PM declares growth stimuli, sees Ukraine

Prime Minister of Ukraine Mykola Azarov said on Jan. 24 the government will pursue a program to activate the economy’s development in 2013-14, which will require USD 22.5 bln in financing for industrial modernization and structural reforms. The government plans to grow domestic production through direct budgetary investment, such as purchases for domestic goods, tax and customs stimulants and cheaper credit. He said the government will strive to enable the economy to join the top 100 nations for economic freedom. He projected GDP will rise 3-4% in 2013.

Zenon Zawada: It’s not the first time the Ukrainian government declared ambitious goals and rosy projections and it won’t be the first time it will disappoint. At least, we did not find any stimulus outlines by Azarov in the 2013 state budget. Rather than trying to reinvent the wheel, the government will be better off addressing the two keys areas to improving investment in Ukraine – strengthening rule of law and reducing government regulations – that were stressed by the European Business Association, as reported by the Kommersant newspaper. Azarov’s GDP projections do not look realistic and they exceed all other forecasts (including ourexpectation for  2.0% growth).