I am frequently alerted by commercial contacts to difficulties with the Ukrainian business environment; and have often blogged on this subject. So it was interesting to hear from a leading independent economist recently the view that there had been some progress on macroeconomic reform recently. The economist said this had included:
– The 2011 Pension reform – a tough but wide-ranging reform which had long been a condition of support from the International Financial Institutions (IFIs).
– Amendment of the Budget Code to enable financing of municipal utility companies within prudent limits. This had enabled the launch of the so-called E5P (Eastern European Energy Efficiency and Environmental Partnership), a multi-donor €100 million fund for co-financing IFI projects and providing technical assistance.
– Cancellation of grain export quotas and reversal of a proposal for the monopolisation of grain exports.
– The implementation of motor fuel excise tax, which was important for the financing of roads.
– Successful fundraising, led by the EBRD, to secure funding for the new safe confinement and nuclear waste storage facility at Chernobyl.
– 5.2% economic growth in 2011, following 4.2% in 2010, and -14.8% in 2009 (all figures Economist Intelligence Unit.)
– Inflation down to historic lows in January 2012.
There is plenty to debate here, including the question of whether the Ukrainian authorities will make it possible for the construction of the facilities at Chernobyl to proceed smoothly and of whether new proposals may yet be brought forward further to obstruct the export of grain. I am also conscious that forecasts of Ukrainian economic growth in 2012 vary from 2.5.-3.5%, and that hard times may lie ahead. But I’m always keen to report good news about Ukraine as well as areas for concern; and was therefore intrigued to hear one expert’s assessment of progress on the macro front. I would welcome readers’ comments.