• Ukrainian banking and finance: major changes and challenges

    23.10. 2018

    Many years of fixed exchange rate together with expansionary fiscal policy created huge external imbalances. The report describes the following key issues of Ukrainian banking and finance: Inflation targeting instead of defending the currency peg ‘Moral hazard’ aftermath – fewer banks of better quality Strengthening of the supervision State-owned banks ruled by the market New currency law paves the way to future FX liberalization The report was presented in Vienna during the panel discussion “Ukraine’s Economic Development and the EU Association Agreement”. This report was produced under the Ukrainian Think Tank Development Initiative (TTDI), which is implemented by the International Renaissance Foundation (IRF) in partnership with the Open Society Initiative for Europe (OSIFE). TTDI is funded by the Embassy of Sweden in Ukraine. The views and interpretations expressed in this report are the authors’ and do not necessarily reflect those of the Government of Sweden, IRF and OSIFE.   Read more
  • Budget-2018 overview

    14.02. 2018

    This year no quantum leap happened in either budget planning or revenues/expenditures structure.  The Parliament failed to adopt the medium-term budget resolution for 2018–2020 and scarcely ever link the new expenditure proposals to either strategic priorities for the state or corresponding income sources. Between the 1st and the 2nd hearing the MPs boosted the budget expenditures by almost UAH 40 bln. This means that should the budget be amended any time during 2018, the 2.5% of GDP budget deficit target is at risk. There are also several worrisome factors within revenues and expenditures incl. realistic achievement of pensions and non-tax revenues targets. The most significant change made to the expenditures in the budget for 2018 is the increase in expenditures on the economic activity, public order as well as on the general government functions against the previous year. To assess if this is right ... Read more
  • Assessment of efficiency of public expenditure and steps to optimization

    10.11. 2016

    Analysis of budget requests (presentation)The objectives of this research on “Assessment of efficiency of public expenditure and steps to optimization” are to identify areas in which public spending is too high and to assess measures of possible reduction through higher efficiency of spending. Periodic assessment of public expenditure efficiency, and also optimization of outlays, in order to achieve a reduction of spending in less prioritized sectors is becoming worldwide practice. The results of previous research of the Centre for Economic Strategy on the optimum level of public expenditure demonstrated that the share of public spending in GDP is high in Ukraine while the levels of institutional capacity and confidence in state institutions are low. To achieve macroeconomic stability it is important to reduce the debt burden and budget deficit. That is why assessment of efficiency of public spending is an urgent ... Read more
  • Currency black market: the extent of the problem

    08.07. 2016

    The Ukrainian economy is largely dollarized. This complicates monetary policy and reduces the potential amount of funds available for investment. In 2014-2015, due to a surge in inflation and a weakening of the hryvnia against most world currencies, the demand for foreign currency increased significantly. The subsequent introduction of harsh official restrictions on trade in foreign currency led to a spike of “black market” foreign exchange transactions, which have become a blind zone for official statistics. According to official data of the National Bank of Ukraine (NBU), in 2013 the population bought on average $1601 million per month from banks. In 2014, when the first currency restrictions were introduced this amount was reduced to $669 million. In 2015, when the restrictions became stricter, this figure fell to only $57 million (or 3.6% of the 2013 level). Officially, the amount of foreign ... Read more
  • Steps to current account liberalization: facilitating exports of services for small businesses

    26.04. 2016

    Extremely complicated procedures of currency exchange and cross-border transfer rates in Ukraine affect not only outflows of currency abroad but also inflows of foreign exchange earnings from exports. This is particularly harmful for small businesses. Administrative complexity also concerns taxation and other procedures related to the necessity of declaring international economic agreements in writing. Simplification of regulation will not only provide additional inflows of foreign currency, but will also create jobs and growth in aggregate domestic demand. The purpose of this research is to express our common position with the proposals of the USAID Leadership in Economic Governance (LEV) and the Easy Business Non-Governmental Organisation to facilitate the export of services and support the implementation of proposals contained in draft law No. 4496 of 04/21/2016 (Draft Law on Amendments to Certain Legislative Acts of Ukraine) regarding elimination of administrative barriers ... Read more
  • What is the optimum level of public spending in Ukraine?

    02.11. 2015

    The objective is to answer the question of whether the share of public spending in Ukraine’s GDP is too high in terms of efficient use of the country’s scarce economic resources. The current level of public expenditure in Ukraine is high compared to world standards. Ukraine is one of 10 countries in the world with the highest rate of public sector expenditure to GDP. Thus, the ability of the Ukrainian government to spend such a large part of the country’s economic resources efficiently is questionable: compared to other countries Ukraine is at the bottom in international rankings on efficiency in public administration, quality management and the fight against corruption. Such inefficient use of the country’s limited resources leads to a low level of economic development and poverty. Reducing the share of GDP redistributed through the public sector, and improving the efficiency of ... Read more