Ukraine's most reform-minded ministers gathered together in an attempt to attract more investments into the country’s most capital-needy spheres: agriculture, energy and infrastructure. But they cannot expect much if corrupt top officials will not be punished.
Economy Minister Aivaras Abromavicius, Finance Minister Natalie Jaresko,
Infrastructure Minister Andriy Pyvovarsky and Agriculture
Minister Oleksiy Pavlenko supported each other side-by-side as they took turns
in presenting their accomplishments and challenges in front of no more than 100 top representatives of various multilateral financing institutions and export credit agencies at a Kyiv investment conference on Jan. 28. Though the ministers are
hopeful, they say that Ukraine cannot expect much economic change if investors
don’t start pouring money into the economy.
Jaresko says that the elimination of corruption will
be her top priority in 2016. But she also says that investors can’t wait until
all the work will be done in the government.
“We don’t have the luxury and time to wait for everything to be perfect.
We need to partner with you in this imperfect environment to make it perfect,”
Jaresko said. “I again urge everyone to take at least what has been done into
account as you look at priorities, look at where the country was a year ago and
where it is today.”
The whole-day
event which took place at the Intercontinental Hotel in Kyiv was organized by the Forum for Leading International Financial
Institutions, a think tank, and Ukraine’s economy ministry, in collaboration
with the American Chamber of
Commerce in Ukraine. The conference was designed as a platform for discussion between the private sector and government to highlight investment
plans and Ukraine’s investment climate to export credit agencies and
multilateral financing institutions.
Top representatives of such enterprises as Naftogaz,
Oschadbank, Citibank Ukraine, ING Bank and of international financing institutions such
as the European Bank of Reconstruction and Development, International Finance
Cooperation and World Bank were present among others.
Some of the accomplishments the ministers say they
have achieved in 2015 are: a stabilized non-fluctuating currency, a rebound of
international reserves to $13 billion, elimination of one third of the nation’s
pocket banks, massive staff cuts, less dependency on Russian gas, energy
subsidies for 12 million Ukrainians, elimination of almost 50 percent of
licenses and permits and reducing Ukraine’s public spending by 9 percent.
Abromavicius said Ukraine is “departing with
its past” and that its economy is at a “turning point,” a message he has been
trying to sell during the last couple of months.
But critics are skeptical of the point making a full
180-degree turn if Ukraine’s top officials and corrupt judges remain unpunished
and if the legal system will remain unchanged, a point the minister also
acknowledged.
“Obviously the most critical element is still out
there. It is the court system, the rule of law… putting people behind bars,”
Jaresko said.
But the finance minister said that reforms have been
done in the anti-corruption sphere, mainly setting up the grounds for doing
action in 2016.
“It’s been a long year for the anti-corruption bureau,
the anti-corruption agency and the anti-corruption prosecutor and asset-recovery
agency, but we are there. They are fully funded at Western levels by the
budget, they have hired eight detectives, cases on corruption are being handed
to them day to night,” Jaresko said.
The lagging privatization process is another major
problem.
Abromavicius acknowledges that one of his failures
last year was not being able to launch the privatization of Ukraine’s more than
1,500 state-owned enterprises that need to be privatized.
“We still have to sell state-owned enterprises – that
is a fact,” Abromavicius said. But, he also says his hands are tied until
parliament will do further progress in passing the necessary laws.
The parliament failed to pass 13 times a proposed
privatization law that would allow the government to start the privatization of
large state enterprises, serving vested interests of oligarchs.
Another sphere that requires dramatic change is the
tax administration and customs services, Abromavicius said.
Jaresko agrees, saying that this is now her number one
priority.
“The first priority for my ministry is indeed the
fiscal service, meaning our tax and customs.” This means improving services,
fairness and changing the administration. The goal is to have new values, principles
and a new outlook, she says.
“Corruption is the poison of any society and in
particular the poison of Ukrainian society,” Jaresko said.
She has a three-way crop strategy to deal with it:
tackle specific vested interests, eliminate the space of corruption and build
the institutions from scratch that will reform and punish corrupt criminals.
Some ways to do that are to further close loopholes in
the tax base and at the same time broaden the base, improve tax transfer
pricing regulations and the electronic value-added tax system.
Jaresko also wants to continue tackling with problems in
the banking system making an emphasis on budget constraints.
“There really were no hard budget constraints in this
country previously,” Jaresko said. “Which means every time someone ran out of
money they would come to the Cabinet of Ministers and say we need more money.”
Last month minister Pyvovarsky said that he will
resign from his position, while minister Pavlenko said he will resign as well
on Jan. 29. Both will continue to serve as ministers until parliament will vote
to accept both of the resignations.
