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“We will bring investors if...”

Why did President of the World Bank Jim Yong Kim visit Ukraine?
15 November, 2017 - 19:29

Probably the most important challenge for the Ukrainian economy and society as a whole is presently to convince the international community and its financial sector that the country is recovering both economically and socially. And this was demonstrated, in particular, by the course of President of the World Bank Group Jim Yong Kim’s visit to this country and his communication with the Ukrainian leadership, the civil society, and the media.

During a joint press briefing held by Kim and Prime Minister of Ukraine Volodymyr Hroisman on November 14, The Day’s reporter had the opportunity to ask the distinguished guest whether we could hope that the World Bank would at least take a step ahead of the International Monetary Fund (IMF) in providing Ukraine with financial assistance. Knowing the re­levant traditions, according to which such assistance and investments of the international community as a whole absolutely depend on the position of the IMF, which has somewhat slowed down its cooperation with Ukraine lately, your reporter understood a certain provocative nature of his question. Nevertheless, much in the response of the president of the World Bank, as well as the follow-up reply by the prime mi­nister, seemed rather encouraging.

THE STATE HAS COME TO OWN BANKS THAT HOLD 56 PERCENT OF ASSETS OF ALL SOLVENT UKRAINIAN BANKS. SUCH A LEVEL IS CONSIDERED A SIGNIFICANT RISK FOR THE BANKING SYSTEM ANYWHERE IN THE WORLD. THEREFORE, VOLODYMYR HROISMAN AND PRESIDENT OF THE WORLD BANK GROUP JIM YONG KIM TOOK PART IN THE SIGNING OF A MEMORANDUM ON SUPPORT FOR THE PRIVATIZATION (SALE) OF UKRGASBANK, AGREED BY THE MINISTRY OF FINANCE OF UKRAINE, PUBLIC JOINT STOCK COMPANY UKRGASBANK AND THE INTERNATIONAL FINANCE CORPORATION (IFC)

“We have already reached and even surpassed our limits in supporting Ukraine,” replied Kim, “and the IMF has done the same, but it is a large organization that is much bigger than us and has more than a trillion dollars they can provide as loans. We are now working very closely with the IMF to go beyond these limits and provide even more support, more resources for Ukraine. I sincerely believe in the reforms that are being implemented in Ukraine. We made a bet on Ukraine, we actually made the world’s greatest bet on this country. We want to ensure it succeeds.”

The Ukrainian prime minister had a few words to add to his counterpart’s response as well. “What is the main task facing us today?” he asked rhetorically, and replied: “Ensuring rapid economic growth. The pro­duct of this growth will be the money that we can invest in the quality of life of Ukrainian citizens. Pensions, salaries, jobs, and improving the quality of life in terms of services: healthcare, education, infrastructure, and other industries. This is the task that is facing us today.”

“What do we need for this? And why do we make changes in this country at all?” continued Hroisman. “Investments will come, and in general the good eco­nomy will emerge where there is an effective anti-corruption policy, where there is a free market, fair privatization, where necessary changes have been made that give people quality services, where doing business is easy. In all these areas, we cooperate very closely with the World Bank. And we must change the approach to our cooperation with global partners: from an approach aiming at simple support of Ukraine to one supporting development and economic growth. We, as a European nation with 45 million citizens, are absolutely capable of demonstrating our clear effectiveness in this.”

President Kim, while answering questions from other journalists, also positively evaluated the pension reform that has been implemented in Ukraine. “We closely monitor the situation with the pension reform and I want to note that this was a very bold step,” he said. “The reform has a safety margin, and if it is carried out, the protection of the most vulnerable sectors of the population and the stability of the Pension Fund will be ensured.”

However, Kim noted that the pension system in Ukraine could be more successful. “We know that (at the last moment) new articles were added. Of course, it would have been better if these articles were not added. We maintain a dialog with the Ministry (of Social Policy), and the ministry explained that there are ways in which it can be ensured that the reform will be implemented in the form that it has today,” he said.

Let us recall that passing the pension reform law was one of the key conditions for the completion of the fourth review of the program of cooperation with the IMF, after which an opportunity to receive the fifth tranche of the Fund’s loans will open. In addition, in order to complete the fourth review, Ukraine also needs to pass legislation on the creation of an anti-corruption court, reform the process of privatization of state-owned enterprises, revise internal tariffs for gas... But perhaps the most difficult thing will be enacting a land reform in Ukraine.

“I know that the land reform is a controversial matter in Ukraine,” Kim said at the briefing. “I am here to offer our support for a reform that will ensure prosperity for Ukrainians and will be conducted in such a way as to protect even the smallest landowners.” The president of the World Bank Group said that his organization had already successfully carried out such reforms in many countries and stood ready to offer expert assistance to Ukraine.

Particular attention was paid by both leaders who gave the briefing to the anti-corruption reform, and more specifically, to the creation of an anti-corruption court in Ukraine. “It would have been nice if we could get a decision on the creation of such a court passed in the next few months,” said Hroisman. “Now, speaking about the formation of the court, it is clear that this will take some time, because it will require new procedures, a new selection, and the certification of judges. Although I can note that it is very good that a new Supreme Court has been formed and all the structures involved in the selection and certification of judges have relevant experience. I think that regarding the third element (the anti-corruption reform), punishment is key. Without punishment, there will be crimes.”

The president of the World Bank Group also believes that defeating corruption is very important for Ukraine. “Trust in the country brings foreign investment flows,” he emphasized and said: “I spoke with Ukrainian financiers, and they claim – and I understand it myself – that Ukraine has enormous potential. One third of the world’s black earth is precisely here. There is a population that is ready to work. But in order to ensure economic growth, it is necessary to fight corruption and create an independent (anti-corruption) court. After this, I promise that we will bring investors from all over the world and show them the potential of Ukraine. But without fighting corruption, it will be difficult to do.”

By Vitalii KNIAZHANSKYI, The Day. Photo by Artem SLIPACHUK, The Day
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