The Evergrande crisis and the global economy

Authors: Anna Bjerde and Novoye Vremia

Four years ago, the World Bank prepared a multi-year strategy to support Ukraine’s development goals. It was a period of recovery from the economic crisis of 2014-2015, when GDP declined by a cumulative 16 percentage points, the banking sector collapsed and poverty and other insecurity measures drove down. increase. Indeed, we saw at the time that Ukraine was at a turning point.

Four years later, despite daunting internal and external challenges, including an ongoing pandemic, Ukraine is a stronger country. It has shown itself to be more resistant to unpredictable challenges and is better placed to achieve its long-term development vision. This increased capacity is above all the result of the determination of the Ukrainian people.

The World Bank is proud to have joined the international community in supporting Ukraine during this time. I am here in Kiev this week to launch a new assistance program. In doing so, we take a look back at what worked and how to apply these lessons in the future. In Ukraine, as in many countries, the main lesson is that development aid is most effective when it supports the policies and projects that the government and citizens really want.

It doesn’t just mean easy or even uncontroversial measures; rather, it means that we work closely with government authorities, businesses, local leaders and civil society to understand where policy reforms can be most effective in removing obstacles to growth and human development and where specific projects can. be the most effective in providing social services, especially to the poorest.

Looking back over the past four years in Ukraine, a few examples emerge. First, land reform. Over the past two decades, Ukraine has been one of the few countries in the world where farmers were not free to sell their land.

The ban on allowing farmers to leverage their most valuable asset has contributed to underinvestment in one of Ukraine’s most important sources of growth, harmed individual landowners, led to high levels of unemployment and rural poverty and undermined the country’s long-term competitiveness.

The president’s determination and the government’s actions to open the market on July 1 took courage. It was not an easy decision. Powerful and well-connected interests have benefited from the status quo; but it was the right one for Ukrainian citizens.

A second area in which we have been closely involved is governance, both with regard to public institutions and the rule of law, as well as the corporate governance of banks and public enterprises. Poll after poll in Ukraine, over a decade ago, it was revealed that strengthening public institutions and creating a level playing field for business was a top priority.

World Bank technical assistance and policy funding supported measures to restore accountability for illicit enrichment of public officials, strengthen existing anti-corruption agencies such as NABU and NACP, and establish new institutions, notably the independent High Court against corruption.

We also work with the government to ensure the integrity of public enterprises. Our support for the unbundling of Naftogaz by the government is a good example; helping to set up supervisory boards in public banks is another. We hope that our early dialogue on modernizing Ukrzaliznytsia’s operations will also be beneficial.

As we begin to prepare a new strategy, the issues that have guided our ongoing work — strengthening markets, stabilizing Ukraine’s fiscal and financial accounts; and delivering inclusive social services more effectively – remain as urgent today as they were in 2017. Indeed, the progress that has been made must continue to be sustained as it is frequently attacked by powerful interests.

At the same time, the past few years have brought to light emerging challenges where we hope to deepen and broaden our engagement. First, COVID-19 underscored the importance of our long partnership in health reform and strengthening social protection programs.

Changes to the delivery of health care in Ukraine in recent years have helped mitigate the effects of COVID-19 and will continue to improve the health of Ukrainians. The government’s efforts to better target pro-poor social spending have also made a difference. We look forward to continuing our support in both areas, including in the short term through additional support for the purchase of COVID-19 vaccines.

Looking ahead, the challenge we all face is climate change. Here again, our dialogue with the government positions us to help, especially to deliver on Ukraine’s ambitious commitment to reduce carbon emissions. During President Zelenskyy’s visit to Washington in early September, we discussed operations to strengthen the electricity sector; a program for the transition from coal to renewable energies; municipal investments in energy efficiency; and how to harness Ukraine’s unique capacity to produce and store hydrogen. It is a bold program, but it can be achieved.

I was satisfied with my visit to Kiev to see first-hand what has been achieved in recent years. I look forward to our partnership with Ukraine to help realize this courageous vision for the future.

Originally published in Ukrainian in Novoye Vremia, via the World Bank

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