The new Zelenskyy government has been named a "turbo-regime" for the speed and quantity of its draft laws and new bills. But how have the reforms passed by the administration worked out in practice? According to recent polls, the majority of Ukrainians have yet to feel any major changes in the economic situation of either their family or the country as a whole.
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However, the Ministry of Economic Development, Trade, and Agriculture feels like Ukraine is on track to meet or exceed growth forecasts. “For Ukraine, we can observe that growth is accelerating … the World Bank, the IMF … they’ve revised their forecasts upwards,” said the Deputy Minister of Economic Development Sergiy Nikolaychuk at a recent airing of the Sunday Show, adding that his Ministry believes optimistic growth forecasts are due to “... favorable sentiments both outside and inside Ukraine.” And he believes that growth of 6-7% per annum is possible if the government’s reforms are implemented in a timely manner.
And while Ukrainians do, generally, feel more positively about the future (or at least they feel less negatively compared to the previous year), growth is not yet guaranteed. Not only did a recent IMF mission leave Kyiv without coming to an agreement, but Ukraine’s entrenched system of oligarchy also remains in place. As Executive Direction for the Center for Economic Strategy Hlib Vyshlinsky points out, “The key issue is … not only economic policy, but rule of law. That’s why people are talking so much about the PrivatBank case, because it shows whether the judiciary in Ukraine could be really politically independent …”
As The Atlantic Council and the American Chamber of Commerce in Ukraine continuously stresses, the perceived lack of rule of law in Ukraine is the largest reason Ukraine has for scaring potential investors. “But we’re dealing with an obsolete system, a flawed legal system, law enforcement agencies that are supposed to be fighting corruption but lack the credibility that they’re supposed to have – all this impacts on potential investors in the country, and it also impacts on the IMF and the World Bank’s attitudes towards this country,” says British-Ukrainian journalist Bohdan Nahaylo.
And until that perception changes, it will be difficult for Ukraine to attract more foreign direct investment than in previous years, though as Vyshlinsky notes, land reform – that is, the repeal of the moratorium on the selling of land – may prove to be a driver of massive foreign investment into the country.
Land reform is only one of five priorities the Ministry of Economic Development is targeting. On the Ministry’s to-do list is also labor market reform, antitrust regulation, export promotion, and privatization, but the government’s credibility – or lack thereof – remains a big problem for reform effectiveness.
“The big problem right now is still about credibility … people still know that there’s an oligarchic setup. It’s not just [Ihor] Kolomoisky. Kolomoisky is just the jagged tip of the iceberg that we see …” said Nahaylo.
Volodymyr Zelenskyy’s government isn’t the first to propose a drastic change in Ukraine, and most of the government’s current priorities have been on task lists for various Ukrainian administrations since independence. It remains to be seen if they’ll manage to succeed where their predecessors have not – but the average Ukrainian, at least according to the latest polls, is starting to feel – not quite positively, but perhaps less negatively than they have before.
/By Romeo Kokriatski