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23 November 1998
For immediate release
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President Kuchma Addresses the Parliament

On November 19, 1998 the President of Ukraine Leonid Kuchma addressed the Parliament of Ukraine.

The President in particular focused on difficult economic situation that exists in the country and on the policies of the government of Ukraine that are required to overcome it.

In his address President Kuchma stated that, as a result of a well-balanced policy of the government, Ukraine managed to allay the consequences of the world financial crisis. In view of this, Leonid Kuchma called upon the deputies of the Verkhovna Rada to abstain in the future from the attempts to dismiss the government and to provide it with a sufficient support to perform its duties in an effective manner.

The President identified the problems existing in the financial, economic and social spheres and stressed that in the course of the next year the main goal of the government policy would be to boost the real economy. President Kuchma specifically dwelt upon the need to encourage domestic investment, development of small businesses and agricultural sector, and establishment of free economic zones.

Among the key social problems that demand priority attention of the government, President Leonid Kuchma identified the repayment of arrears on wages and pensions. One of the ways to do this, according to the President, is to expedite the process of privatization, which can bring considerable resources into the state budget.

Leonid Kuchma stressed that the existing monetary policy has not resulted in a healthier economy. He suggested that measures aimed at the support of the national currency were to a great extent artificial, and they overstrained the budget. In this regard, the President suggested that the government should consider liberalizing the tightly controlled currency market, freeing the hryvnia from trade corridor as one of the steps to support producers and exporters.

In his speech President Kuchma called on deputies of Verkhovna Rada to support the 1999 budget, which foresees a tight deficit of 0.6 percent of GDP, most of which would be covered by external rather than domestic sources. He noted that a high level of the budget deficit, combined with a low level of money supply to the economy, had been the most painful ailment of the economy of Ukraine and one of the main reasons behind Ukraine's current financial crisis.

In this connection, the President noted with dissatisfaction a low level of tax discipline in Ukraine. Among the possible government strategies in this field, Leonid Kuchma suggested to broaden the tax basis by revoking tax privileges and lowering the tax burden.

The President of Ukraine specifically underscored the importance of a continued cooperation between Ukraine and international financial institutions, in particular the International Monetary Fund and the World Bank. He pointed out that any possible disagreements between them and Ukraine should be resolved exclusively through the process of negotiations.

President Kuchma declared that Ukraine remains open for serious foreign investors and would like to further encourage strategic investments in the economy of Ukraine.

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