In spite of differences in its public reception, the effects of increased state spending in Russia and Ukraine are comparable.
Photo: Vladislav Sodel
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Ukraine Really Knows What Inflation Is
Inflation in Ukraine for the first quarter of the year has surpassed the government's annual plan. With planned inflation of 9.5 percent, it amounted to 9.6 percent in three months, or 26.2 percent annually. Inflation in March of this year was 3.8 percent, the highest monthly rate since January 2000. The cause is similar to that in Russia: high state spending in 2007 and the beginning of this year, which the opposition has branded populism on the part of Yulia Timoshenko, as well as a credit boom and growth of the money mass of over 50 percent per year.
In the first three months of the year, the government spent 29.76 billion hryvnias (98.4 percent of plan), which was 64.46 percent more than in the same period of last year. The monetary base increased by 3.9 percent in the first quarter to 136.4 billion hryvnias, and the money mass increased by 5.1 percent to 416.2 billion hryvnias. As of March 1, the M2 money mass was 393.476 billion hryvnias, 51.63 percent growth in a year.
The Ukrainian Economic Ministry drafted new macro-indicators for the year on Thursday and raised the expected level of inflation to 14.6 percent. The corresponding resolution will be passed be the government on Wednesday. The World Bank has forecast 17.2-percent annual inflation for Ukraine. Ukrainian analytical centers are saying up to 20 percent. As in Russia, Ukrainian authorities are hoping for deflation in July and August, in part because of an expected good harvest this year.
www.kommersant.com
All the Article in Russian as of Apr. 14, 2008
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