New land market, seesawing IMF relations and inflation-driven recovery
The launch, at long last, of a farmland market in Ukraine was probably the most remarkable event of the past month. The law was passed a year ago but has only now come into effect. Many political players have been trying to derail this reform, and Ukrainians were never certain that the market would start functioning on July 1st, 2021. But Ukraine has really made a historical step forward, getting rid of one more Soviet-era ball and chain. Of course, the market has been launched in a phased manner: only individual Ukrainians can buy or sell farmland, with a cap of 100 hectares owned by a single individual. Starting in 2024, limitations will be lifted. Foreigners will only have access to the market after a nationwide referendum. Given these caveats, we need to be realistic about economic impact of this reform: most likely, any real impact will only show up a few years down the line.
Unfortunately, regular scandals over the issues the IMF considers extremely sensitive continue. First came the resignation of several mid-level managers and heads of departments at the National Bank of Ukraine (NBU), who blamed adverse changes in the decision-making process at Ukraine’s Central Bank. In short, NBU Governor Kyrylo Shevchenko is concentrating all decision-making powers in his own hands, which represents a clear risk to macro-stability, and overall stability in the banking sector. The IMF surely will not like this. Another blunder was the decision to exempt major infrastructure projects from transparent procurement procedures: a law had already passed and the president had signed it into effect. Not so long ago, the IFIs named public procurement reform among Ukraine’s biggest success stories. And now President Volodymyr Zelenskiy simply ordered that procurement procedures be bypassed, claiming this would simplify and speed up his Big Building initiative. No doubt other foreign partners are unhappy about this. But, despite all blunders, Ukraine is going to receive $2.7 billion from an extra SDR allocation anyway.
There’s also good news on the reform front. The Verkhovna Rada finally passed a bill to reboot the High Qualification Commission of Justice (HQCJ), the body that serves as the HR department for Ukraine’s court system. Foreign experts have been given a decisive role in the selection process among HQCJ members. This step is critical for proper judicial reform, although this reform will remain incomplete without the High Council of Justice (HCJ). A reboot of HCJ is still in the pipeline.
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