Reforms Bulletin
(March-April 2018)
Economic development and improvement of investment climate
- According to the governmental report on State Budget-2017 implementation, all scheduled reforms were duly financed in 2017 and a well-balanced policy on urgent expenditures was conducted. As a result, the state budget deficit decreased to UAH 47.9 bln (1.6% of GDP), while the pace of reforms implementation accelerated.
- On 27 April the President of Ukraine signed bill on ratification of guarantee agreement between Ukraine and IBRD on lending to small and medium enterprises. The agreement creates a legal framework for the development of cooperation between the parties, involving long-term investment resources in the economy of Ukraine in the amount of $150 million under state guarantees.
- The Government of Ukraine adopted the final report on implementation of joint projects with the IBRD. In total, USD 1.25 billion of credit funds were directed to ensure implementation of critical reforms in the economic, regulatory, legislative and social spheres, public administration and financial management.
- The Export Promotion Office, a consultative and advisory initiative since 2015, was transformed into a state institution under the Ministry of Economic Development and Trade.
- The export of goods from Ukraine in January-February 2018 has increased by 17.9% in comparison to the same period in 2017 (USD 1.1 bln) and totalled USD 7.4 bln. The EU has consolidate its position as a key export partner for Ukraine (45.1%).
- According to the State Statistics Service of Ukraine, the inflation is slowing down in Ukraine due to the decline in prices for edible and light industry goods. The inflation index of February 2018 totalled 0.6% in the comparison to 0.7% in January 2018 and 0.8% in December 2017. From the beginning of 2018, the core inflation index in Ukraine equalled 1.3%.
- Fitch Ratings has kept the economic growth forecast for Ukraine at the level of 3.2% in 2018, and predicts the increase by 3.7% in 2019.
Anticorruption reform
- On 25 April 2018, the Cabinet of Ministers of Ukraine has approved the bill on The Anticorruption Strategy for 2018-2020 to further promote anticorruption initiatives.
- On 5 April 2018, the President of Ukraine submitted to the Parliament a draft law on National Bureau on Financial Security of Ukraine as urgent one. The law aims at eliminating corruption in law enforcement bodies by creating a special agency to control fiscal discipline.
Privatization
- The State Property Fund of Ukraine has approved the list of 660 companies for privatisation in 2018 in the framework of the so-called small privatization that is expected to bring additional UAH 21.3 billion to the state budget.
- Ukrgasbank has made a first step toward its privatisation by signing an agreement with the International Finance Corporation on consulting services in the area of SME-related services.
- The privatization of the state energy generating company Centerenergo was re-sheduled for June 2018. The Polish branch of Ernst & Young was chosen as a Centerenergo sales adviser.
Energy sector reform
- The Roadmap for energy efficiency cooperation with the IMF stipulates not only for financial assistance for Ukraine, but also affects the reduction of burden on the state budget on social benefits.
- Ukraine, the EU, Germany and the International Finance Corporation signed an agreement on establishing a fund to enhance the energy efficiency of Ukraine in the residential sector and to reduce greenhouse gas emissions.
- By the end of 2018, Ukraine is planning to join the NATO Energy Security Centre of Excellence to become a part of the qualified and expert community specializing on questions related to operational energy security.
- EU is expected to join the implementation of the energy saving program and to provide support for Energy Efficiency Fund in the amount of EUR 50 million.
- The Government of Ukraine allocated UAH 400 million on the implementation of the credit program aimed at improving the energy efficiency of residential buildings.
- For the first time since 2006, UKRNAFTA held an e-auction on natural gas of its own production.
- Energy management system will be established on the Energoatom objects under the support of the State Agency on Energy Efficiency. This has to increase its energy efficiency by 15-20%.
- Due to the introduced legislation changes, the number and capacity of the solar energy plants in 1st quarter of 2018 almost doubled in comparison to the entire 2017, proved to be attractive to investors.
- The investment potential of Ukraine in the sphere of the renewable energy is estimated at EUR 12 billion, which are necessary to implement the National Plan on the renewable energy.
- The Japan International Cooperation Agency (JICA) will examine the perspectives of the energy generation of garbage In Ukraine. Preliminary, the potential is estimated at the level of 1 billion m3 of gas per year.
- Ukraine and Moldova signed Memorandum on cooperation directed at synchronization of energy systems of Ukraine and Moldova in the framework of ENTSO-E.
- Croatia and Ukraine established cooperation in the sphere of energy efficiency and “clean” energy. In this regard, Ukraine is ready to discuss modalities of its joining to the LNG-terminal project on the Krk island.
Land reform and support of agricultural sector
- By 31 August 2018, a digital base of monetary valuation of agricultural land is expected to be launched.
- The new system of quality and safety control for edible products commenced work on 4 April.
- On 19 April 2018, the Parliament of Ukraine has adopted the draft law on organic products labelling, which will facilitate the competitiveness of the Ukrainian organic products and expansion to foreign markets.
- In 2018, in the framework of state support of agricultural sector, 30% costs of the construction and re-construction of livestock farms and complexes, 40% of costs on machinery and equipment, 80% of cost of seedlings, and etc, will be reimbursed to farmers, cooperatives and producers of agricultural production.
- The procedure of agricultural lands transfer to the amalgated communities is to be finished by December 2018.
State administration reform
- The Government introduced changes to the Nomination Committee’s work that will be responsible for the nomination of heads of the largest and strategically important state enterprises. The committee will be composed of 4 state and 4 independent non-state experts; a single Selection Committee is introduced; the recruitment company will be in charge of the preliminary selection.
- The State Employment Service of Ukraine has renewed its membership in the World Association of Public Employment Services (WAPES) that deals with issues of employment, migration and education.
- For the first time the Key Performance Indicators (KPI) were introduced for the assessment of performance of state secretaries and the heads of the central executive power organs.
- The Government of Ukraine has allocated over UAH 142 million for the creation and functioning of administrative services centres in the format “Transparent office” to enhance the provision of services in the sphere of social protection on the qualitatively higher level.
Decentralisation
- As of 27 April 2018, 728 amalgated communities were formed, representing more than 31% of Ukraine's territory, and 14.9% of its citizens. Local budgets have continued to increase, amounting to almost 51.5% of the consolidated budget in 2017 (the highest rate over the history of modern Ukraine).
- According to the preliminary calculations, the local budgets are projected to increase up to UAH 230 billion in 2018, giving an opportunity to implement projects on the ground aimed at improving the quality of services in education, medicine, administrative services, etc.
- The Government has allocated additional USD 2 million for the reconstruction of Donbass.
- The adoption of the draft law "On Urban Agglomerations" will become the next step in the decentralization process that will allow to form urban agglomerations and define the forms of their support by the state.
- Approximately UAH 1.4 billion will be transferred to the local budgets from the state budget for provision of qualitative, modern and affordable secondary education in the framework of the “New Ukrainian school” program.
Healthcare reform
- The launch of the National Healthcare Service is scheduled for July 2018. Meanwhile, the Head of the NHS has been already appointed.
- Over a million patients’ declarations were registered in the e-Health system in one month starting from the launch of the campaign “Doctor for each family”.
- In May 2018, the first electronic prescriptions will be prescribed to the patients in 5 pilot cities of Ukraine.
- Starting from 2020, the State will cover the examination, consultation and appointment of a doctor of a specialized health facility only on condition of referral from the primary care physician.
- The international monitoring quality assessment of in the sphere of medical education will be performed in 2018, which will include the results of the international exam on medical fundamentals.
- The Ministry of Healthcare creates the system of uninterruptible professional development for the medical workers.
Reform of education
- As a result of the memorandum signed between the Ministry of Education and Science of Ukraine and the platform of innovative partnership YEP, the web of business incubators is to be developed in the universities of Ukraine, where lecturers and students will be taught how to implement the research results in business.
- Better Regulation Delivery Office (BRDO) will be engaged in the development of the policy of education technologies and services of Ukraine for creation of new rules on electronic educative content and implementation of its effective regulation.
Pension reform
- On 1 March 2018, approximately 550 thousand retired military received the revised pensions (increase by UAH 1.500 on average).
- The President of Ukraine signed the law on state support to combatants, persons who have suffered from disability as a result of the war, and their children for vocational and higher education.
National security reform
- The President of Ukraine has approved the Annual National Program on cooperation between Ukraine and NATO.
- On 5 April the Parliament adopted in the first reading a bill on National Security of Ukraine.
Other news
- On 25 April, the Government approved an Action Plan for the implementation of the Strategy for Communicating European Integration to raise awareness of Ukrainian citizens about the opportunities in cooperation with the EU.
- Infrastructure: In 2018, about UAH 47 bln will be allocated from the state budget for the modernisation of approximately 4,000 km of motorways.
- Culture: The Government adopted the Action Plan on Strengthening the National Unity and Consolidation of the Ukrainian society.
- Ecology: Starting from the launch of the Single register of Environmental Impact Assessment in December 2017, approximately 200 assessment procedures have been started.