Summer Summary: 10 most notable reforms

Summer Summary: 10 most notable reforms
August 31, 2015.

1. Macro-financial stabilization. Ukraine has avoided default due to agreements with the committee of creditors on restructuring and writing off 3.8 billion out of $ 19.3 billion debt on favorable terms. The interest rate on debt service should reach 7.75 percent, which is only 0.55% above the current service price. Due to the support of international financial institutions i.e., the IMF, and the World Bank, investors got a clear, positive signal.

The agreement is very timely, since work on preparing 2016 state budget is currently being undertaken. Settling the public debt service issue allows Ukraine to continue its policy of macro-financial stability. In other words, it means that the deterioration of Ukrainian living conditions is slowing down. In particular, the government approved the decision to raise the minimum pension and the subsistence minimum from September 1.

2. Police reform. It is, obviously, the most notable summer reform, which ordinary citizens could not only see, but also try. The new patrol service has started working in Kyiv, Odesa and Lviv. Overall, 2,800 police officers appeared on the streets of these cities. In September, their number will grow to 600 people more as a result of the planned personnel increase in Odesa and Lviv. New police will also start work in Kharkiv in the same month.

The new law regarding the National Police, approved on July 2, 2015, comes into force on November 7. Since then, Odesa, Lviv and Kyiv experience’s will expand to the rest of the territory. In November, new police will start work in Mykolayiv, Dnipropetrovsk, Uzhhorod, Mukachevo, Lutsk and Khmelnytsky. Moreover, the latter town has the largest competition for a police officer position, seeing 26 people compete for a position.

Another important detail is that the patrol service has not only a new name, but also new content. Personnel are crucial in any reform. The share of former employees in the three cities where new police have started work ranges from 2 to 7 percent.

3. The instatement of new personnel, and above all, in the judiciary and law enforcement is what the public demands most. While perhaps not as noticeable as patrol service reform, it is nevertheless under way.

Prosecutor’s office. A new law regarding the prosecutor’s office came into force in July.  In this vein, the General Prosecutor’s Office announced a competition for employment in Kyiv, Lviv, Odesa, Kharkiv and Dnipropetrovsk. Overall, according to the competition results, they plan to recruit 700 prosecutors. The first competition stage starts on September 5 in which competitors will test their knowledge of the legal framework.

Courts. In August, the High Qualification Commission of Judges of Ukraine has updated the procedure and methodology for evaluation of the qualification of judges and forwarded them to the Council of Judges of Ukraine. These documents are the basis for the re-certification of Ukrainian judges.

4. Anti-corruption reform. This summer, anti-corruption reform was pursued in several directions.

The National Anti-Corruption Bureau of Ukraine (NABU) actively recruited its employees. The first 70 investigators have been selected and must undergo the appropriate training.

This summer, the public and the prosecutor’s office came to an agreement on how to combat corruption and prevent its spread. For this purpose, the National Agency for the Investigation and Disposal of Assets Gained in Corrupt and Other Criminal Ways will be formed. This will be an executive body with a special status, devoid of the bureaucratic burdens of the Ukrainian judicial system. The Cabinet agreed on the corresponding bill at its meeting on August 19, and determined its status as a priority for approval. A similar status was also given to the Prosecutor General Office’s initiative for improving property arrest and special confiscation. The main idea is to shift the focus from the individual status to property characteristics. Then corrupt in this way cannot protect their property by involving a third party.

5. Openness of the authorities can prevent corruption. This summer was rich in initiatives that make government closer to the service of customers, both citizens and businesses.

Education. The Ministry of Education (ME) has implemented a series of revolutionary innovations that are the norm for Europeans, but have never been available in Ukraine. These innovations cover both higher and secondary education. These are technical solutions, but they must significantly contribute to improving the quality of Ukrainian education. Now, all theses will be available to the public, as the ME instructed all universities to publish them on their websites. This constitutes a significant step in the fight against plagiarism.

Academic mobility, which allows both students and faculty access trends of modern innovations in education, was also the focus of ME’s attention. The Ministry has radically changed approaches in this area. Now students and teachers can combine training and work in Ukrainian universities with education and training abroad.

Starting from September 1, there will be more English classes in schools. The event also coincides with the Go Global Initiative, previously approved by the National Reform Council.

Service state. One hundred free secondary legal aid centers have started their activity in Ukraine.  These centers provide free legal aid to vulnerable people in civil and administrative cases. In addition to assisting with fundamental human rights and access to justice, the centers help people in areas where the government has changed its policies, such as gas subsidies, pensions and other social benefits.

Competition policy. The Antimonopoly Committee of Ukraine (AMCU) has taken an unprecedented step in its history by starting to publish its decisions. In addition, it defined the fines calculation principles and allowed concentration without special authorisation. This AMCU decision is very important. A committee with such powers must be transparent and predictable. The new AMCU steps claim to introduce a new and civilized corporate culture.

Property transparency. Society has received access to ownership registers in Ukraine. Now everyone can learn about property, registered to any other person. First of all, this innovation is a tool for fighting corruption, opening up a disproportionate declared income and expenditure. In general, data openness enhances trust and confidence in society.

Information openness. Several significant decisions were adopted this summer based on the law on Citizens’ Appeals. And they are already working.

The National open data portal http://data.gov.ua began its work in Ukraine. Now any citizen can offer opening a set of state information. Thus, this data will become public.  The Ministry of Infrastructure has already published a working version of procurement contracts on its official site.  The list includes enterprises managed by the Ministry since the beginning of 2012 to the first quarter of 2015.

In addition, citizens can send petitions to the President in electronic form. A special site has been created for this purpose at https://petition.president.gov.ua/.  The president will consider the petition if it collects at least 25,000 signatures.

6. Government Procurement. Despite the lack of a specialized law (its approval must be in the fall), the ProZorro system of electronic public procurement received a lot of supporters.  Over 300 procuring entities have joined the system.  In late July, Kyiv City Council joined it, too. Ukrgasvydobuvannya was next, and made purchases of over 759.99 UAH via ProZorro. The next procurement through ProZorro was 100 million UAH. The average savings in the procurement through ProZorro is 12-20%.

7. Deregulation. Businesses received several long-awaited innovations this summer.

Ports. First of all, we should note the Cabinet decision on the simplification and improvement of Ukrainian seaports. These actions are aligned with the established international norms. In addition, an experiment to reduce port charges by 50 percent will start soon.

Resources. For the first time since its independence Ukraine has developed regulations for gas and oil fields development.  The Ministry of Ecology and Natural Resources of Ukraine approved the corresponding order. Soon it must be registered in the Ministry of Justice of Ukraine. This is a signal to investors regarding the state’s readiness for civilized business practices.

Another signal is the simplification of procedures for granting special permits for resource usage and conforming to European Union directives.  This will increase the attractiveness of the mining industry to foreign investors. The new rules will come into force in the fall.

8. Financial stability. This summer became a milestone in financial market changes. The State Commission on Securities and the Stock Market began cleaning house. In particular, the Commission has suspended trading in the securities of more than 90 companies-issuers, for which total market capitalization reaches 400 billion UAH.

Greater institutional capacity has been provided for the National Bank of Ukraine (NBU), as well as for the Deposit Guarantee Fund because a number of laws have come into force. These changes are extremely important, because they bring NBU closer to best financial practices. Thus, the National Bank becomes less dependent on the whims of power and has more opportunities to perform its main function: ensuring the stability of the national currency. An expansion of the Deposit Guarantee Fund powers, for its part, will also contribute to the stabilization of the financial market, as it accelerates the process of reforming the banking system through a more expeditious procedure for the withdrawal of insolvent banks.

9. Tax system. Despite the pending debate on the future framework of the tax system, taxpayers still received their current bonuses.

First, businesses received a civilized and acceptable solution to the problem of income tax overpayments in the form of the Ministry of Finance Order, which fully regulated the issue. Big business was most sensitive to this issue.

Second, small businesses also received a bonus in the form of deferment of compulsory introduction of cash registers until January 1, 2016. The corresponding law was approved by the Verkhovna Rada.

Third, the following three laws aimed at a reduction of the tax burden on businesses came into force, namely corresponding amendments to the Tax Code of Ukraine concerning trasnfer pricing, taxation of non-profit organizations, on reducing the tax burden on taxpayers.

The innovations include the prohibition for supervisory and other public authorities to use the inspection report as a basis for conclusions regarding the relationship of the taxpayer and its contractors, if the tax notice based on the inspection report is not given to the taxpayer.

10. Decentralization. The Verkhovna Rada of Ukraine approved in its first reading (by 265 votes) the amendments to the Constitution in terms of decentralization. Thus, Ukraine has become one step closer to the fulfillment of obligations to the international community. In addition, the emerging and empowered communities have more confidence in their future.

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