Issue 2,
9 June 2006
The political uncertainty caused by the recent parliamentary election and slowness to appoint a coalition government is impacting the economy. According to the State Statistics Committee, the industrial output of the nation grew 0.5% in April over the same month in 2005, whereas industrial output was a meagre 0.4% for January-April year-on-year.
While Ukraine’s GDP grew 2.7% in the first quarter of 2006, the growth rate actually decelerated compared with last year’s first quarter, which saw GDP increase 5%. Yet perhaps the most sobering fact is that Ukraine’s current GDP is only about 63% of what it was 15 years ago.
“The unwillingness of capital markets to invest in Ukraine stems from political uncertainty,” said Serhiy Teryokhin, BYUT’s MP and former Minister of Economy. “We need to put in place a strong government that will protect property rights and respect the sanctity of contracts. A Tymoshenko-government will achieve this, along with pro-active measures to remove bureaucratic impediments and so encourage business and investment in Ukraine.”
Last year Tymoshenko’s government abolished more than 5,000 regulatory acts that had curtailed the growth of private enterprise and created a breeding ground for corruption.
“The economic watchwords for the new government must be ‘stability’, ‘investment’ and ‘growth’” said Yulia Tymoshenko. “Although inward investment has slowed to a trickle, investment banks are showing huge interest in our industry and natural resources, which are ripe for development. We don’t anticipate investment levels to pick up until a new and stable government is formed. At the moment we are paying a hefty price for the wheels of our democratic process turning so slowly. At the same time, many of our own business leaders have invested too much time in trying to enter the Rada.
“Our focus must be on economic growth. The first step must be to put in place a stable government with clear, consistent policies. Stability is the oxygen that will breathe life into the investor community.”
Tymoshenko has assured business leaders that she will continue to privatise Ukraine’s strategic industries, slash duties and tariffs; remove barriers to insurance companies and foreign banks and reform the judiciary. As for the thorny subject of re-privatsations, she foresees closure on the issue, contending that the state should not intervene. “This matter is best left to the courts,” said the former prime minister in a recent address to investment banks.
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