Managing Director of EBRD about the difficult situation in the Ukrainian economy
The European Bank for Reconstruction and Development (EBRD) has submitted to President Viktor Yanukovych recommendations for emergency improve the business climate in the country. Otherwise, warn the bank, investments in the Ukrainian economy will start to decline rapidly. Of these recommendations, the prospects of the Ukrainian economy and its key issues special correspondent "b" said Yuri PANCHENKO EBRD Managing Director for the region of Turkey, Eastern Europe, the Caucasus and Central Asia Olivier Descamps.
- Ukraine shows some of the worst rates of GDP growth across the region and the presence of the Bank has not yet reached the pre-crisis level. Why is this?
- The way out of the crisis, the Ukrainian economy has been arduous. Do not forget that Ukraine is very dependent on exports of raw materials in the first place - steel products, the global decline in demand for which we are now witnessing. The pace of growth of the Ukrainian economy is also affected by the eurozone crisis - countries with significant trade with the EU, have suffered more than others. In this regard it should be noted that the situation in Ukraine is not unique - similar processes occur in the euro zone. In addition, we are seeing a cyclical economy. Given that the 2012 elections were held in Ukraine, the reforms have been suspended. Therefore, in 2013 we are building a very small growth of the Ukrainian economy - 1%, but we expect that the gradual stabilization in the euro area will have a positive influence on Ukraine in the second half of the year. In this regard, we look forward to accelerating the growth of the Ukrainian economy in 2014.
- The President of the Bank, said a sharp deterioration in the investment climate in Ukraine in recent months. What does this mean?
- We have always talked about the relationship of economic growth and a good investment climate. Investors are reconsidering their attitude to new markets for themselves, especially if it is the developing countries. In this case, the Bank is a bridge between investors and Ukrainian authorities. We work in Ukraine for a long time and are constantly receiving signals from our customers about the difficulties they face, realizing their projects. This is connected with the failure of the law by the authorities and with a selective approach to the control of a business, and many other things. In 2012, these signals are so frequent that we saw that many of our partners are simply not able to work in the current environment. And we could not intervene. The current visit of the President of the EBRD is good that Ukraine was recently appointed a new government, so we have great hope that our recommendations will be heard.
- What are the specific steps the Bank has the power to improve the current investment environment?
- The government should listen to local and foreign investors doing business in Ukraine. Need to conduct a survey of companies and using questionnaire to identify the most pressing problems 5.10 hindering business development. The ad hoc working group with representatives from government, business and international financial organizations to determine how to address these problems. To the group's work has been successful, the parties need to sign a memorandum of understanding with clear timeframes implementation of these measures - in this case, the business will trust her.
- Another initiative - the institution of business ombudsman to resolve disputes that arise between business and government. It should be equidistant body that has their respect. The ombudsman can access all investors, both domestic and foreign. The most important thing - to change the nature of the relationship between government and business. I am glad that President Viktor Yanukovych interested, asking them to prepare for future work.
- Make recommendations to the responsibility of the bank?
- EBRD traditionally participates in the Council of Investors or Business Council of the President or head of government in the countries where we are active. We served recommendations directly to the president - yes. However, the very form of giving this advice, so to speak, their hardness, perhaps, is a precedent for the bank. The current situation requires tough decisions. Russia's experience has shown that the institution of the business of the Ombudsman, the creation of which we are involved, working in this country very well, as we could see for themselves.
- Is there another positive experience, except the Russian Federation?
- Probably not, but the success of this institution in Russia - where he has performed in a fairly short time - has allowed us to extrapolate the situation in Ukraine, giving such advice. Take all necessary legislative changes, and most importantly - their implementation, takes time. We understand that, but the authorities are now required to give a signal to business, that are ready to meet him.
- The government has proposed EBRD to lend the security program of nuclear power stations and subway construction in Kharkov. Is it possible to change the proportions of EBRD loans to government?
- The optimal ratio of loans - 65/35 in favor of private companies. Each year we try to keep this ratio. So important to us is a good business climate in Ukraine, which helps draw more loan applications from the private sector. State we help large loans to the strategic objectives. In these projects, long term training. Loans are issued as private business much faster. This allows us to avoid excessive concentration on gosproektah in a particular year and the need to transfer a signature projects in the public sector in the next period. We also prefer to lend to state projects not their own, and in partnership with other financial institutions such as the European Investment Bank. In addition, the programs that you mentioned, really interested in the bank, but the final decision on our agreement to lend pending.
- You have announced a new direction - the support of municipal authorities. What cities can be your borrowers and for what purposes will be given the means?
- We have developed a good portfolio of municipal projects in 15 different cities. Their total estimated cost of 100-130 million euros. This borrowed money for projects in energoeffekivnosti, particularly the modernization of heating systems and water supply. We tried to make loans under the state guarantees not to teach municipalities greater financial responsibility and independence. In this case, our borrowers are not only large cities.
- Can we say that the crisis has become much more difficult to find a reliable borrower for private companies?
- Of course, the crisis has affected the work of the business. If earlier the company to obtain loans for the development and increasing market share, now taking money to cover operating expenses. Has become much more difficult to obtain loans to small and medium businesses. That is why we are funding banks for lending to businesses. These programs will continue.
- How important is the work for the Bank of Ukraine and the International Monetary Fund?
- Macro-economic stability in the country was a serious business. It allows you to be more confident about the future. That is why we welcome the resumption of negotiations between Ukraine and the IMF. Fund loan program will help stabilize the situation in the country, which has a positive impact on the plans of investors in the Ukrainian market.
Interview by Yury Panchenko
