The Cabinet of Ministers of Ukraine is launching a broad discussion of the developments of the National Economic Strategy 2030. This document, which should determine the directions of Ukraine’s economic development for the next decade, is being developed by the Working Group of the Cabinet of Ministers of Ukraine on the platform of the Center for Economic Recovery at the initiative of President Volodymyr Zelensky. Specialists in various fields have already got acquainted with developments in the areas of investment attractiveness, capital markets and macroeconomic stability; support for the creative and hospitality industries; business culture development and regulatory policy; energy sector development, mining and effective environmental protection; industry, transport and infrastructure; international economic policy and trade; digital economy and information and computer technologies; management of state and communal property; reintegration of the temporarily occupied territories of Ukraine; development of the agricultural sector. Some experts expressed their views on the Strategy to the UA-Times.
Investment attractiveness, capital markets and macroeconomic stability
Among the strategic goals in this section of the Strategy are to increase foreign direct investment to $ 35-45 billion in 2030, increase Ukraine’s stock market capitalization to 40% of Gross Domestic Product, increase gross fixed capital formation to 20-30% of Gross Domestic Product, and increase accumulative assets. pension provision up to 25% of Gross Domestic Product.
Among other things, the following priority steps are envisaged: introduction of a capital amnesty, creation of the International Financial Center Kyiv, introduction of a funded pension system, introduction of insurance medicine, creation of a two-tier platform for issuing shares for Small and medium-sized enterprises (SMEs) and big business, consolidation of information on issuers and stock market players. , introduction of the state budget management information system, increasing the transparency of the systematic investment plan initiation process, introduction of the project evaluation point system and creation of a subdivision to support project evaluation, consideration of proposals and provision of standardized data.
“Two problems are relevant in Ukraine – weak protection of property and” investment hunger “(which, incidentally, is derived from the first). In the ranking of Doing Business 2020 on the indicator “property registration” Ukraine ranks 61st, obtaining a loan – 37. Easy access to property registers, raiding, corrupt courts scare away investors.
The problem will be solved by the introduction of real severe punishment for raiding, abolition of bail for corrupt officials (so that they do not run away from justice), and in case of their conviction – confiscation of property, compensation for lost property/assets/profits from illegal court decisions. they are approved (in case of cancellation by higher authorities)”, – said Konstantin Denisov, Candidate of Economic Sciences, Lecturer at Zaporizhzhya National University, on how to make Ukraine an attractive country for investors.
According to the expert, the investment hunger can be solved through affordable lending, as bank loans provide no more than 10% of all business investments in Ukraine. The reduction of the National Bank of Ukraine discount rate and its preservation at the historical minimum (6%) did not increase lending to the economy, although it reduced the cost of loans: for businesses to 9.0% in November 2020 (against 13.3% a year earlier), households – to 30.4% (vs. 33.1%). “Today, banks direct free resources to the redemption of government bonds (at the end of November 2020, they held 51.9% of all Domestic government bonds of Ukraine issued). The National Bank of Ukraine withdraws part of the market funds from banks through the issuance of certificates of deposit, increasing their volume in January-November 2020 by 52%. One of the ways to change the situation is to abandon the uncontrolled issues of government bonds that appeared under the government of V. Groysman. Let me remind you that Article 15 of the Budget Code requires the government to agree with the budget committee of the parliament on an unscheduled increase in debt”, – said Konstantin Denisov.
Serhiy Vaskov, Managing Partner of “ESKA Capital”, also noted that today Ukraine does not look particularly attractive to foreign investors. We are not even in the top 20 European countries that would be interesting for significant financial infusions. However, the state is in a permanent state of seeking help from international funds.
“The economy needs money – the government is looking for them… From the outside. While a large amount of money is inside the country, – says Sergei Vaskov. – According to the National Bank of Ukraine, the population has up to 355 billion in cash in hryvnia, and more than $ 86 billion in cash in foreign currency. The big problem is that these savings don’t work. The “thrift paradox” (observed by economists Katchings, Foster, and Hayek) reads: “The more savings and less investment, the faster the general economic downturn will occur.” Indeed, we need financial infusions, but not “others”, but ours. Why? Because domestic investors are really interested in economic development here. They are interested in long-term real impact investment. This contributes to both 1) the general increase in the standard of living of communities at the micro level, and 2) the growth and development of the entire economy at the macro level. We need to form a domestic investor with long money. Given the size of our economy, we can allow this. And the stronger the domestic investor, the bigger the economy. Neither IGLBs nor municipal bonds will help the development of a market economy, they do not create added value, but only accumulate a debt burden on the budget. The added value and, accordingly, the well-being of Ukrainians creates business. And he will come to the stock market only after he sees that investors here are no longer afraid of the state”.
According to the managing partner of “ESKA Capital”, the stock market will help to activate the domestic investor: “All over the world, the growth of the economy and investment in business takes place through the stock market. I am sure that Ukrainian private investors can become this trigger. There are all the necessary tools for this, only some “improvements” are needed at the legislative level. 1) It is necessary to create the most comfortable conditions for domestic investors so that they are not afraid to lose their money. Because so far we do not have the protection of investors’ rights, and the judicial system is operating unsatisfactorily (by the way, for foreign investors we also have no programs to attract, no benefits, no incentives); 2) Liberalization of financial regulators is needed to make market operations easier; 3) Launch a state program to promote the domestic stock market; 4) Finally complete the pension reform; 5) To develop the market of corporate bonds and to equalize them in taxation with Domestic government bonds of Ukraine”.
Development of the agricultural sector
This item of the 2030 Strategy includes the promotion of employment in rural areas, simplification of business conditions through the reduction of regulatory barriers, digitization of information on soils, land and water resources within the geospatial data infrastructure, continuation of land reform, creating a competitive environment in the domestic chemical market. fertilizers, stimulating the development of Research and development (R&D) Centers of international producers of resources for the agricultural sector (fertilizers, seeds, feed, etc.), providing access to modern genetic products, stimulating yield improvement through access to basic material and technical resources, promoting the cultivation of high-margin crops, stimulating the restoration of aquaculture and self-sufficiency in the domestic market of domestic products, creating conditions for increasing processing, promotion of Ukrainian agricultural sector abroad markets.
Experts note that the implementation of new reforms requires a thorough audit of existing legislation. “There” the devil will break a leg “- many contradict each other. After that, it will be clear that it needs refinement. But first of all, the domestic fishing industry must be transferred from the Ministry of Ecology back to the Ministry of Agriculture, – said the chairman of the Association of Fishermen of Ukraine Oleksandr Chistyakov. – In general, a number of bills are needed for the industry to start reviving. In particular, the Law, which increases penalties and increases fines for trade in illegally caught fish; The law on the introduction of the Certificate of Origin – the document says about the legality of fish products; Law on Multiple Increase of Fines and Amounts of Compensation for Illegal Catch of Aquatic Living Resources; Law on the Establishment of a Specialized Fund for Support of the Fisheries Industry, which will be replenished with a percentage of fines and amounts of compensation for dispatchers; and more. I hope that this will be possible, as for the first time a person who knows its problems has been appointed to the management of the fishing industry, especially since this is the first woman to head the State Agency for Fisheries”.
Development of the energy sector
Among the priority steps in this area, the Strategy states: to ensure energy independence in the gas and oil spheres, to ensure the stability of imported supplies of petroleum products in order to increase energy security, to form a system of minimum energy reserves, to ensure integration of energy markets and transport networks. consider exporting hydrogen to the EU. To achieve these goals, it is planned to increase energy efficiency in the use of electricity and heat, ensure completeness and availability of all forms of energy and fuel and energy resources, limit the negative impact of energy on the environment, increase production and consumption of electricity from renewable sources, primarily through distributed generation .
In his commentary, Oleksiy Badika, the founder of Atmosphere, notes that today hundreds of households and dozens of businesses in Ukraine are installing solar power plants for their own consumption without a green tariff. But from the standpoint of Ukrainian networks and legislation, solar power plants for own consumption do not exist at all. As a result, their owners design and calculate their stations so as not to deal with the procedure of obtaining a “green tariff” or with the bureaucracy of regional power. And although in the reports of the State Agency for Energy Efficiency, National Energy and utilites Regulatory comission and regional energy companies you will not find any mention or data on such self-consumers, their number is growing steadily.
So far, Ukraine is just beginning to think about developing a policy to support those prosumers (consumers who have their own generation) who produce electricity mostly for their own consumption. Meanwhile, in developed countries they are actively integrated into electricity markets. For example, the 4th energy package of the European Union will become mandatory for the EU next year. It provides for the maximum integration of distributed energy resources into electricity markets. The 4th energy package guarantees that every owner of a power plant on the roof of a building or storage system will be able to participate in organized electricity markets, – says the founder of the company “Atmosphere” Alexei Badika. – One of the most common mechanisms in the world is called “net metering”, or net metering. If we abstract from the details, then such a mechanism allows the consumer to give to the grid surplus electricity and consume previously produced electricity when it is convenient. At the same time he pays for the difference between the consumed and given electricity. In my opinion, this tariff system will balance the market and give impetus to the further development of the industry”.
Effective environmental protection
The Strategy stipulates: 1. Review the National Emission Reduction Plan for large combustion plants (SO2, NOx and dust) and implement measures for the reconstruction and modernization of thermal power plants and thermal power plants in accordance with the updated energy strategy until 2035. 2. Introduce environmental management and audit systems. 3. Ensure the introduction of the latest technologies and exchange of information on the utilization of fuel and energy waste… And there is also a clause on the completion of the construction of storage facilities for spent nuclear fuel and highly radioactive waste from its processing.
But in other points of the Strategy you can see conflicting plans to, in particular, the creation of facilities for processing household and hazardous waste, industrial waste in the Chornobyl zone, or dredging of the Pripyat River within the project “Gdansk-Kherson International Waterway (E40)”, that has not passed any examinations and no permits.
“This strategy takes into account climate change, but in reality it ignores it. It is obvious that no ecologist was involved in the work. It is unknown where to get water for watering new irrigated areas. It is unknown what will happen to the radioactive sludge when the exploitation of the Dnieper above Kyiv begins. It is not clear why drainage reclamation was allowed to develop when there was a drought. Therefore, the question should be asked as follows: why is the document so clumsy? And only then about the laws that are missing, ”Kyiv environmentalist Oleh Lystopad commented on the Strategy.
Oleksandr Chistyakov also noted that no environmental bill has been adopted in the last two years, while the Law on Garbage Disposal is urgently needed; Law on the prohibition of the use of light plastic bags. “It is necessary to revise the Law on Nature Reserve Fund in the direction of its improvement; to bring order to the lease of reservoirs, as the current regulatory framework has completely put an end to the development of domestic fish farming; the Law on Atmospheric Emissions needs to be urgently revised (dirty air leads to 45,000 deaths from heart and lung diseases every year); and much more, ”insists the chairman of the Association of Fishermen of Ukraine. – It is not gratifying that for all years of Independence there was no Minister of Ecology with profile education (and there were 37 of them). The Ministry of Ecology has long since transformed from the Ministry of Environmental Protection into a bureaucratic office for issuing various permits for its destruction.
Translation: Ann Loboda