Reform program – any luck this time?

UKRAINE - In Brief 27 Feb 2014 by Dmytro Boyarchuk
Parliament today approved new Cabinet with Arseniy Yatseniuk as a prime-minister. Also parliament accepted reform program of the new Cabinet. In fact the document (reform program) appeared to be a summary of key actions the authorities plan to do in the nearest future without much details. Among initial steps of the Cabinet is resumed cooperation with the IMF, signing Association agreement with EU, fiscal consolidation, heating tariffs’ increase, development of entrepreneurship, energy reform etc. Actually, all the words and ideas are correct and we have no word of critique to that summary. Still the main issue is implementation of all those declarations. To tell the truth, all the points of the program (economic part) are identical to what we have seen at the programs of previous governments (including reform program of Viktor Yanukovych); however, as we know, positive plan does not guarantee any success. We do not see any risk in resuming cooperation with the IMF. Next week mission of the Fund will arrive to Kyiv and we believe the IMF will grant money even before any reforms start at the country. At least it used to be a traditional approach for the Fund to build relations with new Cabinets. Also we do not see any problems with signing Association agreement with EU as soon as new president elected. At the same time we see really tough times to start unfolding when declared tariffs increase and fiscal consolidation will start. For the moment, Ukrainians are preoccupied with political events but probably will be surprised when next payday comes. As we know, previous government approved spending plan with effective fiscal gap exceeding 8% of GDP hoping for $12 billion ...

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