Middle-week thoughts: World Bank believes in Ukraine, but conditionally

Yevhen Pentsak (50) 09 April'09

Tags: banking system, IMF, NBU, fund market, inflation

Everybody is waiting for the decision concerning the IMF second tranche of the loan; the government and the National Bank are ready for IMF mission arrival. The optimism of the government not only exceeds the limit but excites the imagination. However, there are several «queers» in the World Bank, whose forecasts do not coincide with the government’s forecasts...

The crisis has overcome, hryvnya is growing, inflation is falling, stock market is rising, and the government is looking optimistically into the future.

«We are fit into a schedule, and I think we can combine (second and third tranche). We have to appeal with such a proposal», - said the Prime Minister of Ukraine.

All the necessary prerequisites are created: the difference between the exchange rate of National Bank, interbank and cash, is removed, the outflow of deposits is declined, the banking system is stabilizing. However, some people think in a different way...

A meeting with the head of the World Bank for Ukraine, Belarus and Moldova Causes, Martin Raiser, and the leading macroeconomist of WB, Ruslan Piontkivskiy, in Kyiv-Mohyla Business School with representatives of Ukrainian business was held yesterday.

Martin Raiser said that the Board of Executive Directors of the World Bank approved the project for improving roads and safety traffic in Ukraine; the amount of the project equals $ 400 million.

«This project is an integral part of the World Bank activity, which is aimed to overcome the consequences of the socio-economic crisis that struck the Ukraine. It should lay the foundation for future economic growth and competitiveness rising, providing at the same time with workplaces and fiscal incentives in order to ease the effects of economic recession», - stated in an official report of WB.

«We have reviewed the growth forecast for Ukraine for 2009 taking into account the sharp decline of global and regional forecasts, together with internal delays in the economic policy implementation. We predict that the Ukraine GDP decreased by 9% in 2009, but considering risks of further worsening of this prognosis in the event if the external environment will continue to worsen, and/or the authorities will delay the introduction of the main anti-crisis measures.

We predict a slow recovery to 1% in 2010 and then acceleration to the medium-term average rates of 4-5% since 2012. We expect (as well as for other «new» economics) the less stern trajectory of growth than during the last stage, because of the long disinclination to risk at the international capital markets. Medium-term growth prospects for Ukraine are likely to depend on its ability to improve productivity» (WB full report here).

Let’s note that this report was published the day before the IMF mission arrival, therefore, in my opinion, it was an information cause of delaying the second tranche of the loan. Although the Minister of Economy of Ukraine, who calls the prognosis of WB «conditional», does not agree with WB forecast. The head of the World Bank agrees with the word «conditional», but in the context that this is the most optimistic of all the forecasts for Ukraine, and is consider conditional to the fact that the IMF will provide Ukraine with the second tranche of the loan.

Martin Raiser said that the foreign capital market will not be as accessible to the Ukraine as earlier; the interest rates on loans in foreign currency would increase. That is why in order to support the competitiveness we need significantly to improve productivity, management efficiency and innovative business. It is easy to say but hard to implement. We need fundamental reforms of our society in relation to the institutions of government, education, health, etc. It is clear that it is much easier to obtain (to beg) another loan and to prepare for the next elections than actually to seize an opportunity and implement badly-needs for the country reforms.

We need another revolution in our consciousness, like the one that took place during the Orange Revolution. At that time we said that we are not slaves, but free self-sufficient nation. Now we have to say that we can and want to work well. But not only to say so, but work indeed. It should become our national idea!

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See also:

Мысли среди недели:путь к спасению мировой экономики

Последние события на мировых фондовых рынках заставили задуматься, как близко мы стоим к краю мировой экономической пропасти. События 11 марта 2011 года, 4 августа 2011 уверенно указывают на то, что депрессивное десятилетия начала третьего тысячелетия будет иметь еще более депрессивное продолжение. Движется ли мир в хорошем направлении во всех смыслах слова «добрый»? Может долго держаться макияж, если наносить один слой пудры за другим?

Comments:

mike 10/04/2009 12:30

Оптимизму нашего правительства можно только позавидовать. Любая, даже незначительная, положительная тенденция превращается в оглушительный успех, а все остальные процессы превращаются в происки оппонентов. Также не стоит забывать что 2009-й – год выборов. И все наши политики заняты предвыборной кампанией, а «пакет антикризисных мер» становится отличным поводом для политических спекуляций и предвыборных обещаний. В такой ситуации легко поверить в то, что прогноз мирового банка является оптимистичным, то есть базовый еще хуже, и уж совсем страшно думать про пессимистичный вариант развития событий.

Matros 10/04/2009 13:05

[Євген Пенцак]: Описана ситуація про всі позитивні показники, що "підганяються" для МВФ, виглядають, як на мене, насправді непогано. І навіть якщо це короткостроково (а так воно і є), то все одно необхідно, як ковток повітря утопаючого: "винирну, вдихну. Мене побачать, кинуть мотузку".
Що правда, нікуди не зникають питання:
1. А чи не кинуть другий кінець мотузки? (песимістичний для України сценарій)
2. А чи буде взагалі хтось спроможний витягнути на другому кінці мотузки? (зовсім песимістичний сценарій не тільки для України)

А от сил навчитись таки самим плавати в нас зараз просто не дістане, не володіємо ми своїми кінцівками не те що на рівні професійних плавців, а й принаймні на рівні звичайного 18-ти річного (повнолітнього) парубка.

[mike]: "Політичні спекуляції" є і будуть. Влада, маючи на меті продовжити свої повноваження, будь-яку подію буде представляти в самому вигідному для себе світлі, тим самим кажучи "Це ж ми при владі, це наша заслуга". Класика жанру, кор

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