we should have paid to Russia, but we refused to pay and saved for Ukraine.

Certainly, we need to continue diversifying of energy sources and we are working out this issue with our European and American partners. We plan to increase the volumes of reverse gas supplies, to build new pipelines – the Government has already made a relevant decision – to ensure diversification of energy supplies in Ukraine.

A number of deals has been signed with western companies, namely, with StatOil from Norway, and not just with StatOil but also with German and with French companies. Hence, our policy to diversify energy sources and reduce dependence on Russia proves to be successful and we will continue.

With regard to, by the way, namely the price, I remind you that in the contract we had the price with the Russians at 400, now we have the price - they offered it - 385, now we are paying 376, if I am not mistaken. And in the first quarter of the next year will be 350, not 365. But the market faces hardships as oil prices drop, and we will continue looking for the cheapest and most independent supply sources.

Apart from that, our Government has managed to make the Parliament to support the law on modernization and operation of the gas transportation system at the third attempt. We have launched a procedure of attracting investors to the Ukrainian GTS, where the state owns its share in a control package, another 49% can be distributed among an operator company or companies of our European or American partners only.

Another very good sign is reduced gas consumption. We have cut has consumption by 20% as compared with 2013 showings.

Moreover, the Government commenced an energy efficiency program – through the Oshchadbank and the state budget of Ukraine substitution of gas boilers by boilers using other fuels. This program was launched and in the future, with assistance of our European investors we will finance fuel meters and insulation of homes. And it will provide an opportunity to save more and, accordingly, to reduce dependency.

The scope of our energy activity is to accelerate production of our own gas and maintain order on our domestic gas and oil market. There is a lot of work to do here. I hope the new Parliament will not establish an energy lobby, similar to that in the previous one and which made it impossible for us to adopt a law on introducing a state of emergency in the energy sector. Therefore, the work of this Parliament, comprising 300 supporters of pro-European majority, will yield into approval of not just the mentioned law but all other laws, those that could finally shed light on the domestic oil and gas production.

In general, dear members of the Government, we can discuss a lot of things. By the way, we have prepared for you such a report. It doesn’t contain all topics, but each Ministry has written here, what has been done by them and to which extent. I think that every Minister has what to say.

Am I satisfied with our work? Of course, I’m not satisfied, as one always wants to do more and better. But has each of us done what we could do? I can clearly and openly answer: yes, we have. Everything we could have done in this situation; everything we could have achieved; everything we could have solved, was done.

2014 has been very difficult and 2015 won’t be less difficult. And this also should be honestly told to the people. I rely solely on the support of people we have had during the year, on the efficiency of the new Government, the responsibility of the new Parliament, the interaction with the President. We have no other choice than to move forward. By overcoming all the difficulties, overcoming all the obstacles, in a constant struggle. It is the battle both against an external aggressor, that is Russia, and an internal aggressor, that is corruption, irresponsibility, inefficiency.

We will move further, keeping this in mind. And we will go through hardships to the stars - those in the European colours.

Thank the media!