Ukraine has made great progress in adapting its economy from the Soviet model to a 21st century economy in the globalized market. The reforms carried out in Ukraine will benefit not only the country and its people, but the entire region and the European Union. Ukraine’s strategic position between Europe and the growing markets of the Middle East and Asia mean that the reforms taking place will have a global impact. In a difficult economic period globally, Ukraine has grown steadily in the last two years due to the reforms made.
The economic reforms being undertaken in Ukraine include:
Trade and Growth:
- Increasing transparency and reducing corruption, to cement Ukraine’s place as a trusted partner in the global market economy.
- Increasing trade with the EU. The Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU that was signed in March 2012 marks a major step in ensuring closer ties between the EU and Ukraine and reinforces the Ukrainian government’s objectives of spurring new levels of trade, investment and growth, opening up new kinds of economic freedom for Ukrainians and integrating the Ukrainian and European economies in a wide range of sectors.
- Strategic Partnership with the World Bank. The World Bank recently approved a new country partnership strategy (CPS) for Ukraine for 2012-2016, focusing on improving the business environment for domestic and foreign investors, improving physical infrastructure to reduce the cost of doing business, and creating an appropriate policy framework and attracting private investment in agriculture. The World Bank has also increased the volume of loan disbursement for Ukraine from eight to 18 percent.
Ukraine is promoting its energy independence and ensuring greater energy security through:
- Playing an important role as an energy corridor between the Caspian Basin and Europe, without Russian influence.
- Reducing Ukraine’s dependence on supplies of Russian natural gas.
- Ukraine’s membership of the Energy Community treaty, an EU-backed cooperation agreement.
- The separation (‘unbundling’) of the transit and transportation branch of NaftoGaz, the state oil and gas company, from its resource exploitation division, as required by EU law.
- The President of Ukraine, Viktor Yanukovich, has proposed to create a three-party consortium to own Ukraine’s network of pipelines, in which Russia and the EU each own a 33% stake, with Ukraine holding the remaining 34%.
- The Ministry of Agriculture has estimated that Ukraine’s sugar and corn resources could produce nearly five million tonnes of biofuels per year, substituting up to 30% of light fuel imports.
Other reform measures:
Ukraine is undertaking a wide range of reforms in all sectors of the economy. Key measures include:
- Pension reforms, undertaken in 2011, which are a condition of support from the international financial institutions;
- Amendments to the budget to enable financing of municipal utility companies. This enabled the launch of the so-called E5P (Eastern European Energy Efficiency and Environmental Partnership), a multi-donor €90m fund for co-financing projects with international financial institutions and providing technical assistance;
- Cancellation of grain export quotas and reversal of a proposal for the monopolisation of grain exports;
- The implementation of a motor fuel excise tax, which is important for the financing of roads;
- Major land reform, encouraged by the international community, so that Ukraine can take advantage of the boom in agricultural trade. The reform will allow private ownership of land