Ukraine: time to deliver on reforms

Notwithstanding important progress in poverty reduction since independence 20 years ago, Ukraine is not achieving its full potential. It is time to focus attention on why despite ambitious objectives implementation has often lagged.

I came to Ukraine just over a month ago. I heard a renewed commitment to improved governance and implementation of important economic reforms. But I also heard skepticism from business and civil society whether these commitments will be put into practice. Confidence in the government and more generally in state institutions is low and this undermines the implementation of even best laid plans. It is time to focus on these implementation difficulties.

Our new Country Partnership Strategy with Ukraine for 2012-16 is targeting implementation issues by aiming to strengthen the relationships between the state, citizens, and business. The first pillar of our strategy focuses on improving public services, enhancing sustainability and efficiency of public finances, and promoting a more transparent and accountable use of public resources. The second pillar focuses on improvements in the business climate and the promotion of domestic and foreign investments, as well as competitiveness and job creation.

The new Strategy aims to deliver concrete results and through this help the government builds trust. The Strategy is based on a careful diagnostic of underlying risks, both technical and governance related, and an analysis of our past experience. Our partnership with Ukraine is calibrated to the degree of progress in the implementation of reform and good governance commitments. It is selective as it focuses our support on those sectors and state institutions where we believe implementation risks are mitigated by strong ownership and willingness to invest in building the capacity necessary to sustain complex reform efforts.

We are seeing first results of our joint focus on implementation: our existing portfolio of projects has seen a remarkable turnaround over the past 18 months in the pace with which activities proceed on the ground. From the renovation of 756 local welfare offices and the modernization of the Dnipro hydropower cascade to the rehabilitation of the Kyiv-Kharkiv M3 road, we are supporting concrete development results for the people of Ukraine. We want to see more.

To help build consensus and greater confidence in reform delivery we also propose much greater and more systemic participation of civil society and the business community in our activities. Increasingly complex reforms in sensitive social areas such as pensions, healthcare, or municipal services cannot be effective without public engagement in, formulation, monitoring, and implementation. And we are continuing to work with many other international and local partners to ensure that Ukraine gets the best service from its many friends.

My assignment in Ukraine starts against the background of the evolving public debt crisis in the Eurozone and concerns globally about the impact on growth and the risk appetite of financial markets. But a recent comprehensive report on Europe which we produced at the World Bank, “Golden Growth: Restoring the Lustre of the European Economic Model” (worldbank.org/goldengrowth), suggests Europe will remain a source of strength and support for all its neighbors. The crisis, particularly among Europe’s weakest economies in the South, highlights the costs of delaying key structural reforms from improving the business climate, reforming labor markets to dealing with public pension systems.

My message to Ukrainian policy makers is that they are not alone in battling with difficult reform agendas. Concerted and consistent implementation of reforms can deliver ample economic dividends. We stand ready to help the Ukrainian authorities deliver on their commitments, for the benefit of all Ukrainians.

Qimiao Fan is the World Bank’s Country Director for Ukraine, Belarus, and Moldova