Cutting the upper limit for cash payments with participation of individuals from January 4, 2017 to UAH 50,000 during 24 hours will help to bring the Ukrainian economy from the shadows, according to preliminary calculations of the Economic Development and Trade Ministry.
"Bringing the economy out of the shadows will be thanks to reduction of opportunities for legalization of income of population (doubtful or unlawful) via transactions to buy and sell valuable goods, property and expensive services," the ministry said on its website.
According to the forecast of the ministry, the possible reduction of the shadow economy level calculated using the monetary method is estimated at around 4 percentage points at the initial stage. This with all other things being equal would reduce the integral indicator of the shadow economy by around 2 percentage points. According to the ministry's calculations, in H1 2016 the shadow economy level was 38% of official GDP (4 percentage points less year-over-year).
The ministry said that the restriction would help to significantly reduce cash supply within the volumes exceeding current needs of consumers.
"We would manage to restore the health of the economy and financial system of Ukraine. It would help to avoid bank shocks in the future," First Deputy Prime Minister, Minister of Economic Development and Trade Stepan Kubiv said.
He said that the decision of the NBU to cut the limit would not touch the interests of ordinary Ukrainians with over 90% of expenses less than UAH 50,000 today.