After 100 days in office, the government is already boasting of its economic achievements, but independent observers say recent good news on the economy should not be attributed solely to the Cabinet of Prime Minister Viktor Yushchenko.
An upbeat Yushchenko appeared before regional media on March 31 to note the achievements of his first 100 days in office.
'We have the spirit and ambition to change the situation,' he said, before ticking off an impressive list of achievements.
Foremost among them, was a 6.1 percent gross domestic product increase over the first two months of 2000 against the same period in 1999, an accomplishment local media have attributed to the economic policies pursued by a new government dedicated to reform.
But a recently published report authored by the German Consultation Group, which advises the Cabinet on economic reform, has questioned whether recent upturns in economic indicators should be construed as a sign of substantive economic growth, or a sign that reforms are working.
The report on the first 100 days of economic reform attributed the increase in GDP to last fall's devaluation of the hryvna, which caused a reduction in foreign imports to Ukraine, and an increase in exports over the period.
'Now is the time to activate reforms, because thanks to the positive development in certain sectors of the economy, there will be a chance to mitigate social tensions, which will undoubtedly arise in the future,' the report said.
On April 5, Yushchenko admitted that the economy had in part been stimulated by the devaluation of the hryvna. However, he also noted the negative consequences of the hryvna devaluation.
'A collapse of the hryvna should be feared like fire,' Yushchenko said, adding that recent economic growth was stimulated by the elimination of unnecessary budget spending totaling Hr 2 billion (including cuts in government subsidies to agricultural enterprises) and the lifting of restrictions on the currency market.
Less controversial accomplishments of the new government include a debt restructuring agreement with commercial creditors and the adoption of a zero-deficit budget this year, which Yushchenko hopes will ease inflationary pressures and allow central bank loans to be channeled to the real economy instead of covering budget shortfalls.
Building on that success, Yushchenko said the government would seek 'internal reserves' to finance reforms – rather than borrow as in previous years.
'The fact that Ukraine has managed to avoid default has so far been the biggest merit of Yushchenko's government,' agreed Yelena Bereslavska, an economic adviser at the Ukraine Interbank Currency Exchange.
'This relieves pressure on the budget and on each of us – there will be no high inflation and depreciation of the hryvna rate,' she said.
Yushchenko said that the policies pursued by his government had sparked an economic recovery that could mark the beginning of the end of a decade of depression.
'During the past 100 days, we did not borrow a single kopek on internal or external markets.'
According to the prime minister, the government will also seek to consolidate economic growth by pushing forward cash privatizations and land reform.
Earlier this week, the government sold a 30-percent stake in the country's only alumina producer to a locally registered Russian company, which promised to pay over $100 million.
Yushchenko said sell-offs of state-owned enterprise shares would continue.
On land reform, Yushchenko said his government will push to allow the free sale and purchase of Ukraine's rich black soil, and its use as collateral.
In line with a presidential decree issued earlier this year, all Soviet-era collective farms have already been transformed into joint stock companies or cooperatives. Yushchenko pledged he would now proceed with full land reform.
'If Ukraine wants to be a European, democratic and well-to-do country, we must launch this reform,' Yushchenko said.
David Snelbecker, an economist at the Harvard Institute of International Development, a USAID subcontractor, says the government has gotten off to a good start.
'In order to get sustained growth, Ukraine needs comprehensive reforms,' he said.
But in their Country Risk Summary published on April 4, the Economist Intelligence Unit warned that that government's reform efforts may be constrained by divisions in parliament and opposition to government plans from key constituents.
Many political observers agree that the success or failure of reforms depends on the continued support of Presidient Leonid Kuchma and on the level of cooperation attained between legislators and government officials implementing reforms.
During a meeting with members of the parliamentary majority on April 4, Yushchenko said he would resign if the program government is proposing is not adopted by Ukraine's parliament, which is scheduled to vote on the measure on April 6.
– material from Reuters was used in this report.
