1. Ukraine’s reform priorities: 2019-2020
Presentation at the Bruegel seminar on “The Ukrainian economy: the way forward after a year of political turbulence”, Brussels, May 28, 2019
Marek Dabrowski

2. Macroeconomic challenges (1)
Fragile macroeconomic and financial stability and weak recovery
Continuing fiscal deficit and public debt on unsustainable level; limited access to private debt market (conditional on continuing IMF support)
Social and pension spending – major expenditure item
No sustainable source of financing current-account deficit, continuous current account controls
Modest gross international reserves (4M import)
Inflation only marginally below 10% and dependent on exchange rate stability
NPLs over 50% of total loan portfolio and growing
High degree of dollarization
Potential challenges to NBU independence

3. Macroeconomic challenges (2)

4. Macroeconomic challenges (3)
Source: IMF Country Report No. 19/3

5. Macroeconomic challenges (4)
Source: IMF Country Report No. 19/3

6. Energy sector reform
Keeping natural gas and district heating tariffs on cost-recovery plus level, avoid return to gas subsidies or cross-subsidies, ultimately – market determination of gas prices
Naftogaz restructuring (unbundling)
Elimination barriers for domestic gas production
Energy-market regulation, especially electricity (source of rents and corruption)

7. Other structural reforms
Privatization (improving business climate and efficiency, eliminating sources of corruption, reducing public debt,
Abandoning land moratorium
Abandoning monopoly of Ukrainian Railways in cargo transportation
Easing business climate

8. Political system Dysfunctional Constitution of 1996/2004
Two-head executive (potential for conflict)
Difficulties with forming parliamentary majority and government
Contradictory rules with potential for various interpretations
Mixed electoral system
Financing political parties and election campaigns
Majority rules (27 vacancies in Rada)  53.2% for legislation, 70.9% for constitution changes

9. Decentralization
Constitutional changes blocked (because of the special status of Donbass)
Some progress in voluntary consolidation of smallest territorial units (formation of hromadas)
Fiscal decentralization (education and healthcare)
The most serious agenda still ahead and sustainability question

10. Other institutional reforms
Continuation of judiciary reform (including constitutional changes) – long road ahead
Reform of police (unfinished)
No much progress on other fronts: prosecutor office, security agencies, public administration, etc.