The Ukrainian Prime Minister believes that the Ukrainian economy can double in two years, requiring more than seven percent annual growth rates.
The Ukrainian parliament Verkhovna Rada has approved the privatization of several large state-owned Ukrainian enterprises, reports Unian. The sales are expected to boost the government’s finances, deter corruption and increase efficiency.
The privatization process has been slowed down due to the pandemic and fear that no foreign and domestic investors would be willing to invest. However, according to Unian, the Ukrainian government has now decided to move forward anyway.
“We have begun processes that the leaders of our country have been avoiding for years. Probably because of their terrible names – demonopolization, de-shadowing, deregulation. We started large-scale privatization in Ukraine. It slowed down a little due to COVID-19, but we definitely realize that this process, important for the country, for business, will continue, getting rid of ballast, which brought only losses to the country and, unfortunately, brought corruption to Ukraine,” Zelensky said at the end of March, according to Interfax-Ukraine.
Several companies ready to be sold
The Ukrainian Prime Minister Denys Shmyhal has said that state-property sales will start this summer. The first two companies up for sale are expected to be United Mining and Chemical Company and First Kyiv Machine-Building Plant, which is expected to bring nine billion UAH to the state budget. Privatization expects to bring around 12 billion UAH to the state budget in 2021, mainly from the sale of these two companies.
Among other things, the government expects that the sale of Ukrspyrt distilleries will bring 1.9 billion UAH and that they will receive 1 billion UAH from the sale of mothballed penitentiary facilities. 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 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.
Ukraine can double its growth rates
The privatization process is part of the government’s plans to kickstart growth. Prime Minister Denys Shmyhal believes that the Ukrainian GDP can double in ten years.
“Yes, it’s ambitious, although realistic. 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.
It will require yearly growth rates of 7,2 percent. In 2019, before the pandemic, the Ukrainian GDP grew by 3,2 percent, according to the World Bank.
Have to develop a new model
Minister for Development of Economy, Trade, and Agriculture Ihor Petrashko believes that such high growth rates will only be possible if Ukraine shifts away from a development model, relying only on the use of cheap natural resources and cheap labor.
“We have to build an innovative model, the priorities of which include the development of and trade in products with higher added value, higher technological level of production, a qualified and highly paid workforce, saving energy and other types of natural resources, and an innovative management style. It is toward this path of development that our strategy should be directed,” Petrashko said, according to Unian.
According to the Ukrainian National Strategy, reforms will focus on development in agriculture, industry, energy, and the IT sector. The government hopes to sign a new deal with the EU, allowing more export of Ukrainian products. In the agricultural industry, it wants to implement a transparent land market, expand the country’s infrastructure and deeper processing of products to help the sector evolve.
In the energy sector, the government hopes to diversity energy imports, increase storage capability, develop a green gas market, electricity, and thermal energy.