The creator of Polish “shock therapy” Leszek Balcerowicz and Slovak reformer Ivan Mikloš spoke about shortcomings and perspectives of Ukrainian reforms.
Changing the approach and the future of reforms
Kyiv, October 6, 2016. Ukraine should approve the whole package of reforms at a time. This will ensure necessary interconnection and save time. This was stated by Leszek Balcerowicz, co-founder of Strategic Advisory Group for Support of Ukrainian Reforms, at a presentation of the package of key reforms held at Ukraine Crisis Media Center. “If we agree on the package, the effect will be in 2.5 years, just before the elections. This year, economic growth has begun but it is very slow. It depends only on the reforms whether it remains as slow as it is, or will accelerate,” believes Mr. Balcerowicz. According to him, the key reforms include reforming the state apparatus, public finances, tax system, transparent privatization, deregulation and de-monopolization as well as efficient energy sector reform. Mr. Balcerowicz stressed that the land reform is a fundamental stage.
Ivan Mikloš, co-chairman of the Strategic Advisory Group for Support of Ukrainian Reforms, noted the important achievements in the field of public finance: macro-financial stabilization and fiscal consolidation. However, he said, it is still a very shaky result. It is very important that fiscal consolidation is associated with structural reforms. “We need structural reforms: health, education, social services – macroeconomic stability is impossible without them. Neither can we expect economic growth, nor quality of life without this,” he explained.
Weak cooperation between the branches of power
Ivan Mikloš also stressed the importance of improving the state apparatus system. “The problem is that there is no close cooperation and interaction between the Parliament and the government for the reforms to be implemented quickly. Only 37 percent of the government proposals were supported by the Parliament last year. It is impossible to accelerate the reforms without the support from the Parliament,” the expert believes.
Mr. Mikloš noted that the new anti-corruption strategy is necessary because the current one is weak and is not backed by the practical action plan. “The most effective fight against corruption is to accelerate the reforms: deregulation, liberalization, privatization,” he believes.
Business and energy sector prospects
According to Ivan Mikloš, as to the tax area, it is necessary to reform the simplified taxation procedure – to leave it only for small businesses. He also stressed the need to abolish the moratorium on land sales. “This is one of the most decisive factors of not only attracting investments, but also economic growth and rural development. If we make the privatization process open, it will benefit the Ukrainian society rather than the oligarchs,” noted Mr. Mikloš.
As to the energy sector, a lot has been done, while a great deal of work remains ahead. “The market is monopolized and non-transparent. It is necessary to introduce the Third European Package. We have an independent regulator already. Now it is necessary to adopt the new law on the electric power market,” explained the expert.
As to the healthcare reform, it is important to introduce the principle of “money follows the patient,” instead of “money allocated to an institution”.