Ukraine’s economy has stabilized and is ready for growth. There are many threats for Ukraine but the prospects are good, Anders Aslund, the chief associate for the Atlantic Council writes in an article translated by NV.ua.
According to Aslund, over the past 3 years Ukraine managed to reduce its budget deficit from 10% to 3% by cutting expenditure by the state. The country’s state debt stabilized at 80% of GDP, against IMF fears that it will spin out of control. The wage tax has been decreased from the abominable 45% to 22%.
Ukraine’s international payments have been balanced following the imminent currency devaluation. Ukraine’s gold and currency reserves are up from $5 bn as of Jan. 2015 to $15 bn.
The nationalization of PrivatBank has ended the cleansing of corrupt and undercapitalized banking system. Due to harsh monetary policy, the Central bank cut the inflation from 61% as of April 2015 to 12% today.
Ukraine has implemented serious structural reforms. The unification of energy prices removed corrupt gas schemes costing the country 8% of its GDP.
Electronic income declarations dealt a heavy blow to corruption. The ProZorro public system of tendering has improved corporal management.
Ukrainians pin large hopes on 2017. The civil service reform is under way. Bureaucracy must modernize and become transparent.
Ukraine’s major challenge is the upcoming reform of judiciary and courts.
However, there won’t be any substantial improvement of the customs and tax systems. Their reform will probably take another year.
However, the projected 2-3% growth of the economy is not sufficient. By invigorating export to Europe, China and Middle East Ukraine can secure a much bigger growth.
Still, it is premature to make rosy predictions. The newly elected US president may pose a major threat for Ukraine as he seems eager to strike a deal with Vladimir Putin, with Ukraine likely to become a sacrifice,” Anders Aslund says.