DIGEST 19.09-25.09.2015: BATTLE FOR REFORMS

DIGEST 19.09-25.09.2015: BATTLE FOR REFORMS
September 25, 2015.

Macro-financial stabilization. Debt restructuring is a cornerstone of Ukraine’s macro-financial stabilization.

This is the chronicle of the vents:

1) On September 22nd, the Government approved the order to start the procedure for public and publicly guaranteed debt restructuring and its write-down; 2) On September 23rd, debt payment and servicing were temporarily suspended. 3) On October 14th, negotiations on the terms of restructuring with the creditors are expected to take place in London; 4) after that and on their approval the process of asset switching will start. The government is planning to finalize the negotiations by 1 December 2015. The management of the International Monetary Fund has already expressed its support for Ukraine in this process after the country reached a compromise deal with bondholders.

Financial sector reform is already showing signs of success, as demonstrated by the National Bank of Ukraine lowering, as of September 24, the bank discount rate by 5 percent – from 27% to 22%. This decrease followed a similar step a month ago, which was the first rate decrease since August 2013.

Anti-corruption reform. Attention has focused on personnel policies of anti-corruption and law enforcement agencies.

The National Agency for Prevention of Corruption (NAPC): The selection commission identified 20 candidates who passed to the second round, which will be held on September 28. The commission will then choose five finalists who will be employed to work in the NAPC.

Prosecutor’s office: More than 10,000 candidates participated in the first stage of a competition for employment in local prosecutors’ offices. The first round showed candidates possessed a high level of legislative knowledge – the average score was 76.7 out of 100. The first 40 candidates on the selection list for each region will then pass to the next round. Altogether there will be four selection rounds.

National Police: The establishment of new police units is proceeding in areas close to the occupied parts of Donbas. On September 26 enrolment starts in Kramatorsk and Sloviansk. On the same day new patrol police officers will begin their work on the streets of Kharkiv. Recruitment is continuing in Cherkasy, ​​Kremenchug and Poltava. Overall, it is planned that by the end of the year there will be about 10,000 new patrol police officers Ukraine.

Civil service reform.

Despite the huge importance of this issue for the country (as it impacts on all government functions), it has become a hostage of politics. President Petro Poroshenko’s comment during the National Reform Council meeting on 18 September on the inappropriateness of proposed civil service reform as per the draft law “On civil service” has raised sharp debate in society. The fate of the bill was supposed to be clarified by the relevant parliamentary committee on September 25. The Committee had to consider the document in order to set up a deadline for voting in the second and also final reading. However, the committee did not gather as there was no quorum. Delaying this reform significantly impedes reforms in all spheres since it makes it impossible to demonstrate to society new, professional managers in the civil service who can bring positive changes to citizens’ interactions with the state, thus losing the potential benefits of reforms on the whole.

Staff renewal. Whilst debate on the conceptual foundations of civil service reform is going on, the heads of some ministries are trying to find ways to launch reforms themselves. One of these steps is an attempt to modernize qualification requirements for candidates for executive positions in the public sector. From now on it is not obligatory for candidates to have sector-specific higher education. Instead, a master’s degree in management or law (or other postgraduate education) in these fields will be recognized.

The Ministry of Social Policy endorsed these changes by decree on September 22, 2015. These changes were initiated by the Ministry of Infrastructure, which has announced a number of calls to fill management positions in its subordinate companies. These changes will make it possible to expand the range of potential candidates by bringing in professional managers. The Ministry of Infrastructure has already implemented these changes, having re-launched the recruitment competition for the position of director of the state company «Administration of River Ports».

The Ministry of Infrastructure in its aspiration to improve personnel policy has opted to bring best international practices to both the ministry itself and Ukraine’s state railways company “Ukrzaliznytsya”. This will come into effect after the corporatization of Ukrzaliznytsya and its transformation into a public joint-stock company. This process should be completed by the end of 2015. The regulatory framework to hold competitions for selecting heads of Ukrzaliznytsya will be prepared by the Ministry of Infrastructure by the end of September.

Significant personnel changes have been taking place in strategic companies that are subordinate to the Ministry of Agrarian Policy and Food. Following the election of the head of “Ukrspyrt” via open competition, the new top management of state grain trader “State Food and Grain Corporation” was chosen similarly. The committee on appointing heads of crucial enterprises selected Boris Prykhodko for the post of the corporation’s Chairman of Management Board. Overall, 45 candidates competed for the post. Their fate was decided by a competition commission, which as well as government officials also included representatives of well-known audit and recruitment companies.

Deregulation. The Ministry of Economic Development and Trade of Ukraine (MEDT) has kept its promise to support business and to extend the moratorium on inspecting small and medium-sized businesses: the Verkhovna Rada (Parliament) registered a draft law according to which the moratorium will continue until June 30, 2016. However, the moratorium does not apply to the control of safety and quality of food by the State Veterinary and Phytosanitary Service of Ukraine. According to the draft law, unscheduled inspections are allowed only following a citizen’s complaint on violation of consumer rights and upon the approval of the State Regulatory Service. If the law is adopted, administrative pressure on business will diminish.

The procedure for alcohol imports was simplified beginning 20 September: the obligatory UkrSEPRO quality certification and standardization system has been abolished. Previously, dishonest officials used the certification in their corrupt schemes. From now on, in order to import alcohol to Ukraine it is enough for a business to have an authorization stamp from the State Veterinary and Phytosanitary Service of Ukraine. The MEDT has sent explanatory documents to all customs points.

Food safety. On September 20, 2015 new legislation on food safety came into effect. It is based on EU legislation and aligns regulation of production processes and products in Ukraine with modern international standards. Despite problems with its implementation, the law gives more possibilities for exporting Ukrainian products.

Formally, this refers to the enactment of the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine on food products” № 1602, which sets out a new version of the Law of Ukraine “On safety and quality of food products” (2005). From now on this law is called the Law of Ukraine “On basic principles and requirements for safety and quality of food products.”

Openness of government. Despite public skepticism, the first electronic petitions received the President’s response last week. So far, the Presidential Administration is the only public authority in Ukraine that has introduced such a communication tool. This tool, common in many democracies, was launched under the Law “On citizens’ appeals”. According to this document, a petition collecting more than 25,000 signatures within three months, must receive a response within 10 days.

Social Protection. Extending public access to free legal aid is one of the few reforms aimed at quick wins. Having a significant impact on ordinary citizens it has already proven its effectiveness. The number of acquittals in criminal cases involving lawyers engaged by the program of free legal aid has increased from 43% in 2014 to 64% in 2015. Beginning July 1, 100 free legal aid centers started their operations. In addition to assistance in criminal procedural matters, these centers provide assistance in civil legal matters. During the first 100 days more than 16,000 people appealed for free legal aid in these centers. Every fifth person was assigned a personal attorney. Moreover the Ministry of Justice initiated revision of the eligibility criteria, so that more citizens could apply for help.

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