Ukraine intends to increase the inflow of foreign direct investment (FDI) by 2025 to $15 billion per year, while at the end of 2020 their outflow amounted to $420 million, and in 2021 the National Bank predicts a recovery in FDI inflows at the level of $3 billion.
The targets are enshrined in the National Economic Strategy 2030 posted on the government’s website.
According to it, Ukraine should at least double its real gross domestic product (GDP) in 10 years.
Target indicators are also the following: an increase in exports to $150 billion compared to $49 billion in 2020, an increase in labor productivity by at least 1.7 times, and a decrease in the unemployment rate from 8.6% to 6% in 2030.
As indicated in the strategy, the share of the public sector of the country’s banking system by 2030 should be reduced to 25% from the current 54%.
At the same time, the document contains the intention of the Ukrainian government to keep the state budget deficit at the level of 2-3% of GDP, and the ratio of public debt to GDP at 30-40%.
As for the trade priorities of the state until 2030, here the document sets out plans to increase the share of small and medium-sized businesses of total exports to 40%.
International trade should also be facilitated by the reduction of the time for passing customs procedures to average European indicators, as well as the synchronization of the work of the customs authorities.
In addition, the National Strategy provides for an increase in the share of investment imports by at least 30% by 2030.
The Cabinet of Ministers of Ukraine has approved the National Economic Strategy until 2030.
The corresponding decision was made at a government meeting on Wednesday.
“The National Economic Strategy-2030 is a comprehensive document that should lead Ukraine to the club of developed and successful countries. The strategy was developed with the involvement of experts, scientists, officials, MPs. This will become a significant contribution to the development of a successful, wealthy and European Ukraine,” Prime Minister Denys Shmyhal is quoted by the government’s press service.
It is reported that more than 500 participants have joined the creation of the Strategy: representatives of more than 20 analytical centers, more than 30 business associations, 40 executive authorities, the expert environment and civil society, and MPs.
The document defines strategic steps for the development of industry, agricultural sector, mining, infrastructure, transport, energy sector, information and communication technologies, creative industries and services.
The Strategy also takes into account important cross-cutting areas – digitalization, Green Deal, entrepreneurship development and balanced regional development.
“Among the principles on which the National Economic Strategy is based are European and Euro-Atlantic integration, inviolability of private property, rule of law, intolerance to corruption, free and fair competition, equal access for business,” the government said.
Ukraine is developing an ambitious economic strategy for Donbas and in September its roadmap may be presented to the Cabinet of Ministers of Ukraine, said Vice Prime Minister of Ukraine – Minister for Reintegration of Temporarily Occupied Territories, First Deputy Head of the Ukrainian delegation to the Trilateral Contact Group Oleksiy Reznikov.
“Ukraine is currently developing an ambitious new economic strategy for the east of the country. A key focus is the development of the parts of Donetsk and Luhansk regions currently under Ukrainian control. This approach is perhaps best described as a Ukrainian take on the notion of “special status” for the region, with the goal of transforming the investment climate and implementing a new economic model at the regional level. According to his idea, this process should begin to gain momentum as soon as possible in the regions of Donbas, which are currently under the control of the Ukrainian government, and then it could spread to the regions occupied by Russia after their liberation.
Reznikov said that investors work in hot spots in the modern world, and he held dozens of conversations with foreign diplomats, international business representatives and Ukrainian investors who are much more concerned about the state of the Ukrainian justice system than proximity to the front lines.
“Our goal is to create a special investment regime in the part of Donbas controlled by Ukraine. We consider the extension of the rules of international commercial arbitration to the region as an integral part of these plans. Additionally, the Ukrainian state should assume at least some of the insurance burden against the kind of political and military risks that are hard for investors to predict. To help make this approach sustainable, we envisage a special-purpose fund to encourage and assist investments rather than relying on donor aid,” he said.
The Deputy Prime Minister hopes to present to the Ukrainian government a roadmap for the economic development of Donbas in September. “It will then take an estimated six months to prepare the necessary bills. This will require expert input. Ideally, this input would come direct from potential future investors,” he said.
Reznikov drew attention to the need to “set the right tone from the outset. This is not a matter of crisis relief for the Donbas, but a bid to create an advanced and innovative economic zone that can have a positive impact on the whole of Europe.”
In his opinion, in the context of the crisis caused by the coronavirus epidemic, Ukraine is ideally suited for diversifying production outside China and having high-quality production facilities closer to the EU countries, and the Donbas region has many specific characteristics necessary to play a leading role in this process.
Reznikov considers it obvious that in the seventh year of the war, the Russian interpretation of “special status” is unacceptable for Donbas.
“Rather than helping to resolve the conflict, Moscow’s approach is tailor-made to precipitate the disintegration of Ukraine. The sooner this dead end model is discarded, the better. A durable peace can only be achieved by creating a brighter future for the people of eastern Ukraine that undermines Russia’s ability to destabilize Ukrainian society,” he said.
Ukraine’s deputy prime minister drew an analogy that European investment could create a “new era of growth opportunities” in Donbas, as they once turned the region into one of the continent’s industrial engines in the nineteenth century.
Reznikov also pointed out that the aggression of the Russian Federation “destroyed the Donbass of the pre-war era” and it is already pointless to talk simply about “restoring the region”, and instead, one should focus on creating a new economy.
“The rebuilt and renewed Donbas can become the center of new approaches to production. The tragedy of the war has turned Ukraine’s industrial centers into ruins, but this devastation also creates space for bold innovations and original thinking, which are not always possible in more developed economic conditions,” he said.