The second week of November was a historic day for Ukraine – the Parliament adopted in the first reading the law on land market has launched a land reform, and the next day adopted the law on the state budget – for the first time in two decades in the first half of November and the middle of the day and not in late December in the morning. In addition, the IMF mission arrived in Kiev to end negotiations on a new program, and the state statistics service reported a slowing of economic growth in the third quarter of 2019.
This week was marked by in truth an epoch-making event for our country, which, according to President Vladimir Zelensky, will go down in the history books. The Verkhovna Rada gave a start to land reform, taking the first reading a bill to run from 1 October 2020 land market.
When Wednesday, 13 November, it became clear that the Parliament has a sufficient number of supporters that the key to economic development reforms, and a moratorium on land sales indefinitely will not be Ukraine passed the midpoint and closer to the civilized world, where everyone is working on the ground citizen has it all right, including the right to sell.
“I think it’s bound to be written in the history books, every one of you today became which author. Thank you,” thanked supporters of the bill 240 deputies, the head of state.
Prime Minister Alexey Goncharuk appreciated the decision of Parliament as the end of feudalism and the transition to a new era.
“End of era, where the people – the moratorium, and “his people” – all. Finally we can realize the transition from feudalism to the real market relations as a full-fledged developed country. Ukrainians have the right to freely dispose of their property,” he said.
According to the bill, supported by members of the Pro-presidential faction “servant of the people” that form monopolista in Parliament and several independent MPs, after 12 months, Ukraine will lift a moratorium on sale of agricultural land, which was introduced in 2001 as a temporary measure, and since then has been regularly extended because of the “unwillingness of legislative base”.
From 1 October 2020 to buy domestic land can the citizens of Ukraine, territorial communities, state and Ukrainian legal entities. The question concerning the right of foreigners to participate in the land market remains open.
In the bill there is a rule that to qualify for the Ukrainian chernozems will be able also to citizens of other States. However, it caused such a storm of controversy in society, fearful of manipulative slogans that foreigners will buy up for nothing the entire Ukrainian land and take out our fertile soils outside of the state that the President Zelensky promised the people to solve the issue of access to the market of foreigners only on the results of a national referendum. Appropriate changes will be made to finalized the second reading of the text of the bill.
According to the speaker of Parliament Dmitry Razumkov, a referendum can be held until 2024 and after the adoption by the Verkhovna Rada of the law on democracy, which will be written rule on the referendum. Until the right to purchase land will be solely for the Ukrainians.
As for the cost of agricultural land, the bill assumes that the starting price of sale of plots of land auction will be set no lower than the normative monetary evaluation.
According to the estimates of the Ministry of economic development, trade and agriculture, prices on Ukrainian soil after the launch of the market will be competitive. The cost per hectare may exceed two thousand dollars and in the future will only increase. The government intends to help farmers and smallholders to actively participate in the auction. Next year the Cabinet will direct more than four billion hryvnias of budgetary funds on cheaper lending rates for the purchase of land by farmers.
Budget in turbo mode
“Historic” vote on land reform was not the only landmark achievement of the Verkhovna Rada this week. Another was the refusal of the annual practice to pass the state budget December night or morning – long discussions and irreconcilable contradictions. This time the MPs broke the trend and voted for the main financial plan of the country in the first half of November and the middle of the day.
According to the document, next year budget revenues will be increased by fourteen billion hryvnia, the costs – for ten billion, and the deficit fell by 855 million hryvnias, that is, remain within 2.1 percent of GDP.
The Minister of Finance Oksana Markarova in presenting the document in Parliament called it realistic and balanced, noting that next year many sectors of the economy, local governments will receive much more resources.
“This budget is the increased spending on health and education. This budget provides a much more significant investment in infrastructure. This budget is not reduced, and increased spending on local self-government”, – said the Minister.
Based budget for 2020 for the updated forecast GDP growth of 3.7 percent and an average annual rate of 27 hryvnia for one dollar. And since this macroeconomic forecast is conservative, the risks of failure of the financial plan – is minimized.
As reported in the comments of the experts of the Center for economic strategy, UNIAN, forecast devaluation of the hryvnia to 27 hryvnia to the dollar might seem too pessimistic, but if this forecast comes true, then the lost revenue from taxes on imports of partially kompensiruet lower maintenance costs and repayment of foreign currency debt.
The mission of the Foundation: the return
Another important event this week was the return to Ukraine of the mission of the key creditor of our state – International monetary Fund – after a nearly two-month pause. Experts from Washington arrived in Kiev to continue discussions with Ukrainian officials on a new program eff.
If the talks are successful, the new program, according to the Prime Minister Goncharuk, will be calculated on a three-year term. Earlier, the national Bank assessed its potential volume to ten billion dollars and predicted that Ukraine will be able to get the first two a billion before the end of this year.
In the case of this programme, the reforms will facilitate the transition of the national economy to a new quality, when the continued assistance of the Foundation our country more is not required. Forecasts of Ukraine’s chances for an agreement on a new program rather optimistic.
On the eve of the mission’s visit to Kiev, the head of the communications Department of the IMF Jerry rice at a traditional briefing in Washington said that the parties managed to achieve progress in negotiations on several important issues, in particular, “in the discussion of fiscal and monetary policies and key reform measures, the protection of Central Bank independence and financial stability”.
Indeed, since the departure of the previous IMF mission in late September, the Ukrainian Parliament adopted a number of important laws, many of which had not moved forward for years due to the lack of political will. We are talking about “split” (liquidation of the financial services Commission and transfer its functions to the national Bank and the national Commission for securities and stock market), the resumption of responsibility for unlawful enrichment and the separation of “Naftogaz of Ukraine”. Also Rada adopted the state budget for 2020, and endorsed in the first reading the bills on the establishment of financial investigations service and the launch of the land market.
However, Kiev has yet to convince the Fund to the irreversibility of the reforms. Therefore, to relax our officials early, because at stake is the question of economic stability of the state. It is important to consider that the future 2020 and 2021 are the periods of peak payments to creditors when we need to pay the bills fourteen and ten billion dollars, respectively. Raising funds will allow the IMF to pass this difficult stage more painless. Otherwise, the national economy will overtake the crisis and the devaluation.
The performance of the economy
Another important piece of news the second week of November was the message of the State statistics service the growth of the Ukrainian economy in the third quarter of 2019. Compared to the third quarter of 2018, gross domestic product grew by 4.2 percent, slightly down from the previous quarter, when growth was 4.6 percent.
The Central Bank previously estimated growth of the Ukrainian economy in the third quarter at 3.5 percent. Updated statistics says that the national economy is moving in the right direction.
According to forecasts of the International monetary Fund, Ukraine’s GDP growth by the end of 2019 will be approximately three percent, the world Bank anticipates 2.7 percent growth, and the European Bank for reconstruction and development – 3.3 percent.
Meanwhile, Ukrainian agrarians completed the harvesting of grain and go to the next record. According to the agricultural Department of the Ministry, farmers threshed more than seventy million tons of grain, which exceeds the figure in 2018, when the gross harvest amounted to a record 70.1 million tons. Thus, farmers will make a significant contribution to the further development of the national economy, ensuring the increase of foreign exchange earnings from grain exports.
Next week promises to be an exciting economic developments. Concurrently with the expected decrease in air temperature in Kiev will continue the mission of the IMF and state statistics Committee will report on the work of the Ukrainian industry for ten months of 2019.