You're reading: IMF: Ukraine’s business environment getting worse

Ukraine needs to take steps to improve its business environment, Resident Representative of the International Monetary Fund in Ukraine Max Alier has said.

"…An important issue, which needs to be considered but doesn’t receive enough attention, is the business environment. At the macro level, the indicators seem to be positive, and this can be seen in several sectors: demand is reviving, consumption is resuming, the economy is emerging from crisis. However, problems are being exposed, ranging from tax legislation, management, administration, laws, and customs. In agriculture, there are quotas on grain exports that are allocated absolutely non-transparently," Alier said during the 4th Annual Summit "Ukrainian Real Estate and Construction" organized by Adam Smith Institute in Kyiv on Wednesday.

According to Alier, the business environment in Ukraine is not getting better, but worse. He noted that without improving its business environment, the country would not be able to realize its full potential and significantly speed up its economic growth.

Alier also stressed the need for structural reforms in the country.

There are some structural reforms that are currently lagging behind in Ukraine, compared with other countries, but it is very important that they should be carried out, he said.

As reported, the IMF mission that analyzed Ukraine’s compliance with the requirements of the stand-by arrangement completed its work in Kyiv earlier this week.

The mission agreed to a more gradual schedule of gas tariff increases to help cushion the impact on households and on a smooth schedule for conducting pension reform, while the work is currently underway to identify offsetting budgetary measures to support the combined (general government and Naftogaz) deficit of 3.5% of GDP for 2011.

IMF Mission Chief for Ukraine Thanos Arvanitis said that discussions with the authorities regarding these measures would continue over the coming weeks.

As reported, the IMF decided to renew its loan partnership with Ukraine in the summer of 2010 through a new stand-by program.

The approved stand-by program for Ukraine is 10 billion in special drawing rights (SDR, around $15.6 billion), which is the IMF’s third biggest assistance program following those for Greece and Romania.

In late July 2010, Kyiv received the first tranche coming to SDR 1.25 billion. The IMF decided in December to allocate a second tranche worth SDR 1 billion.

The program foresees the future quarterly allocation of tranches, each worth SDR 1 billion, with the exception of the last tranche, which will be worth SDR 750 million.