Ukraine PM Yatsenyuk presents government reform program

Prime Minister Arseniy Yatsenyuk presented on Dec. 9 the government’s reform program, which was approved by the Cabinet of Ministers. They include specific measures planned for 2015-16, including dismissing 10 percent of state employees and hiking wages for those who remain. Among the fiscal measures are cutting Soviet-era social payments, consolidating state social funds and introducing contemporary state benefits.

 

In phases, the government will reduce the personal income tax to a range of 15 percent from the current range of 41 percent in order to bring wages from out of the shadow economy, Yatsenyuk said. The Cabinet will also prepare legislation requiring all Ukrainian citizens to submit annual income declarations.

 

The government will establish two public-private enterprises to manage the nation’s natural gas transit and storages systems, in which 49 percent stakes will be sold to investors from the EU and the U.S., said Yatsenyuk, who declared a public tender for investors in 2015. The government is also aiming for Ukraine’s energy system to be fully integrated into the European energy system by 2017, he said. The government also intends to finish construction of two nuclear reactors at the Khmelnytskiy nuclear power plant by 2018 and enhance the power-producing capacity of several others, he said.

 

Yatsenyuk also proposed privatizing 1,200 out of 1,500 state-owned assets previously forbidden from being sold. He called for an international audit of state enterprises up for sale and sales of their stock. The sales will occur when economic conditions will offer higher prices.

 

The prime minister also announced what he deemed to be government decentralization, deregulation, and de-bureaucratization. The first phase involves reducing state controlling agencies to 28 from 56. A second phase will consist of changes in licensing and eliminating excess functions of Ukrainian officials, which should be done by the first half of 2015, and replacing Soviet-era standards with 15,000 EU standards in accordance with the EU Association Agreement, which should be done by 2016, he said. Legislation will be submitted to parliament to transfer fiscal and tax functions to local governments. Hundreds of EU experts will consult the Ukrainian government on how to modernize the Ukrainian government, he said.

 

Yatsenyuk acknowledged that his interim government didn’t do anything effective to reform the nation’s corrupt judicial system. The new government’s plan also calls for conducting a full recertification of the nation’s judges and an overhaul of the court system, which includes established a three-tiered court system and making the Supreme Court the nation’s highest arbiter, he said. At the same time, local courts should handle most of the nation’s legal workload, he said.

 

Zenon Zawada: We welcome these concrete, constructive proposals declared for the short term. At the same time, our biggest concern is whether they’re part of a larger strategic plan, which seems to be lacking. A random, patchwork implementation of reforms – particularly applying those that come easier than others – simply won’t be effective.

 

Deadlines for 2016 don’t reflect the urgency of Ukraine’s situation, partly because determining the realistic deadlines in post-Soviet Ukraine sometimes requires doubling the announced time. The government should not only be working with European consultants, but outsourcing Ukrainian experts in all professional spheres to work overtime and weekends to prepare the necessary rules, regulations and laws for immediate implementation.

 

On paper, the announced reforms are a substantial step forward in delivering what the Ukrainian state needs to thrive. But we can’t foresee the hurdles that will emerge in the state bureaucracy apparatus, as well as the always tumultuous parliament.