Not "for the first time". The analysis of the President's speech in Parliament
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Not “for the first time”. The analysis of the President’s speech in Parliament

Photo: president.gov.ua
3 December 2021
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“For the first time” is a catchphrase in the President’s speech in the Verkhovna Rada on December 1. And, perhaps, this motif was the reason for numerous manipulations in his speech.

Overall, 16 factual statements from the President’s nearly hour-long speech caught our attention (we left out trivial statements like “two times two is four”).

Out of the statements that we fact-checked:

  • 9 or 56.25% were manipulation and exaggerations;
  • 2 or 12.5% ​​were left without a verdict as they contained personal judgments;
  • 5 or 31.25% were true, but there was a catch in each of them. 

Remarkably, there were no totally false statements this time, unlike last year’s speech in Parliament when Zelensky lied five times about facts.   

Among the statements without a verdict are references to Akhmetov’s wealth and an evaluation of judicial reform.   

Without a verdict

“We have restored, proclaimed, elected, and gained our independent Ukraine <…> where politicians are working for 100% of citizens, not for 20% of one citizen’s GDP.” 

Zelensky also spoke of the 20% of the country’s GDP being held in the oligarchs’ hands during his press conference on November 26. However, while it was not clear at the press marathon whether Zelensky was talking about one oligarch (probably Akhmetov) or all of them, the President clearly articulated that he meant “one citizen” in his speech in Parliament.

Forbes estimates Rinat Akhmetov’s wealth at $7.6 billion, with Ukraine’s GDP in 2020 being $155.5 billion. That is, the approximate share of the wealth of Ukraine’s richest oligarch is 4.8% of GDP.

However, it is important to keep in mind that comparing wealth as an asset with GDP over a specified period (e.g., a year) may not be entirely correct. For instance, a plant (asset) produces a particular product. The plant’s annual output is a share in the country’s annual value-added and GDP. If the plant is idle and there is no production, it does not mean that it costs nothing, yet at the same time, its contribution to GDP is zero. 

Without a verdict

“It is not the first time that judicial reform has been launched in Ukraine, but it will be completed for the first time.”

Interestingly, Zelensky put it differently during the press marathon last Friday: “We started the reform of the judiciary. Nobody else did.We pointed out in our fact-check that judicial reform actually began in 2016. We could give this statement the verdict “truth”, but it contains the speaker’s forecast. Therefore, we label it “without a verdict” according to VoxCheck methodology.

Next, we will see where the President used manipulation and exaggeration and where he spoke the truth.

President’s manipulation and exaggeration 

Manipulation

“In 2021, the size of Ukraine’s economy will be a record high for the first time since independence, exceeding $190 billion. It is more than in pre-crisis 2008 and 2013.”

First, it is incorrect to measure the economy’s growth in dollars. This indicator’s size, inter alia, is affected by the hryvnia’s exchange rate against the dollar. The hryvnia is known to have devalued significantly in 2014-2015 compared to 2008 and 2013. The most accurate indicator to measure economic growth is real GDP. Considering the projected GDP growth of 3.1% in 2021, it will still be 13% lower than in 2008 and 7% lower than in 2013.   

Second, the current NBU and MEDT forecasts have lower estimates for dollar GDP. In its macroeconomic forecast for 2021-2023, on which the state budget is based, the Ministry of Economic Development and Trade estimated the nominal GDP for 2021 at UAH 4.506 trillion. Considering the exchange rate of 29.1 hryvnias to the dollar (also in the MEDT’s 2021 forecast), it is only $154 billion.

In October, the National Bank came up with a more optimistic 2021 forecast of UAH 5.190 trillion. Considering an average exchange rate of 27,4 hryvnias to the dollar over the ten months of 2021, it is $ 189.4 billion.

Nonetheless, the President is right that the figure of $190 billion will be higher than in all the previous years of independence.

Manipulation

“For the first time since 2013, we will reduce public debt to below 50% of GDP. Even though it has grown rapidly in recent years in most countries and, on average, exceeds 90% in the world.”

According to MEDT estimates, the share of public debt in GDP in 2021 is expected to stand at 57.1%. According to the NBU, it is indeed at about 50%.

However, the President was wrong in saying that the average debt-to-GDP ratio in the world is 90%. According to the International Monetary Fund, an average among 190 countries (for which the IMF has data) in 2020 was nearly 68% of GDP. According to forecasts, it can be 67% in 2021. The average value for 2020 is 79% among developed countries, and it may increase to 80.4% in 2021. Among emerging countries, it is 65% and 63.5%, respectively. 

Manipulation

“As of today, the minimum wage in Ukraine is 6.5 thousand hryvnias. We have not only raised the minimum wage. For the first time in 30 years, the average wage in dollar terms has exceeded $500 per month.”

The average salary for September (according to the latest available data) is UAH 14,045. In September, the exchange rate was 26.73 hryvnias to the dollar. That is, the average salary is $525, as stated by the President. However, the average wage has risen due to an increase in the minimum wage and objective economic factors such as labor migration and the growing demand for labor in some industries.

Besides, it is incorrect to compare salaries or other income in dollars. We live in Ukraine, where the national currency is hryvnia, and we pay for everything in hryvnia, not dollars. Income should be compared against inflation, i.e., how much prices have risen for main consumer goods and services in the country. An inflation-adjusted wage is called real wage. Today, it is also the highest since independence.

Manipulation

“This year, we have increased the size of student stipends to equate them with the subsistence level. At the same time, we will not reduce the number of stipend holders. It is very important.”

First, not all academic stipends are equal to or above the subsistence level. The minimum wage of UAH 2,393 has been set in the 2022 state budget. While the usual academic stipend for university students will be UAH 2,000, and that for students of vocational education institutions UAH 1,250. Stipends exceeding the subsistence level (i.e. higher stipends, stipends awarded by the President of Ukraine, and the Cabinet of Ministers) are awarded only for outstanding achievements.

However, the increase applies to academic and individual stipends, not social ones awarded to privileged categories of children regardless of their academic achievements. The size of social stipends for orphans and children deprived of parental care has increased in 2021, and now they receive 150% of the subsistence level for the respective age (instead of the previous, fixed amount of UAH 2,360). Benefit recipients of other categories receive amounts below the subsistence level: UAH 890 (students of vocational education institutions) and UAH 1,180 (university students).

Second, the number of stipend holders will go down. Today, 40-45% of students studying under the government order arrangement receive stipends. However, an increase in the size of stipends will be accompanied by a 35-40% decline in the share of stipend holders. That is, the maximum share of stipend holders set by the departments’ stipend commissions will decrease by 5-10%.

Manipulation

“This year, we have provided more than 60,000 teachers with laptops, and, by 2023, every teacher in our country will have a new laptop!”

This year, the government did indeed plan on providing 60,000 laptops to teachers. However, only 24.4 thousand laptops have been delivered under the program to date. Zelensky makes it sound like a fait accompli. However, it cannot be ruled out that the government will have time to implement this plan by the end of December fully. They first began to hand out the laptops on November 12, i.e. it took the Ministry less than a month to fulfill 40.6% of the plan.

Exaggeration

“We do not wait for dozens of months since the seizure of Crimea. We gather dozens of countries to liberate it by launching the Crimea Platform. The first summit was attended by 46 delegations, G7 and EU leaders: the United States, Germany, France, Turkey, all of our friends, the leadership of NATO, the OSCE, and the Council of Europe. For the first time since 2014, de-occupation of Crimea was discussed at the highest international level.”

Representatives of 46 countries took part in the Crimea Platform, but heads of state or government represented only 14. In particular, the United States was represented at the summit by the US Secretary of Energy, Germany by the Federal Minister for Economic Affairs and Energy, France by the Minister Delegate for Foreign Trade and Economic Attractiveness, and Turkey by the Minister of Foreign Affairs. Yet, this does not diminish the importance of the Crimea Platform initiative as a new tool for de-occupation of the peninsula.  

Manipulation

“Our goal is to implement the Association Agreement. According to government estimates, about 60% of Ukraine’s commitments under the Agreement have been fulfilled, with 25% only this year.”

The latest available government report on the Agreement’s implementation is for 2020. At the time, the overall progress of fulfilling the Agreement was 54%. In 2020, Ukraine specifically moved forward in implementing its obligations by 10%. Accordingly, in 2021, to reach the level of 60% of the Agreement’s implementation, another 6% of commitments must be fulfilled, not 25%.

Manipulation

“Compared to 2019, the healthcare budget has doubled.” 

Firstly, the healthcare budget has only doubled nominally. In real terms (i.e. adjusted for inflation) and as a share of GDP, budget spending on healthcare increased by 65.4% and 54.5%, respectively. More details are in the table below.

Year

Healthcare budget, UAH billion

Inflation,%

Healthcare budget at 2019 value, UAH billion  

Change compared to 2019,%

GDP, UAH billion

Share of the healthcare budget, % of GDP

Change compared to 2019,%

2019

97.738

4.1

97,738

​​3977.2

2.46

2020

133.227

5.0

127,979

+30,09

4191.86

3.18

+29

2021

172.195

9.6 

157,536

+61,18

4505.9 (MEDT)

5190 (NBU)

3.82

3.32

+55

+35

2022 (draft before second reading)

193.675

5

161,668

+65,41

5089.4 (MEDT)

5750 (NBU)

3.80

3.37

+54,5

+37

Second, it is incorrect to compare pre-pandemic 2019 and 2021-2022, when Ukraine began to spend more on healthcare due to COVID-19. 

By the way, according to the law, Ukraine must allocate 5% of its GDP for healthcare. However, the figure in the 2022 budget adopted in the first reading is lower.

Manipulation

“For the first time in history, the opposition criticizes the authorities for building roads and bridges. Special criticism of the “Great Construction” comes from those who, when in power, could not even do medium or small construction. They, too, drove on roads with holes in them, leaving the same holes in the budget. We have already built 13 thousand kilometers of roads. But you can never get enough quality roads, so the goal for the next two years is not less. It’s 15 thousand kilometers of roads.”

First, roads had been repaired and built before the presidency of Volodymyr Zelensky and the coming to power of Servant of the People. For instance, under Prime Minister Volodymyr Groysman (April 2016 – August 2019), more than 7,000 km of roads were built and renovated. Of course, this is less than the 2020-2021 figures, but it is incorrect to say that the previous government “could not even do medium or small construction.”

Second, 6,556 km of roads were renovated and built as part of the “Great Construction” in 2020. Information on how many roads were built in 2021 was not publicly available at the time of the President’s speech. We only know that the plan for 2021 is 6,500 km. The President must have included it in results for “Great Construction.”

Besides, the President does not make the difference between “building” and “repairing”, although these are two different things, both quantitatively and qualitatively.  

President’s truth. There is a catch, however

Truth 

“For the first time since independence, the state is building Antonov AN-178 aircraft for its army. For the first time, we are starting to build a military plant to produce modern drones in Ukraine.”

At the end of 2020, the state ordered three new AN-178 aircraft from Antonov for the first time for the army. They are not ready yet. On November 13, Antonov announced they had finished major work on the first aircraft that is now being prepared for its first flight. Work is underway on the second aircraft.

As for the military drone plant, the President most likely meant the construction of a plant to produce the Turkish Bayraktar UAVs. The site for the plant has already been chosen, but construction work has not started yet.

Truth

“Yesterday, we did not know how to split the first batch into 500 thousand doses. Millions of AstraZeneca, CoronaVac, Pfizer, and Moderna doses are currently available. We started with 10,000 vaccinations a day. In November, we did 6.5 million. Thanks to our doctors! Overall, 24 million vaccinations today.” 

Since the start of the vaccination campaign, more than 24.7 million vaccinations have been done in Ukraine, including 7 million vaccinations in November. Indeed, there is no shortage of vaccines in Ukraine today. According to the Minister of Health, vaccine supply in 2022 will be enough for booster vaccinations and full-fledged revaccinations, if need be.

Despite these successes, due to the late start of the vaccination campaign and the slow pace of vaccinations in the first half of 2021, Ukraine has a low vaccination rate today, namely 26% of the fully vaccinated population, with the European average being 58%.

Truth 

“Our gold and currency reserves have increased to stand at $30 billion today. That’s the highest figure since 2013.”

The President is right that our foreign exchange reserves now stand at their highest levels since 2013. As of November 1, 2021, forex reserves amounted to $ 29.6 billion.

However, it should be noted that until 2014, foreign exchange reserves had been spent on keeping the exchange rate of 8 hryvnias to the dollar. The highest level of FX reserves was in the summer of 2011, namely over $38.3 billion. By the end of 2013, reserves had fallen to $20 billion, and in February 2015, to almost $ 5 billion. However, by May 2019, i.e. before the election of Zelensky, the reserves were back at $20 billion.

Truth

“For the first time in the history of independent Ukraine, the loan rate for small and medium-sized businesses fell below 10%. Currently, it is 9.7% on average. Thanks to the 5-7-9 Affordable Loans program, Ukraine’s small and medium-sized businesses have received over 70 billion hryvnias and created thousands of new jobs.”

As of November 29, the average business loan rate was indeed 9.7%. The average rate started to fall below 10% from June 2020. Lower loan rates became possible due to the introduction of inflation targeting. In 2020, due to lower inflation and to support the economy during the crisis, the NBU significantly reduced the key interest rate, impacting the credit market.

Since the launch of the 5-7-9% program (February 3, 2020), entrepreneurs have taken UAH 73.5 billion in loans. In August this year, the Ministry of Economy announced that it made it possible to preserve 172 thousand jobs and create 19 thousand new ones thanks to the program.  

However, it should be noted that the state, not the market, subsidizes loans under this program. Market rates are 9.4% (for short-term loans) and 13.6% (for long-term loans), respectively.

Truth

“Energy crisis, restrictions on electricity, a significant increase in fees. For the first time, it is not about Ukraine. That’s the reality in the whole world, despite which we have managed to maintain stability in the energy sector, curb rising prices for housing and communal services, and even reduce electricity prices for households.”

The President meant two decisions. The first is a memorandum signed on September 30 between Naftogaz, the government, and city leaders on not raising gas tariffs for household consumers until the end of the heating season. The second one is a reduction in electricity prices for households from October 1 to UAH 1.44/kWh, provided that the consumption is up to UAH 250 kWh/month. If the consumption exceeds 250 kWh/month, the price will remain unchanged, i.e. UAH 1.68. According to the Energy Ministry, 80% of households consume up to 250 kWh/month. That is, the reduction in electricity prices will not affect all Ukrainians.

However, it should be understood that Ukraine purchases coal and gas at world prices. Therefore, when buying expensive energy and selling it cheaply to the population, sooner or later, the losses will have to be covered. For instance, Naftogaz or other energy supply companies might become unprofitable.

In addition, regulating tariffs for households may hinder the development of the energy market. For instance, take natural gas. In recent years, various mechanisms have been in place to regulate household gas prices (the PSO, marginal costs in January 2021, etc.). As a result, the following risks arise:

  • limited competition because, if the prices are regulated, the consumers have no incentive to look for the suppliers offering better conditions;
  • losses incurred by state-owned natural gas supply companies, which will be covered from the state budget, i.e. at the taxpayer expense;
  • corruption risks on the part of suppliers, e.g. schemes of selling gas purchased at “for-households” prices to enterprises;
  • reducing consumers’ incentive to increase energy efficiency;

Also, the price regulations for household consumers are, in fact, a subsidy for everybody, not just the poorest. Therefore, it will be more expensive for the budget. 

The bottom line?

While the President’s speech last year mostly contained errors concerning reforms, this year’s top topic for manipulation was the economy. Chasing “the first time” let the President down: wages and GDP should not be measured in dollars, just as achievements should not be overstated. This includes forgetting that roads have been built before and that the healthcare budget still does not meet the norms established by law.

Even speaking about facts, Zelensky came to a hair’s breadth from manipulation several times. For it is only possible to understand how appropriate it is to regulate energy prices or boast the pace of vaccinations considering the context: the gas and electricity market restrictions (that need to be created to have access to the EU common market) and considerably lagging behind Europe with wide differences in vaccination levels. 

We want to believe that the President will succeed in achieving another important “first time” – being completely honest with his voters. 

Authors

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The authors do not work for, consult to, own shares in or receive funding from any company or organization that would benefit from this article, and have no relevant affiliations