Ukraine can expect to receive $1 billion in foreign direct investments in 1998 – 25 percent more than was invested in the country last year, a senior government official said on Thursday.
Speaking at a press conference, Roman Shpek, head of the National Agency for Reconstruction and Development (NARD), predicted the increased flow of money into the country would be fueled by recent government initiatives to improve Ukraine’s business climate.
But Shpek said NARD, a government agency charged with promoting economic development in Ukraine, had lowered its estimates of foreign capital inflow to take into account foreign investors’ fears of a possible Communist victory at the March parliamentary elections.
‘I’m consciously not talking about higher figures because of the upcoming elections,’ he said.
Last year Ukraine attracted $759.2 million in direct foreign investment, $42.9 million more than in 1996. But overall foreign investment since independence in 1991 has been a paltry $2.05 billion – far less than many of Ukraine’s neighbors in Eastern Europe have attracted since the fall of communism.
Shpek also warned the increased flow of capital into Ukraine can only be sustained if the government makes attractive enterprises available to investors. He named the privatization of Ukrtelecom, the state telephone monopoly, as one possible money-spinner for the government. Under the Cabinet’s current privatization plan, 25 percent of the state-owned telecommunications giant will be sold off, which Prime Minister Valery Pustovoitenko has said could inject up to $4 billion into government coffers, and perhaps even more in the form of capital improvements in the national phone network. Western analysts consider that figure wildly optimistic.
Agriculture is the one sector of the economy most lacking capital for development, said Shpek.
To date, agriculture has attracted only $46 million in foreign direct investment, while the sector’s true need is for $3 billion per year, he said. He blamed the chronic lack of investment in agriculture on the failure of parliament and the executive branch to resolve the issues of private land ownership and land sales.
