“Can real reforms be delivered?” This was the topic of the Ukraine Summit, held in Kyiv on March 29. Organized by The Economist Group, the event was interesting not only because of covering an urgent topic for present-day Ukraine, but also because the summit’s participants could hear both the government’s and the opposition’s take on various problems. However, there was no real discussion, which the audience expected so much. After having spoken, the officials silently and diplomatically dis-appeared, leaving the opposition to voice their arguments to the investors present.
Ukraine has considerable economic potential, but the pace of its realization is disappointing, Arkadiy Ostrovskiy, The Economist’s Moscow bureau chief and the summit’s moderator, said in his opening speech. Therefore, one should press the government harder on the issue of realizing reforms, he believes, to finally rid the Ukrainian economy of its Soviet legacy.
Iryna Akimova, the first deputy head of the Presidential Administration, stated that in 2010 the government initiated reforms and will pursue them this year. Having told the audience about the achievements of the last year (GDP growth, budget deficit decrease, banking sector stabilization), she moved on to the plan for reforms in 2011. According to her, in the near future the Parliament will approve a law on state debt and the Customs Code, the functions of the Fund of Deposits Guarantees will be substantially expanded, there will be a single depository, and the deregulation of the economy and privatization will be further pursued. By the end of 2011, according to Akimova, negotiations with the European Union on signing the free trade area agreement will be over. She also said that export quotas for grain can be replaced by export duties. “And from January 1, 2012, the agricultural land market should be open. And it should be open not only for Ukrainian citizens, but also for foreigners who will want to work in this sphere,” Akimova summarized.
For this year the government planned two important tasks, Serhii Tihipko, the deputy prime minister and minister for social policy, continued. First, the deficit of the National JSC Naftogaz Ukrainy is to be reduced to 8.5 billion dollars (and eliminated completely by 2012). Second, the Law “On state purchases” is to be finished, taking into account the suggestions of the European Commission. Besides, it is also possible, Tihipko said, that the State Tax Service of Ukraine will be dissolved. “Bodies that will not be reformed should be dissolved. For example, the Tax Service can be dissolved by means of merging it with the Customs Service, and sharing one administration, like in many other countries,” Tihipko said. Finally, the deputy prime minister added that by the end of the week the government would make public the bill on salary legalization.
Yulia Tymoshenko, the leader of the Batkivshchyna party, called this last initiative absurd. “When Serhii Tihipko was now talking about the adoption of the law on salary legalization, I had the impression that I was in a surreal world. Because to legalize salaries, not to pay them in envelopes, one should do just one thing — remove redundant taxes from the salary fund,” she said. Therefore, in her opinion, one should realize a reasonable and balanced tax reform, which will curb the grey economy in the sphere of salary payments.
In the opinion of Ostrovskiy, all the reforms the government planned and voiced are very good. However, for the country’s economic prosperity, one should understand not only which reforms are to be implemented, but also what prevents their implementation.
Akimova supposes that one of the main barriers is the opposition of the bureaucracy, which has considerable authority today.
Oleksandr Paskhaver, the president of the Center for Economic Development, agrees with this opinion. “I think that the opposition of the bureaucracy will lead to the failure of reforms — not necessarily to their rejection, but their essence may be changed considerably,” he told The Day. The new government went much further in planning reforms than the previous one, the economist says. But if the reformers don’t take into consideration some essential conditions, there will be no effect. The first condition, according to Paskhaver, is that changes should be implemented by reformative structures headed by politicians who have the people’s confidence. The bureaucracy should play an advisory role in this. The second condition is that one should start from oneself, or the population will remain skeptical. And finally – there should be a lot of feedback from society, including the opposition.
