The Ukraine is rising
Three years on from the start of Russia’s aggression, The Ukraine has restored macroeconomic stability and made rapid progress in implementing a comprehensive reform strategy with the support of international partners. Inflation has fallen from 60pc at its peak to 12pc and will be in single figures next year.
A fiscal deficit that threatened to spiral out of control has been tamed. Growth has returned and is projected to reach 2pc this year and 3.2pc in 2018. Living standards are recovering and the financial reserves are being restored. This year it expects to be able to return to the international financial markets for the first time in four years.
Painful reforms
This has only been possible because Ukraine has been willing to embrace radical and often painful reforms. Energy subsidies that drained resources and fuelled corruption have been eliminated, whilst they still maintain protection for the poorest households.
The resulting price rises have been difficult to absorb, but the benefits are already being felt through greater efficiency and stronger public finances. Taxes have been simplified and restructured to reduce business costs and boost employment. The introduction of electronic systems means tax administration is becoming more transparent than ever and they have started to modernise one of the most corrupt agencies, the State Fiscal Service.
Ukraine’s historically corrupt judiciary is in the process of being extensively overhauled to create strong and independent courts. The next reform priorities will be to make the national pension system sustainable and liberalise the sale of land to open the agricultural sector to more competition and investment.
The Ukraine has emerged from the worst of its crises and is firmly on the road to recovery. Yet there can be no slackening in the pace of reform. Hesitation will only benefit those who want to see the country slide back into post-Soviet stagnation. All the sacrifices of the last three years will have been for nothing unless they use this opportunity to make a decisive break with the past.
