Oksana Markarova: "Annual meetings with the IMF and the World Bank are not merely a long-standing tradition. They are a joint effort to understand global economic trends and share valuable experiences we will then put into practice in Ukraine"

4/15/19

The delegation of the Ministry of Finance chaired by Minister Oksana Markarova participated in the annual Spring Meetings of the International Monetary Fund and the World Bank in Washington, DC, on April 10-14, 2019.

Over ten thousand people from a number of countries took part in this year's meetings, including finance ministers, heads of central banks, leading investment bankers, economists and representatives of the business community.

This year, the participants focused on sharing experience in combating poverty and reducing inequality, overcoming the challenges posed by the threat of another global economic slowdown.

In addition to the main program of the event, Ministry of Finance delegation held a series of meetings with international partners and participated in a series of expert discussions.

At a meeting with Vice-President of the European Commission Valdis Dombrovskis, the focus was on the progress of the Ukrainian reforms and further steps towards the implementation of the Fourth EU Macro-Financial Assistance Program. Minister Oksana Markarova also raises EU-Ukraine cooperation agenda with a European Commissioner Johannes Khan, deputy head of the Directorate-General of the European Commission on Neighborhood Policy Kateryna and Enlargement Negotiations Katarina Mathernova and Ukraine’s Ambassador to the United States Valeriy Chaly.

In a meeting with the IMF leadership, delegations of the Ministry of Finance and the NBU of Ukraine discussed Ukraine’s progress in complying with its commitments under the IMF Program. By the end of May 2019, the next IMF mission chaired by Ron van Rooden will visit Kyiv. Also in May, the Ministry of Finance is expecting a visit of IMF technical missions on the State Fiscal Service reform.

At a meeting with Cyril Muller and the World Bank team, Ministry of Finance Delegation discussed next steps in the implementation of the World Bank cooperation program in Ukraine, including projects in education, infrastructure and agricultural sector. Both parties emphasized that joint efforts of the Ministry of Finance and the World Bank to accelerate cooperation effectiveness have already produced considerable results.

The Ministry of Finance team has also conducted meetings with IFC and EBRD leadership to discuss how their cooperation with Ukraine could be strengthened and investments enhanced. As the Ministry of Finance announced earlier, in the coming months IFC will become a co-owner of a Ukrainian state owned bank Ukrgazbank.
The meeting with Qatar Finance Minister Ali Shareef Al-Emadi was dedicated to the progress in implementing Ukraine’s key reforms, improving its business climate and broadening opportunities for investing in Ukraine’s government bonds state and projects in various economic sectors. Qatar’s investments in Ukraine will be facilitated by the two bilateral agreements recently ratified by the Ukrainian parliament.

In a meeting with the delegation of the Kuwait Fund for Arab Economic Development led by Walled Al Bahhar, potential bilateral cooperation and investment opportunities have been highlighted.

In the framework of the visit, Minister of Finance Oksana Markarova was also invited to speak at an IMF seminar on the global trends and their impact on IMF program recommendations hosted by IMF Managing Director Christine Lagarde. Among other issues, the Minister shared her vision of the global economic challenges, which Ukraine is likely to face in the near future.

"I believe we should focus on three major trends changing our reality on a global level. We also observe their impact on Ukraine. The first is migration, and not only migration of the people, but also of the capital. If we want to retain them within our economies, we should create conditions for them. Challenges also migrate. Our economies have become very interconnected, and therefore our problems become common. The second trend is open data. Ukraine is dynamically developing in this area. At the same time, we face related challenges that need to be addressed together, particularly effective data protection and the impact of large information volumes on the mindset of a new generation that cannot critically process them yet. The third trend is populism, which urges us to think how to resist the influence of those who promise quick fixes instead of carrying out complex but necessary reforms,” Oksana Markarova emphasized in her speech.

The delegation of the Ministry of Finance was also invited for the discussion of the role and effectiveness of state-owned enterprises and state-owned banks in the countries of the Central, Eastern and Southeast Europe hosted by Poul Thomsen, Director of the IMF European Department. Respective IMF study has illustrated that state-owned enterprises are less productive and effective than private companies, while state-owned banks are less productive than private ones.

Commenting on the study, Oksana Markarova argued that economic policy measures to reduce the share of state property are indeed time-consuming, since state-owned enterprises are not only faced with an issue of low efficiency, but also corruption. She stressed that, with this in mind, the Ukrainian government has already planned next steps in this direction and decided to divide such enterprises into three groups: strategic ones that remain in state ownership, those that will be privatized, and the remaining ones that are being liquidated. At the same time, OECD principles of corporate governance will be applied to manage Ukraine’s strategic state-owned enterprises, particularly the principles governing the creation of independent supervisory boards. Moreover, quarterly monitoring of key performance indicators of state-owned enterprises will be conducted. The importance of effective operation of independent supervisory boards is, in particular, demonstrated in the case of Ukrgazbank, which by the majority of indicators is comparable to private banks, while the share of problematic loans is lower than in a number of private banks.

Another high-level event attended by the Ukrainian delegation was a roundtable of finance ministers hosted by the World Bank and dedicated to the issues of human capital development. "Today, inclusive approach to education is already enabling all children in Ukraine to have equal access to education and socialization. It eliminates the rudiments of the old system with its separate schools for disabled children. Ukraine has also started to finance the New Ukrainian School, a nation-wide project in the framework of education reform. As to Ukrainian healthcare, a completely new approach to financing healthcare system has already had a positive impact on availability of medical services and has enabled a significant increase in the wages of primary care physicians. Besides, the Ukrainian government has introduced additional financial assistance measures for large families, which is expected to have a positive effect on the birth rate. All these steps are not merely positive outcomes of the reform process. They are a contribution to the future of our citizens and, thus, a contribution to the future of Ukraine. They will help increase the competitiveness of the Ukrainian human capital, which will positively affect the country's economic development,” Oksana Markarova stated in her speech.

This year’s Spring Meetings of the IMF and the World Bank have once again demonstrated that Ukraine is moving in the right direction and is successfully implementing complex structural reforms. Notably, Ukrainian government is introducing these important changes significantly faster than many other countries. This is particularly true in case of decentralization reform and the introduction of medium-term budget planning. Importantly, Ukraine’s reform progress is widely supported by the country’s key international partners, as they contribute to ensuring stability of the Ukrainian economy and improving well-being of the Ukrainian society.

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