Vice President of the World Bank in Europe and Central Asia Johannes Lynn, has over the course of four days met with high- level government and industry leaders around the country, including National Bank officers, the economic block of the government, and a number of people’s deputies. The topic of discussion was the preparation for granting to Ukraine its second Program System Loan (PSL-2).
With the completion of his visit Mr. Lynn has, as they say, achieved some results. The World Bank remains pleased about how Ukraine has used last year’s PSL-1. In Lynn’s opinion, significant progress has been made in the reduction of arrears in pensions, wages, and salaries, in improving the business environment, in the carrying out of land reform, in the privatization of the oblenerho electric companies, and in the development of new techniques for targeting social assistance. In relation to this the World Bank representative promised at the final press conference that the next $250 million will be forthcoming by autumn in one tranche if the World Bank board of directors approves the allocation to Ukraine of PSL-2.
Mr. Lynn named the fiscal problems connected to maintenance of budgetary receipts (VAT rebates — Author.), the privatization of the new oblenerho group, and restructuring of Oshchadbank, as the key questions which Ukraine needs to solve before autumn. The Vice President of the World Bank considers that insufficient budget revenues are connected with unreasonable tax amnesties, exemptions, and considers that this situation needs to be corrected. Speaking about Oshchadbank, Mr. Lynn noted that it is “a long-term question” and that the restructuring of the bank must be carried out very carefully to avoid damage to the financial system and to protect the rights of investors. He also expressed hope that Oshchadbank would not take on additional risks, and approved the accepted measures on the limitation of new liabilities for the bank. Ukraine’s National Bank has introduced partial restrictions on granting credits through Oshchadbank.
Mr. Lynn considers the search for “good” strategic investors and the solving of the problems of the significant debts from the power companies as the main questions for the privatization of the second part of oblenerho. He said that in the near future the government would carry out intensive consultations on these questions with experts from the World Bank. At the same time, the Ukrainian Prime Minister Anatoly Kinakh, meeting with the visiting banker, said that the pre-privatization preparations for oblenerho need strengthening, especially on the questions of the restructuring and the reduction of debts on the energy marker. According to Mr. Kinakh, this should be completed by the end of June. Today the government will consider a course of privatization in the current year and will define a strategy to carry it out from the beginning of 2003.
The Ukrainian government also received $288,000 from the World Bank Fund for Institutional Development to promote a dialogue with society. The purpose of this grant, to be implemented by the Ministry for the Economy and European Integration of Ukraine, is to enhance transparency of government’s work in preparing and making decisions.
According to Minister for the Economy and European Integration Oleksandr Shlapak, the project named Dialogue For Reform will become “an element of accord in the state” and will help achieve strategic tasks facing Ukraine. Comparing the communication process in Ukraine to a two-way street, Johannes Lynn said such communication holds mutual benefit for the population and officials.
As noted by those speaking at the presentation, a number of related projects are in the pipeline, like public discussions of the budget and government action plan, a survey of the Chernihiv oblast regional strategy to combat poverty, of Lviv oblast experience of implementing pension reform, and an education program involving state budget issues. The latter, State Secretary for the Ministry of Finance Anatoly Maksiuta said, envisions the shooting of twenty-five ten-minute videos that will explain in layman’s terms various aspects of the budget policy. Quite soon, the films will be shown by ICTV.
Several more projects will be implemented during the next two years, project coordinator on the part of the Economy Ministry Yaroslav Demchenkov said, notably, a www.dialog.me.gov.ua Internet site, a telephone hot line, periodical publications on economic issues, and briefings for the mass media. Other projects include developing standards and procedures for holding public discussions and other communications events, recommendations for preparing legal acts to stimulate development of the third sector, and training officials in public policy issues.
