Government presents "Ukraine 2010" economic program

by Pavel Polityuk
Special to The Ukrainian Weekly

KYIV - President Leonid Kuchma, members of government, the head of the central bank and leaders of the Parliament, together with prominent economists, bankers and academics, took part in a two-day forum on March 10-11 to discuss the global and domestic strategy for furthering Ukraine's economic development.

"The major task of our meeting was an attempt to discuss a deepening transformation process in Ukraine ... and to substantiate strategic targets of stabilization of the economic situation in the country," President Kuchma told the assembled at the conference's closing. "I think we have fulfilled that task."

The program that the experts analyzed, titled "Ukraine 2010," was prepared last year by the government and leading Ukrainian scholars, and has been approved by the National Academy of Sciences.

In line with the program, it is foreseen that Ukraine must cross through three thresholds in its economic transformation to a strong market-oriented society.

In the first stage, targeted for the years 1999-2000, the goal is to overcome the huge crisis in the industrial sector and to reach economic stability.

By the end of the second stage, the program predicts the beginning of normal economic growth. "During this period, [Ukraine] will work to radically change economic movement," said Mr. Kuchma. "An annual rise in the country's gross domestic product of 6-7 percent has been forecast."

By the third stage of the 2010 program, which will begin in 2006, the country will begin to see its GDP rise to about 8 percent annually.

Prime Minister Valerii Pustovoitenko, who opened the conference, said his government continues to be committed to the economic reforms begun in 1994, when President Kuchma took office.

"We stated in the program: our policy of radical market reforms announced in 1994 remains unchanged. In the program we maintain that the objectives of these market reforms should be reached as quickly as possible," Mr. Pustovoitenko underlined.

The government said the basis for the market transformation must be a stable Ukrainian currency and low inflation. In line with the program, the government expects to lower annual inflation from 20 percent in 1998 to 10-12 percent in 2000 and to 5 percent in the 2006-2010 time period.

"Financial stability must occupy a leading place in Ukrainian economic policy... and economic growth should be provided by the strengthening of our national currency," said President Kuchma.

The government also made a commitment to further lower the deficit of the national budget in the next 10 years from the 1.0 percent of GDP expected this year to 0.5 percent.

Both academicians and ministers said Ukraine must take some very important steps in order to ensure the successful implementation of the Ukraine 2010 program. They said the state must radically change its taxation policy and decrease tax rates. The Ukrainian banking system must be strengthened as well, and a privatization system must be set up that would invite bids from around the globe, with payment on a cash basis. They also called for Ukraine's leaders to create attractive conditions to lure investment into the country.

The program predicts that the state will continue to occupy a leading position in the economic reform process, but during the conference many people sharply criticized the government, saying its reformist measures were insufficient and without commitment, which has caused a delay in significant economic progress.

"We must recognize that the low efficiency of reforms and the serious losses that our people shouldered while reforms were being set up has caused disappointment among some citizens," said President Kuchma in his speech. "The problem is not in the market reform process, but in its non-completion."

The president expressed hope, however, that the Ukraine 2010 program would help the country overcome its difficulties and turn it into a developed, European-style country.

"It is a unique chance for us," Mr. Kuchma said, adding that he is calling on the government and the Verkhovna Rada to create the necessary legal base to implement the program.

"Economic transformation should never become a matter of political barter," said President Kuchma.

Copyright © The Ukrainian Weekly, March 21, 1999, No. 12, Vol. LXVII

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