Ukraine’s government has made impressive progress in helping the country recover from the effects of the global crisis. Mykola Azarov, Prime Minister, says, “Ukraine suffered a 15% decrease in GDP in 2009 and we had a large debt problem as well as a severe budget imbalance. The main aim for the current government is to achieve economic stability, reduce public sector expenses, and bring the budget deficit down to 3.5%. We are on target to reach these goals.”
Ukraine’s GDP grew by more than 4.2% in 2010 and is expected to grow close to 5% this year, while the government has brought the budget deficit down by 5% (from 18.7% in 2009), with a goal of achieving an additional 3.5% decrease by the end of this year and 2.5% next year.
Mykola Azarov explains that the government has pursued an ambitious reform programme that has helped streamline bureaucracy, clarify tax legislation and reduce taxes. The government has also strengthened the country’s pension, education and healthcare systems. “These reforms have been unpopular but something had to be done, even if the government’s approval rating has dropped,” the Prime Minister says. He notes that the newest nuclear MRT surgical treatment centre for cancer patients has been opened and that the educational system is being upgraded to make sure that Ukrainian students receive the training they need.
Changing the local mindset
Mykola Azarov points out that the most difficult reform is to change people’s minds. After years in a communist system in which many services were free or very low cost though not of high quality, Ukrainian consumers are finding that costs (including of apartment rentals and of oil) have risen sharply, and this has made the reform process even more difficult.
In spite of these challenges, Ukraine has made progress on many fronts, including in fighting corruption and attracting foreign investment. The government is stepping up its efforts to make the world more aware of Ukraine’s investment appeal. The Prime Minister says, “Ukraine has some of the biggest and most productive agricultural resources in Europe, along with a temperate climate and sufficient rainfall. Foreign investors in our agriculture sector will achieve significant returns.”
No matter which sector they target, investors will find that Ukraine offers a highly qualified, low cost labour force, extensive energy and other natural resources, and developed infrastructure. The Prime Minister concludes, “Ukraine is a developed and highly important European country with great potential, and we are on our way to European integration.”