The government is expecting a four-fold increase in receipts from privatisations this year.
One of the Ukrainian government’s tools to fight corruption and inefficiency is privatization of the many state-owned companies, which are running with a deficit. The Ukrainian government has previously been successful in selling several companies such as Dnipro Hotel in downtown Kyiv, but the process slowed down last year due to Covid-19.
The Ukrainian government is now ready to kickstart the privatization process, says Deputy Head of the President’s Office Kyrylo Tymoshenko. He believes that the state budget can get a four-fold increase in receipts from privatizations this year, compared to 2020.
“In 2018, the growth of revenues from privatization amounted to 1.2%, in 2019 – 3.1%, in 2020 it was 350%. But we do not stop there, because the plans for budget receipts from privatization this 2021 are to increase receipts by another four times,” Tymoshenko said, according to Interfax.
Earlier this year, Prime Minister Denys Shmyhal mentioned a few companies, which Ukraine is planning to sell. Among them are Ukrspyrt distilleries, which is set to bring 1.9 billion UAH to the budget. Other expected sales are mothballed penitentiary facilities, set to bring the government 1 billion UAH. Another one billion will come from the sale of smaller companies, where many are in terrible shape and only have very little value.
The State Property Fund in Ukraine, which will oversee the privatization process, also expects to privatize the President Hotel in Kyiv, four thermal power plants, Odesa Portside Chemical Plant, Ukragroleasing, and several regional energy companies over the next few years. In 2020, State Property Fund only sold for 3 billion UAH due to the pandemic. The target for 2020 was originally to sell state companies worth 12 billion UAH.
Will lead to growth
Denys Shmyhal said earlier this year that Ukraine can double its GDP over the next ten years and that the privatization process plays an important part in this plan.
“And it’s not only our government but also independent economists who see it this way. They compared our situation to countries that faced a similar situation. Over the next five years, we will invest EUR 15 billion annually, we will carry out further privatization and pension reform, and the last but not least, we will also liberalize our capital market. All this will enhance development,” Shmyhal said, pointing out that extensive reforms will be needed to meet such a realistic goal.
The Ukrainian GDP growth over the years:
In his recent statements, Tymoshenko said that the government might even go further in the privatization process than previously stated. The government is also considering auctioning even more hotels, long-term construction projects and prisons, he said.
“Every year the number of auctions within the framework of Small Privatization rises, and the prices rise, due to which the state earns on the sale of objects increase,” Tymoshenko said.
One example, he said, is Dnipro Hotel which was sold for around 1 billion UAH, which was about 14 times more than expected at an auction.
“This is an example of how the new team of the State Property Fund, the Cabinet of Ministers, the President, and the Office of the President can manage facilities and earn money for the state.”