The EBRD annual convention in Kyiv ended last Tuesday with a press conference by the Bank’s Acting President Charles Frank.
Since this international financial institution is meant to secure the transition of newly independent European and Asian countries to democracy and the market economy, our biggest hopes were, of course, for foreign investment. Ukraine needs $40 billion and has received a little over two and change. Without doubt here, EBRD’s contribution looks impressive: EBRD had assisted 26 projects worth $1.13 billion. Before and during the convention agreements were signed opening new credit lines to support small and medium business (120 million ECU) and for energy sector renovation (27 million ECU).
So much for investment, at least for the time being. After discrete but sharp debates EBRD refused to finance the completion of two power units at the Khmelnytsky and Rivne nuclear power plants. Some experts believe that while preparing for the EBRD convention Ukraine created considerably more job placements in the West than it will ever have, all investments put together. It is true that Kyiv residents have never seen so many first class buses, vans, and limousines on city streets as during the convention.
Meanwhile there are reasons to consider this convention as the least expensive gathering of the bank’s leadership in its whole seven-year history. Suffice it so say that students moonlighting as interpreters at Boryspil Airport were not allowed time for lunch. Female students working at one of the hotels were issued food tickets. Ambulance crews were on 24-hour alert at the Ukraina Palace, free of charge. It is possible, however, that some money was allocated to pay for their work, best described as slave labor.
In many respects this year’s convention strongly resembled past Communist Party congresses when information could be guessed rather than read or heard in laudatory press accounts and speeches. Some transparency was provided only from faraway Australia whose delegate, actually Australian Ambassador to Ukraine Jeffrey Bentley, declared that the European Bank’s financial standing remained unstable (despite 20 billion ECU added to its assets). In his opinion, principal importance should be attached to fiscal discipline and sound management.
The latter could very well be addressed to the current Ukrainian administration where backs must still be aching after all the bowing and scraping at the ceremonies. They did all this with enviable enthusiasm, leaving one wondering how much good this energy would have brought the Ukrainian people if directed in the right vein.
Talking of the people, Vice Premier Serhiy Tyhypko said at the closing news conference that “there are five million people living in Ukraine who are paid from the budget. We cannot afford this luxury.” The government is going to struggle against this “luxury” using the simple method of reducing the number of budget-sustained persons. The next round of reforms envisages the retirement of up to 300,000 civil servants before the end of this year. In this context the Vice Premier spoke about the need to provide those to be pink-slipped with adequate social protection, but other reforms, in his words, would shift the tax burden “from the production to the consumption sphere.”
As for reducing Ukraine’s staggering foreign debt by $10.2 billion, Mr. Tyhypko said this would be done also by curbing budget spending and using privatization proceeds. The Cabinet is specifically banking on the denationalization of Ukrtelecom. Well, blessed are they that have faith! And the Ukrainian government’s faith covers a lot of ground. For one thing, they promised international organizations to lower the budget deficit to 1.5% of GDP. And they have faith in large foreign investment after the EBRD convention. Skeptical experts think otherwise: the expected money will at best cover the business expenses. Incidentally, no one knows how much has been spent exactly. Finance Minister Ihor Mitiukov mentioned Hr 3.5 million and Organizing Committee Chairman Oleh Taranov said it was Hr 3.8 million.
Photo by Volodymyr Rasner, The Day:
Charles Frank came and went carrying out the job of President without ever having been elected







