The $195 million loan is intended to accelerate land reform by funding a comprehensive rural land title and property registration effort.
The World Bank approved a $195 million loan to Ukraine on June 24 intended to accelerate land reform by funding a comprehensive rural land title and property registration effort.
The loan will be used to create a national real property registration and title system, privatize rural land to individual owners, establish property rights by issuing deeds, and encourage the restructuring of farms.
“This loan will provide the financial resources that the Ukrainian government needs to complete its land reform agenda, in particular the issuing of deeds for land in rural areas and the establishment of an efficient cadastre and registry system,” said World Bank project manager Iain Shuker. “This will reduce the cost of land transactions, improve security of tenure, enable mortgage markets and facilitate urban and environmental planning.”
Shuker said that in the short term, the project is expected to distribute rural land and aid in the development of a market for its rental.
“This should provide rental incomes for most of the rural population, mitigating the social impact of the transaction and at the same time allowing entrepreneurial individuals access to land,” he said. “In the medium-term, it is expected that the project will lead to increased rural prosperity and a reduction in poverty by distributing assets and establishing efficient, privately-managed and profitable farms.”
State Land Resources Committee head Anatoly Danilenko said that the project would help complete land privatization efforts and increase loans and investment in the agriculture sector.
“Without additional financing, agriculture will not be able to advance,” Danilenko said. “The bank’s decision to make this loan is proof that there is political and economic stability in Ukraine.”
Oleksandr Kaliberda, acting head of the World Bank’s office in Ukraine, said that $84.4 million of the loan proceeds would be directed toward issuing deeds, and that $76 million would be used to establish a national land title registration system.
Kaliberda said that the World Bank has recommended that deeds be issued to farmers without charge. The government presently charges fees of between Hr 60 and Hr 85 to issue a deed. He estimated that the nation’s 6.8 million farmers would have their deeds by the beginning of 2005. The land registration system should be completed by that time as well, he said.
Ukraine’s land registration system should become self-sustaining within a few years, Kaliberda said.
The seven-year project will also help the State Land Resources Committee scrap its old land-use planning system and adopt a set of land use regulations better suited to a market economy. It will also enable the government to provide information about the new system and training to attorneys, surveyors and consultants.
The issuance of real estate deeds is part of the land reform program the government began in December 1999, when the president signed a binding decree that restructured collective farms and granted former collective farmers legal ownership of agricultural land. The decree required the government to provide farmers with deeds by the end of 2002, but at present only about half the citizens entitled to agricultural land have received deeds.
Danilenko said that the government had lacked the funds necessary to issue the deeds on schedule.
“The only problem that slows down our work is lack of money,” he said.
He said that the agency needed about Hr 500 million to do the work, but had been allotted about Hr 25 million.
“Poorly-defined ownership rights, a lack of mortgage legislation and the lack of a modern title registration system has resulted in a critical shortage of medium- and long-term agricultural loans in the past,” Shuker said.
The World Bank’s loan came almost three years after Ukraine’s original request. Before approving the loan, the bank required that parliament adopt a new land code and a law requiring the registration of real estate.
“In the last three years, the government has made significant progress in land reform,” Shuker said. “Now, the land code has been enacted, the legal framework for land distribution is in place and the government has started to implement its land reform program. In addition, a modern mortgage law was recently passed by parliament.”
Still, the project has some limitations. Kaliberda said that there will be no financing for creation of the registration system in urban areas until a law on registration is enacted that creates a unified system covering rural and urban areas alike.
