In 2010, Ukraine Will Require The Implementation Of Banking, Regulatory, Taxation And Land Reforms

Tue Nov 3, 2009 9:07am EST

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In 2010, Ukraine Will Require The Implementation Of Banking, Regulatory,
Taxation And Land Reforms


NEW YORK, Nov. 3 /PRNewswire/ -- In 2010, Ukraine will need to implement a
number of reforms to increase the competitiveness of the economy and ensure
its growth throughout the post-crisis period, stated Nataliya Izosimova,
Director of the Foundation for Effective Governance (FEG). Izosimova made this
statement at a conference titled "Ukraine: Challenges and Opportunities," held
in Moscow by FEG and the Russian newspaper Vedomosti.

"For a number of reasons, the economic crisis has had a greater impact on
Ukraine than on its neighboring countries. The economic recession creates
great risks for society and the state. Ukraine cannot increase its
competitiveness and ensure steady economic growth during the post-crisis
period, without realizing tactical anti-recessionary measures and implementing
long-term reforms. The crisis creates unique opportunities for structural
change," she emphasized.

According to Victor Chernomyrdin, Advisor to the President of the Russian
Federation and former RF Ambassador to Ukraine, a keynote speaker at the
conference, Ukraine must achieve political stability before it can overcome
the crisis.

"The economic crisis has had a particularly negative influence on Ukraine, as
well as on Russia. That is why it is difficult for Russia to recommend
solutions. However, we would overcome the crisis together. If we work
together, it will be easier for our economies to survive," he stated.

Andrey Lobach, FEG's senior Project Manager, identified several key priorities
that should serve as a background for the Foundation for its projects in 2010.
The following reforms should be implemented: banking system reform, the
approval of a new tax code, the simplification of the conditions for carrying
out business activities, the removal of the moratorium for land sale, the
development of a public-private partnership (PPP) institute, the improvement
of bankruptcy procedures, and state administrative apparatus reform.

"Firstly, these reforms can increase competitiveness and improve the business
climate. Secondly, they may be accomplished relatively quickly and realized
within 2010. Thirdly, the realization of these measures does not require major
financial resources," Lobach highlighted.

Alexander Savchenko, Deputy Minister of Finance of Ukraine and former Deputy
Head of the National Bank of Ukraine in 2007-2009, also spoke about the
importance of reforms during the conference. According to Savchenko, economic
fluctuations align with political fights, which severely affect the economy.

As part of the conference, FEG and Vedomosti organized discussions about
different strategies for tackling the economic crisis in Russia and Ukraine.
The following solutions were offered:

Alexander Lukanov, President of Alfa-Bank Ukraine, highlighted that the
stabilization of the banking sector is the most realistic goal. In his
opinion, inflow of foreign capital through foreign banks' support would allow
the situation to stabilize. Within the forecast for the following year,
Lukanov declared that public confidence will return to the banking sector, and
more deposits will be made.

Denis Bugrov, Board Member at Sberbank of Russia, stressed that the long-term
success of developing Russia-Ukraine relations depends on the choice of
reforms. Among the priorities that need to be addressed, Bugrov named
political stability, and the removal of obvious barriers and obstacles in the
tax legislation and land tax code, as well as the creation of motivators for
improving the economy's effectiveness.

Elena Kuznetsova, Senior Manager at McKinsey & Company, pointed out that
political and macroeconomic stability and understanding of the necessity of
reforms are the key indicators that demonstrate how Ukraine learned from the
crisis.

A debate with the motion Russia is Ukraine's key partner in overcoming the
economic crisis was the second session of the conference. FEG regularly runs
debates together with UK-based Intelligence Squared in Ukraine. Several
speakers spoke for or against the motion, and then the audience actively
participated in the discussion.

Andrey Shevchenko, Member of Parliament of Ukraine and First Deputy Head of
the Rada Committee on the freedom of speech and information, pointed out
during the debates that Russia and Ukraine almost froze diplomatic
communications. In his opinion, the elites of both countries have completely
lost trust in each other. In Ukraine, any business with Russia is regarded as
a risky opportunity to gain greater control over Ukraine. In its turn, Russia
stereotypes Ukraine as a secondary state.

Opponents of the motion that Russia can help Ukraine overcome the crisis
better than others, are convinced that it is impossible to discuss the status
of being a "major partner" while having such an unreliable relationship.
Therefore, it is important for Ukraine to focus on European economic
relations.

Igor Shumilo, Executive Director for economic issues at the National Bank of
Ukraine, expressed confidence that Europe is the only civilized choice for
Ukraine to cope with the consequences of the economic crisis.

However, experts defending the motion that Russia is Ukraine's key partner in
overcoming the crisis emphasized that Europe is not necessarily the best
option for Ukraine's economy.

Kirill Dmitriev, Managing Partner and President of Icon Private Equity,
highlighted that Europe is weak from the economic perspective. It has many
problems and is not of interest for Ukraine. Moreover, Europe is not
particularly focused on Ukraine.

Dmitriev said that economic pragmatism is the main priority for Ukraine and
Russia. "Close cooperation between the two countries will enable them to carry
out innovative and industrial breakthroughs, as well as raise competitiveness
of their economies. Furthermore, the creation of a uniform economic space will
lead to efficient economic results," he stated.

According to Sergey Glaziev, Head of the New Economy Institute of SUM and
General Secretary of EurAsEc, links between the countries are so close that
the Russia-Ukraine pairing is the obvious choice.

Irina Akimova, Member of Parliament of Ukraine and Deputy Head of the
Committee on Economic Policy, concluded that Ukraine needs equal partnership
relations with Russia as well as the EU. She is convinced that there is no
conflict between European integration and a partnership with Russia.

Summing up the discussion at the conference, Konstantin Grishchenko, the
Ambassador of Ukraine to Russia, claimed that at least in a short-term
prospect, and under mutual respect, Russia is the nearest, most serious and
effective partner for Ukraine.

In relation to long-term prospects of Russia-Ukraine relationships and
Russia's assistance in overcoming the crisis in particular, Grishchenko said:
"We have to plan a long-term perspective strategically and build these
relations based on completely different principles. I am convinced we have all
necessary capabilities for that to happen."

"Ukraine: Challenges and Opportunities" was held on October 22, 2009 in
Moscow. It was organized by the Ukrainian Foundation for Effective Governance
and the Russian newspaper Vedomosti.

The participants of the conference included Victor Chernomyrdin - Advisor to
the President of the Russian Federation; Konstantin Grishchenko -
Extraordinary and Plenipotentiary Ambassador of Ukraine to the Russian
Federation; Irina Akimova - Member of Parliament of Ukraine, Deputy Head of
the Committee on Economic Policy; Kirill Dmitriev - Managing Partner and
President of Icon Private Equity; Denis Bugrov - Board Member at Sberbank of
Russia; Alexander Savchenko - former Deputy Head of the National Bank of
Ukraine (2007 - 2009); Alexander Lukanov - President at Alfa Bank Ukraine;
Ruslan Ibragimov - Vice-President at MTS; Elena Kuznetsova - Senior Manager at
McKinsey & Company; Igor Shumilo - Executive Director for economic issues at
the National Bank of Ukraine; Aleksandr Martynenko - General Director at IA
Interfax-Ukraine; Andrey Shevchenko - Member of Parliament of Ukraine and the
First Deputy Head of the Rada Committee on the freedom of speech and
information; and Sergey Glaziev - Head of the New Economy Institute of SUM and
General Secretary of EurAsEc.

About The Foundation for Effective Governance

The Foundation for Effective Governance (FEG), an independent public policy
institution, was formed in 2007 by Ukrainian businessman Rinat Akhmetov. FEG's
main objective is to encourage the development of long-term national economic
programs for Ukraine, through the formulation of practical policy solutions to
the political, economic and social challenges facing the country. The basic
principles governing FEG's activities are independence, a focus on economic
development, openness, and a practice-oriented approach. FEG's International
Advisory Board includes former Prime Minister of Canada Kim Campbell, Chair;
former U.S. Sen. Lincoln Chafee; and Gyorgy Suranyi, former president of the
National Bank of Hungary. More information is available at www.feg.org.ua/en.




SOURCE  The Foundation for Effective Governance

Joshua Greenwald, Rubenstein Public Relations, +1-212-843-8037,
jgreenwald@rubensteinpr.com
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