Ukraine will receive $ 350 million as a loan from the World Bank - this decision was made by the Board of Executive Directors of the financial organization. This amount will be the first tranche in the framework of the “loan to support reforms that are critical for economic recovery” of Ukraine. In addition, it is reported that the loan is designed to mitigate the consequences for Ukraine from the coronavirus pandemic.
The site of the credit institution notes that after Ukraine joined the World Bank in 1992, the country received a total of about $ 14 billion from it under 80 programs and projects.
Land trick
The report of the World Bank lists the main reforms for the support of which these funds will be allocated. First of all, we are talking about creating an “effective agricultural land market”, as well as resolving problem loans in state-owned banks.
“Ukraine has taken the first historic step towards creating a transparent and efficient agricultural land market and unlocking investment in agriculture by adopting a law on agricultural land circulation, which was supported by this development policy loan,” said the leading economist of the World Bank for Belarus, Moldova and Ukraine Faruk Khan, commenting on the decision on a new loan for Kiev.
However, World Bank experts note that Ukraine has yet to introduce a number of additional legislative standards in this area.
“It is important to adopt and implement additional legislation aimed at strengthening land management, improving the disposal process, expanding access to finance for small farms,” Khan said.
“And the gradual removal of restrictions on the purchase of land for all categories of investors,” he added.
To provide support in this area, the second tranche will be used as part of the current program, the bank said.
- Reuters
- © Gleb Garanich
Recall, Law No. 552-IX on the introduction of a land market in the country was signed by President of Ukraine Vladimir Zelensky at the end of April 2020. The law abolished the moratorium on transactions in the sale and purchase of agricultural land that has been in force over the past decades in Ukraine. Creditors of Ukraine insisted on this - the International Monetary Fund and the World Bank. As previously stated in the IMF representative office in Ukraine, land reform can stimulate the country's economy.
At the same time, most residents of Ukraine opposed the abolition of the land moratorium. As the results of a survey conducted by the Kiev International Institute of Sociology (KIIS) in April showed, most Ukrainians negatively assess land reform. So, 60% of respondents opposed the law on the sale of agricultural land adopted in the Rada (26% in favor), and if this issue were decided by a popular referendum, 74% of the population would oppose reform (the same 26% in favor).
The liberalization of the land market will be carried out in stages: starting from July 1, 2021, Ukrainian citizens will be able to acquire land plots with an area of up to 100 hectares, and from 2024 - Ukrainian legal entities. The authorities promised to submit the issue of granting the same right to foreign citizens at a national referendum.
As the head of the Ukrainian Center for Political and Economic Analysis, Alexander Kava, noted in an RT commentary, international lenders are now seeking to open the land market for foreigners, which is still prohibited.
“In addition, foreign creditors want Ukraine to remove other still existing restrictions, for example, concerning legal entities,” the expert explained.
The president of the Center for System Analysis and Forecasting Rostislav Ishchenko believes that although the law on land reform has already been signed, large financial clans continue the struggle, trying to lobby for the introduction of certain changes to the rules for the sale of land. Therefore, it is not necessary to say that the issue of land reform has been completed, the expert believes.
“This law was prescribed for those companies that already own Ukrainian land, including large agricultural foreign companies. And now they want to legitimize their position, ”the source said.
Cash transit
Another two areas of reform that the World Bank tranche should support are related to the reorganization of the gas sector and the creation of anti-corruption structures.
The plan for reforming the energy sector of Ukraine was agreed with the European Energy Community and the World Bank and adopted by the Ukrainian Cabinet in 2015. Then the government adopted the law "On the Natural Gas Market" and increased gas prices for the population and utilities. An important factor that influenced the increase in tariffs was the refusal of Kiev to directly import Russian fuel; instead, Ukraine switched to the so-called reverse supplies. Under this scheme, gas is first transported through Ukrainian territory to Europe, and then supplied to Ukraine with an additional margin.
- RIA News
- © Alexander Demyanchuk
The reform of the gas sector of Ukraine also implies the separation of the Naftogaz monopolist company into several structures - unbundling. First of all, we are talking about the separation of the gas transmission system from Naftogaz, which is under the control of an independent operator.
The procedure was completed by the beginning of 2020, the gas transmission networks were transferred to the management of the established company “Gas Pipelines of Ukraine”. In total, assets with a carrying value of about 32 billion UAH were transferred to the balance sheet of the company.
“Despite all attempts to reform the Ukrainian oil and gas industry, it has become even more corrupt than it was before, despite the fact that tariffs for consumers have increased significantly,” said Alexander Kava.
A similar point of view is shared by Rostislav Ishchenko. According to the expert, the current reform of the energy sector will not help to improve the industry.
“Western business wants to enter the gas transit business of Ukraine, therefore Western partners have long been pressing on Kiev with a demand to split Naftogaz. Some players want to gain control over the profitable transit sector under the guise of these reforms, ”the expert said.
In addition, Western lenders and partners of Ukraine want to continue to dictate where exactly it should buy gas. This opinion was expressed in a conversation with RT by a source in the Ukrainian party "Voice".
“Western partners almost openly say that they agree on all the important decisions of Kiev, including the issue of gas supplies - preserving reverse supplies is beneficial for European countries,” the source explained.
Social paradox
According to a World Bank press release, funds from the loan should also go to strengthen social protection systems in Ukraine and support older people who are most vulnerable to COVID-19. The second tranche in the framework of the reform assistance program will also be partially directed towards these needs: we are talking about "further strengthening of pension payments to vulnerable elderly people."
In March, President of the country Vladimir Zelensky demanded to raise pension payments. Speaking in the Rada, the Ukrainian leader stated that the previously planned indexation of pensions for citizens over 80 years of age has not been carried out, and in general the majority of pensioners receive less than 2 thousand hryvnias per month (about $ 75).
- Reuters
- © Gleb Garanich
At the same time, the reduction of already limited social guarantees for the population is one of the key requirements of international lenders of Ukraine. So, in order to receive a new loan tranche from the IMF, the Ukrainian authorities had to sign a memorandum implying the continuation of the pension reform. It was launched in 2017 and involves the introduction of a minimum insurance period required for retirement. The document also indicates that the Ukrainian authorities will not introduce new benefits and special pensions.
“The support of the elderly that the World Bank is talking about is profanity, empty words. This amount is clearly not enough, several billion dollars will not be enough to support elderly Ukrainians, ”says Rostislav Ishchenko.
In turn, Alexander Kava also noted that there is no question of direct payments to pensioners from World Bank loans - the amount allocated is too small.
A RT source in the Servant of the People party believes that although the amount of aid provided is limited, the World Bank nevertheless correctly identified Ukraine’s most problematic points.
“These are poverty, corruption and the fuel and energy sector. But it is worth considering that all reforms in Ukraine are carried out according to the patterns of Western lenders, which are not always beneficial to the country and, especially, its citizens. The worst thing is that there are practically no people in power who are ready to defend the interests of the country. Many calmly relate to the so-called “consultations” on all important issues with the US Embassy, ”the deputy noted.
The interlocutor of RT in the party "Fatherland" adheres to a similar point of view.
“The Ukrainian economy has suffered from a pandemic, the situation is only getting worse. And the world no longer believes that real reforms will take place in the country. There is no talk of development, the allocation of credit funds is a political decision that allows you to increase influence on Kiev, ”the source summed up.