Ukrainian agriculture minister resigns amid uncertainty over land reform

By bne IntelliNews May 24, 2017

Ukrainian Agrarian Minister Taras Kutovy announced his resignation on May 23 amid stalling efforts to push through a radical land privatisation reform in the former Soviet republic.

"The choice to resign is an absolutely natural process for any European country and a usual international practice," Kutovy wrote on his personal Facebook page. "I think that I have enough knowledge, energy and strength to do even more for Ukraine. I plan to focus soon on matters of attracting investments in the Ukrainian economy."

Kutovy is a former Poroshenko Bloc lawmaker, and former head of the parliamentary committee on agrarian policy and land management. Before his appointment to the current post in April 2016, he pledged to strengthen state support to farmers and complete the reform of agricultural sector tax regime.

The minister's resignation, which should still be approved by Ukraine's parliament, the Verkhovna Rada, may be an indication that Kutovy sees it almost impossible at the current time for the Ukrainian leadership to secure parliamentary support for radical reform in land governance.

Kutovy's move followed the Rada's refusal to adopt a bill to allow the drafting of a roadmap for broader privatisations of agricultural land. On May 18, only 17 lawmakers supported the motion with a minimum of 226 votes needed, sending a clear message to the country's main donor, the International Monetary Fund (IMF), that almost all political forces in Kyiv reject its demands to launch an agricultural land market.

In October 2016, the Rada extended the moratorium on sales of farmland until 2018. The motion was supported by 297 lawmakers. Batkivschyna (Fatherland) faction leader Yulia Tymoshenko even suggested prolonging the measure for at least five years, but said a minimum of one year was necessary.

"While Ukraine has a vast area of arable land, use of this land is currently limited by legislation, restricting private owners' ability to sell their land to more efficient users and constraining the use of land as loan collateral," the IMF said in its staff report published in October, 2016. 

"Amending the legislation to unlock land-related transactions would generate significant economic gains, including higher incomes and greater tax revenues. New legislation on agricultural land sales is expected to be submitted by end-September 2016," the IMF stressed.

Ukraine's international reserves reached $16.7bn in April after a new $1bn tranche from the IMF released under its $17.5bn support programme for the country, and a second €600mn tranche of macro-financial assistance from the European Union.

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