Three years after the revolution of dignity, the Ukrainian economy stabilized and ready for growth. But what will it be: slow or fast? Threat to Ukraine is still ahead, but the opportunities are greater. About this in his article writes the expert of the Atlantic Council Andres Aslund, reports zn.ua.
Among the Ukrainian success Aslund calls the reduction of the budget deficit from 10% to 3% of GDP. Public debt has stabilised at 80%, although the IMF was afraid that he would be out of control. In addition, the government reduced exorbitant payroll tax from 45% to 22%. Foreign payments reached a balance, due to the necessary devaluation of the hryvnia and the exchange rate stabilized in the markets. Ukrainian foreign exchange reserves have grown from $ 5 billion as of February 2015, to 15 billion as at the end of 2016, which reduced the tight controls by the national Bank. Aslund notes that Ukraine was able to do all this, despite severe economic pressure from Russia. Aslund drew attention to the privatization of PrivatBank, which began with the completion of the cleaning process of the banking sector. The tight monetary policy of the NBU, in his opinion, helped to reduce inflation from 61% in 2015 to 12% today. The expert also reminds us about the painful increases in tariffs, which, in his opinion, was necessary, as well as the launch of a public procurement system Prozorro and system of electronic Declaration. However, this has not improved the daily lives of Ukrainians.
The Ukrainian economy grew by 2% in the third quarter of 2016, but the collapse in the previous two years was 17%. Quality public services need to improve. And this is to do in 2017 year. According to Aslund, the new year should begin with public administration reforms, which Ukraine should undertake in cooperation with the European Union. Cumbersome government agencies need to simplify, modernize and make more transparent and open. The author pays attention to the first small steps to reform systems of education and health. But the most important challenge for 2017, he calls the reform of the system of justice. New Supreme court should appear in March. The author hopes that a reformed government would be better to work with the private sector. Deregulation is gradually taking place, however, according to Aslund, one should not expect significant changes in fiscal or customs systems. It will take another year.
Current projections show an increase in Ukraine at the level of 2-3% of GDP in 2017. But it should be a year of much greater economic growth, vibrant exports to Europe, the middle East and China. The reduction of inflation and interest rates should revive lending and domestic investment. The production of energy should also be revived with the reduction of taxation. However, Aslund notes that the forecast of the Atlantic Council regarding Ukraine is not too happy. The greatest threat to her, he calls the presidency of Donald trump in the USA who seem to strives to find a common language with Vladimir Putin. And it is likely that the victim of their agreements will be Ukraine. Another Russian threat lurks in the court’s consideration of the conflict between “Naftogaz” and “Gazprom” in Stockholm. Naftogaz requires $ 28 billion, “Gazprom” – 39 billion. Therefore, it is the largest in international arbitration history. The verdict is expected in the second quarter, but the settlement will take years. Usually Ukraine receives 4% of GDP each year from direct investment from abroad, but for the past three years, she received nothing due to Russian military aggression. Therefore, these flows are only minimally restored in 2017.