Goesta Ljungman, who has been IMF’s resident representative in Ukraine for four years, is now departing. In an interview with Kyiv Post, he says that Ukraine has been very slow with reforms since the country got independence, but he also says that things are generally going better and better – just at a slow pace.
The International Monetary Fund, IMF, and Ukraine’s relationship have not always been the best since Ukraine got independence in 1991. The IMF is currently withholding payments to Ukraine due to slow reform progress, where the IMF is demanding more market reforms before paying the next tranche of a five billion dollar loan to Ukraine.
Goesta Ljungman has been IMF’s resident representative in Ukraine for four years. He is now leaving for his next assignment but sat down with Kyiv Post before leaving office to talk about his experience in Ukraine and how he sees things evolving in the country. Since 1992, Ukraine has borrowed around 32 billion dollars in 11 separate programs from IMF.
On one side, Ljungman says that Ukraine has made progress since the Maidan Revolution in 2014, such as cleaning up the banking sector, fixing the National Bank of Ukraine, and stabilized the hryvnia. Ukraine also has low debt, but not all is going great.
“The list of things that are necessary to address in Ukraine is long,” says Ljungman, “Since independence in 1991, it’s made slow progress in reorienting the economy from a planned one to a free-market one. There are still a lot of things that need to be changed.”
Several things need to be addressed
Ljungman mentions several things which need to be addressed. Among them are increasing productivity, getting more investments, reforming the pension system, fixing tax collection and the judiciary, creating fair competition among energy companies, continuing with privatization, and fighting corruption, which is still a problem in Ukraine.
“Time and again, potential investors are concerned about rule of law, property rights, corruption, and overreach by government agencies,” says Ljungman, “The dominance of oligarchs or business groups, that’s a deterrent to investment… when there is dominance, that starts to impede competition. The first course in economics is that competition generates the best outcome. It stimulates productivity and innovation and gives consumers the lowest prices and best products.”
“There is still a lot that needs to be done in the judiciary system and in fighting corruption. To look at it from a positive side, the fighting or the turbulence or whatever word you want to use is probably a sign that those who are losing from court reform feel the heat breathing down their necks,” says Ljungman, “They feel the need to fight back vigorously, to preserve whatever advantages they have from the current order. This is going to be a tough fight. It’s going to require a lot of support, and a lot of political capital needs to be spent on this. You’re taking on some powerful interest groups.”
Despite all of this, Ljungman points out that Ukraine is doing better and better.
“Ukraine today is still a lot better than it was at the end of 2013. It is important to recognize the work that has been done. It’s important because it shows you can achieve things in Ukraine; you can change things,” he says.