The head of the Rada’s tax committee proposes winding down the «National Cashback» programme and redirecting the funds to business lending under the «5-7-9%» programme. 

Danylo Hetmantsev, head of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy, has proposed closing the «National Cashback» programme and redirecting the funds to business lending via the «5-7-9%» programme, he said in an interview with RBC-Ukraine.

Current government programmes mainly target small and medium business. Are large players to be included?

— The state has limited resources: had we opened the programmes to big business at once, there would have been no money left for small and medium firms. But now big business is asking to expand these instruments, and I fully agree. Business needs two things. The first is cheap loans. The banking system is not providing cheap money right now. The «5-7-9%» programme only partly compensates interest, but in arbitraging returns banks prefer risk-free placements in NBU deposit certificates and government securities — earning interest while risking nothing, instead of lending to the real sector.

Expanding «5-7-9%» and insurance requires tens of billions. Where will the money come from amid a severe deficit?

— Through reallocating ineffective programmes. The budget holds up to UAH 50 billion for programmes the government effectively does not use. It gets to the point where, for every fifth programme, spending managers cannot even complete the procedure and approve the budget-programme passport at the Ministry of Finance across an entire first quarter! The money is allocated but just sits there. This is a huge problem of spending efficiency. Another example is the «National Cashback». Business views it differently, but I have spoken with specific entrepreneurs who say plainly: «We don’t need this cashback — better expand the „5-7-9%“».

Former Economy Minister Oleksii Soboliev argued the National Cashback was beneficial…

— The figures say the opposite: the cashback’s effect on GDP growth is 0.10% — within the statistical margin of error. It was a populist mistake that should be abandoned, with the funds channelled to «5-7-9%» lending.

Background

The «National Cashback» programme provides payments for purchases of Ukrainian goods, including dairy products.

Source: RBC-Ukraine