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Canadian economist: Now is the best time for reform in Ukraine

Advice to the government. Ukraine Crisis Media Center, 19th of September 2014

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Kyiv, September 19, 2014 – Even in the midst of crisis and foreign aggression, the present moment is the best opportunity for comprehensive economic reform in Ukraine. Ukraine’s poor business climate and high levels of corruption are perhaps the biggest impediments to the country’s development, and need to be tackled as soon as possible. This was stated by Oleh Havrylyshyn, a Ukrainian-Canadian economist at Ukraine Crisis Media Center in Kyiv.

Havrylyshyn has conducted meetings with different pro-reform politicians and civil society groups in Ukraine. Despite resistance from some politicians, Havrylyshyn is optimistic about the future of necessary reforms. The Ukrainian government needs to do more to ensure the development of medium and small businesses, as well as improve economic transparency. The non-governmental organization Transparency International and the Doing Business Report have given Ukraine poor ratings. “This is one of the worst elements in Ukrainian economic policy,” said Havrylyshyn.

The best opportunity for Ukraine is to undergo rapid economic reform, copying the experiences of other post-communist nations such as Poland and Czech Republic. This strategy “improves the investment climate, helps small business, and is a signal to the investor nation and the foreign environment,” he stated. One necessary reform is ending gas subsidies, which increases Ukraine’s reliance on Russia, encourages inefficient energy use, undermines the budget, and discourages domestic gas extraction. Another important measure is decreasing Ukraine’s budget deficit over the next several years.

Despite Ukraine’s uncertain security situation and foreign aggression, Havrylyshyn believes that Ukraine has a unique opportunity to press forward with the reform agenda.  “I believe this situation is absolutely the best time for the reforms,” he stated. “When people find themselves in crisis they understand more easily that the government cannot make ends meet and cannot continue with the social welfare programs.” People will likely be especially displeased about increased gas prices, but in a time of crisis, Ukrainians will be more willing to bear this burden for the sake of change. Euromaidan fought for Ukraine’s place in Europe. “Europe means great changes in economic structure and economic policy,” Havrylyshyn said.

Press-briefing of Oleh Havrylyshyn was held in the framework of Ukraine Reforms Communications Taskforce and supported by the International Renaissance Foundation.

Oleh Havrylyshyn is a visiting fellow at Peterson Institute of International Economics. He previously held high positions at the IMF, and was the deputy chief of the European Department at the IMF. In 2014, he became a member of consulting body at the Ministry of Economic Development and Trade.