EBRD report looks pessimistic for Ukraine's 1999 GDP figures (12/27/98)

EBRD report looks pessimistic for Ukraine's 1999 GDP figures

Eastern Economist

KYIV - EBRD Senior Political Advisor Joel Hillman and Senior Economist Julian Exeter on December 8 presented a review of the bank's Transition Report, focusing their attention especially on Ukraine.

"1998 was a stress test for reform," stated Mr. Hillman in opening the presentation. He went on to emphasize that countries with the strongest reform programs already in place, such as Poland and Hungary, had suffered the least economically from the crisis of 1998 and that without additional institutional reforms any further stabilization of the economy in Ukraine would be endangered.

Mr. Exeter focused on macroeconomic indicators for Ukraine, citing revised EBRD figures for real 1998 GDP growth in Ukraine of minus 2 percent, with inflation predicted to run at 22 percent due to the 60 percent devaluation of the hryvnia between July and November of this year.

Mr. Exeter also said that despite the similarities in the situation in Russia and Ukraine, the National Bank of Ukraine has done a much better job of controlling the banking system, and Ukrainian banks themselves have tended to be less involved in the use of sophisticated financial instruments than their Russian counterparts.

The EBRD advisors' prescription for Ukraine's economic recovery and health included tight budgetary policies and accelerated structural reform, successful completion of the International Monetary Fund's Extended Fund Facility program, more widespread privatization of large enterprises to strategic investors and an increase in the transparency of the privatization process, as well as reductions in tax, wage and inter-enterprise debts, and the general use of barter.

In an earlier December 2 briefing on the Transition Report held in Washington by EBRD officials, Risk Management Deputy Vice-President Noreen Doyle said of the EBRD's plans," Next year is expected to be like this year, but the EBRD intends to continue to provide small business loans for worthy businesses within the CIS."

The Transition Report rates Ukraine far more favorably for estimated improvements in general government balances and current account and trade balances than Poland and Hungary for both this and next year.

| Home Page |