Ladies and Gentlemen,
I am delighted to join this important conference and to speak on behalf of the World Bank, one of Ukraine’s long-term development partners and one of the largest international investors in the country.
Ukraine is facing unprecedented challenges – a declining economy, rising fiscal and quasi-fiscal deficits, a significantly devalued currency, pressures in the banking sector, dwindling reserves, huge financing needs and a conflict in the east.
While many of today’s problems in Ukraine stem from the lack of reforms in the country in the past two decades, the conflict in the east has disrupted industrial production and exports and has imposed broad indirect costs by undermining consumer and investor confidence, and has made the economic crisis much worse.
Faced with these unprecedented challenges, the Ukrainian authorities have taken many important steps to stabilize and reform the economy.
They have moved to a flexible exchange rate and undertaken significant fiscal consolidation.
They have got rid of the middleman between Gasprom and Naftogaz in gas trading – one of the most important sources of corruption in the past; started to reform inefficient and unfair gas and district heating tariffs – another important source of corruption; they have taken the courageous but necessary step to raise gas and district heating tariffs on average by 450% and 70% respectively while putting in place a more targeted social assistance programme for the poor and vulnerable who are unable to pay.
They have introduced a more transparent public procurement law and a new transfer pricing law, both of which will help curb corruption and improve public finance.
They have begun the process of business deregulation by reducing the number of licenses, permits and inspections, which make doing business easier in the country.
They have started to clean up the banking system by putting 47 insolvent banks, about a quarter of the banking sector and including some of the largest banks, into the Deposit Guarantee Fund for resolution.
Each of these reforms is substantial and significant and together they represent a meaningful start of the long, arduous reform process.
Are these reforms sufficient? The answer is clearly no. Can more be done? Absolutely!
Because the challenges are so unprecedented, more must be done and done faster. Indeed, continued and faster reforms are crucial for Ukraine’s survival.
As Ukraine continues and accelerates its reform path, continued financial and technical support from the international community is critical: to help stabilize the economy, support the poor and vulnerable, improve capacity, overcome the resistance of vested interests, and most importantly to rebuild confidence.
We must continue the virtuous cycle of faster reforms, more financial support and increasing confidence and we must not allow the process to degenerate into a vicious cycle of slower reforms, delayed financial support and eroding confidence!
In 2014, the World Bank Group provided a total of almost US$3 billion to the country and as President Kim announced in February, we will provide an additional US$2 billion in 2015.
Our investments have focused and will continue to focus on improving basic public services such as district heating, power, roads, water and sanitation, health and social protection.
In addition to our financing, we will continue to provide advice and technical assistance to the authorities in formulating and implementing critical reforms to fight corruption, restructure the energy sector, protect the poor, improve the business environment and stabilize the banking sector.
As Ukraine’s long-term development partner, the World Bank Group will continue to support the people of Ukraine in this difficult transition.
Ladies and gentlemen: the international community can help and must help, but ultimately Ukraine’s future is in the hands of the Ukrainian people. We are here to support but you will have to do the hard work!
I wish you well and thank you!