World Bank Urges Reforms In Ukraine

KIEV, Ukraine -- Paul Bermingham, the World Bank Director for Ukraine, Belarus and Moldova said on Wednesday that a doubling of World Bank lending to Ukraine over the next 12 months will be determined by the pace of reform, reports Reuters.

Bermingham said lending was likely to exceed $500 million under a revised strategy by the new government of President Viktor Yushchenko, swept to power after "Orange Revolution" protests last year. "We're trying to help the government that has announced a very ambitious reform program but has sometimes struggled to turn it into actions," Bermingham said. "The purpose of our program is to respond to objectives we feel are very good objectives and help them realize them in a concrete way for the benefit of Ukrainian people," he added.

Bermingham said he was encouraged to see movement on the country joining the World Trade Organization, which has sparked heated debate in parliament as the government pressed on with legislation needed to join the trade body. Yushchenko has said Ukraine hopes to secure WTO membership in October. Bermingham said WTO admission would boost foreign investment and open markets to the ex-Soviet state trying to move closer to the West and hoping for European Union membership.

But despite progress, the horizon was still clouded by political uncertainty over parliamentary election in March 2006 and status of a constitution approved by parliament during last year's crisis, said Bermingham. "I think the political situation will remain fluid through to the parliamentary elections and whether the constitutional changes approved during the course of the political crisis will actually take place," he added.

Bermingham also said Ukraine's economy was "sound" although there were concerns about inflation and a widening fiscal deficit.

Going forward, Bermingham said strengthened governance, tackling corruption, judicial reforms and property rights were crucial, especially for changing the business environment. "These are all areas the government has correctly diagnosed it needs to do more and I think its translating that diagnosis into the actions it wants to do is the challenge over the next one to two years," he said. "It is policy and institutional reforms agendas that will attract more investment, that will liberate domestic entrepreneurs from the bureaucratic shackles within which they operate today, so that they continue strong growth going forward," Bermingham added.

In a related piece, Reuters reports that the World Bank said on Wednesday it had has approved funding of $251.26 million to back the Ukrainian government efforts to reform its economy and move closer to the West. "The Ukrainian government has set out an ambitious agenda designed to transform the economic and social development of the country and to enhance Ukraine's role in the global economy," Bermingham said. "We in the World Bank have adapted our programs to assist the government to achieve these goals. We now see a real opportunity to pursue the fundamental reforms needed to secure for Ukraine sustained strong growth and poverty reduction."

Ukrainian News adds that the $251.26 million loan is the World Bank’s First Development Policy Loan (DPL) for Ukraine. A World Bank statement said the DPL is the first in a planned series of three annual loans designed to help the government translate its objectives into a sequenced and prioritized program of actions.

In related news, the Associated Press writes that communists and pro-government lawmakers threw punches at each other Wednesday during an angry debate in the Ukrainian parliament over a package of bills needed for entry to the WTO . The session ended with only one of the necessary 14 measures being adopted, but Yushchenko's government remained optimistic that it will push through the bills. Lawmakers managed to approve legislation on the protection of intellectual property rights over compact disc production. Parliament is expected to continue discussion of the WTO bills Thursday.

Gaining membership in the WTO is seen as a major, short-term goal for Ukraine's new pro-Western government, which needs massive amounts of foreign investment to raise living standards in this nation of 48 million. Foreign investors had urged Yushchenko to ensure the bills were passed before parliament breaks Friday for its summer recess, fearing that a delay would dash Ukraine's hopes of WTO membership this year. The hurry is also due to fears that Russia will win WTO membership this year and then impose a series of new conditions on Ukraine, delaying Kiev's admission.

Source: World Bank