The government’s top priority areas for reform are public administration, decentralization, state procurement, taxation, judicial reform, pension, health, education, state property management and privatization, Ukrainian Prime Minister Volodymyr Groysman said while on a visit to Canada on Oct. 1.
While the government has moved on judicial reform, critics say the process was hobbled and perhaps even sabotaged by the process of selecting judges of the Supreme Court. Members of the Public Integrity Council, a civil society watchdog that oversaw the selection of candidates for the court, said 25 of the candidates they vetoed as being unsuitable to serve were nevertheless selected to be Supreme Court justices among 111 chosen. As for the creation of an independent anti-corruption court, President Petro Poroshenko still has not submitted a draft law.
Another priority where Ukraine’s government gets mixed reviews is a pension overhaul. Although new legislation was passed by parliament on Oct. 3, the pension age wasn’t raised, (58 for women, 60 for men) as Ukraine’s financial backers, the International Monetary Fund and the World Bank, had wanted. Critics of the new law said the changes to the pension system were mainly cosmetic.
But the new law raises the number of working years required to qualify for a state pension from 15 to 25 immediately, and it will grow by one year annually, until it reaches 35 in 2028.
Ukraine's aging and declining population has too few workers to support the current pensioners, who get an average of less than $100 monthly. Yet pensions are costly: $11 billion, or 27.5 percent of Ukraine's $40 billion state budget, is needed to pay 12.3 million pensioners.
Meanwhile, reform of Ukraine’s health care system looks to be on track, with parliament approving legislation on Oct. 18 to overhaul what is seen as one of Ukraine’s most corrupt sectors. The new legislation, drawn up by Ukraine’s reformist Acting Health Minister Ulana Suprun, came through parliament virtually unscathed, with almost 900 amendments to the bill being rejected in a marathon voting process that lasted almost three days.
One area that Groysman failed to mention is creation of an agricultural land market, which also should be a priority for the government as future tranches of Ukraine’s $17.5 billion IMF aid package could depend on it
Groysman as far back as April set out the government’s vision for the agricultural sector, it received a lukewarm response.
Indeed, in the six months since, there has been no progress on creating an agricultural land market, which some say will boost investment by $50 billion in the sector. The World Bank says it hopes to see legislation in Ukraine in 2018.
According to experts, the lack of a land market in Ukraine acts as a break on the economy of Ukraine: According to Satu Kahkonen, World Bank Country Director for Belarus, Moldova, and Ukraine, writing in a post on the World Bank website on Oct. 2 (republished on page 9 of in this week’s issue of the Kyiv Post), Ukraine could add 1.5 percent to its annual gross domestic product and $15 billion to its annual output by carrying out “meaningful reform” of the agricultural sector.
Such reform “must include providing incentives for long-term investment and proper land management, access to credit, and transfer of land to its most productive uses,” Kahkonen writes.
However, there is substantial opposition to the ending of the moratorium on land sales not only in parliament, but among farmers themselves. Many smaller farmers — who rent land from landowners who received plots from the state after the breakup of the Soviet-era collective farms — fear that they will lose access should it become available for sale. Landowners will be tempted to sell their land to large agribusinesses, which will then squeeze competition off the market, small private farmers say.
Decentralization in Ukraine passed a milestone on Oct. 29, when Ukraine held the first local elections in its new amalgamated communities, or hromadas. Elections were held in over 400 areas. More than 200 other areas currently undergoing the process of amalgamation also elected local officials.
By the end of the year, Ukraine will have more than 600 new hromadas out of the 1,500 originally envisaged. According to the initial decentralization plans from 2014, a reaction to the over-centralized power in Kyiv, Ukraine’s towns, villages and settlements were to be reorganized into amalgamated communities, the lowest tier in a three-tier local government of oblasts, rayons (districts), and hormadas (amalgamated communities.)
The restructuring is intended to rebalance powers and responsibilities between central government and local authorities. Local authorities are to retain more of the tax revenues in their areas (60 percent of the income tax, and 100 percent of state duty and administrative fees), and use the funds locally to improve infrastructure and services.
However, Russia’s war on Ukraine disrupted the initial plans: the decentralization legislation was amended to take into account Ukraine’s obligations under the Minsk accords to grant special status to the Russianoccupied parts of Donetsk and Luhansk oblasts, which led nationalist and opposition political forces to oppose it. The legislation passed first reading in parliament on Aug. 31, 2015, amid violent clashes outside of the Rada in which four National Guardsmen were killed by a grenade blast. The legislation has since stalled, with no further progress in its adoption.
Meanwhile, the United Nations Development Program in Ukraine has been supporting the decentralization process in the government-controlled portions of Donetsk and Luhansk oblasts. The UNDP has organized study trips for local government officials and civil activists to amalgamated communities in other parts of the country and in Poland to acquaint them with best practice under similar local-government systems.
In addition, the UNDP has supported the creation in government-controlled Donetsk and Luhansk oblasts of Centers for the Provision of Administrative Services, or TsNAPs, providing equipment and staff training. The TsNAPs are intended to act as the public face of decentralization reform in Donetsk and Luhansk oblasts, through which citizens can obtain government services, such as the issuing of passports and residency permits, quickly and inexpensively.
In addition, the UNDP in October launched its “I Am the Community” information campaign to improve public awareness of the decentralization reform process. It has also provided training for local authorities in incorporating input from ordinary citizens, especially women and internally displaced persons, to reflect their priorities when setting local development policies and allocating budget spending.
Lawmakers congratulate Acting Health Minister Ulana Suprun (C) and Prime Minister Volodymyr Groysman (R) after Ukraine's parliament, the Verkhovna Rada, on Oct. 19 passed a law that will trigger the start of longawaited reform of the health sector in Ukraine. (Oleg Petrasiuk)