Ukrainian parliament refuses to endorse preparations for land reform despite IMF demands

By bne IntelliNews May 19, 2017

Ukraine's parliament, the Verkhovna Rada, has refused to adopt a bill that will enable  drafting a roadmap for the country's controversial land reform.

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 the lender's demands to launch an agricultural land market.

Kyiv-based experts consider it almost impossible at the current time for the Ukrainian leadership to secure parliamentary support for radical reforms in land governance and pension system. It will also be a tall order to extend the investigative powers of the newly-created main anti-graft agency, the National Anti-Corruption Bureau of Ukraine (NABU), another of the Fund's requirements.

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.

Meanwhile, the acting governor of the National Bank of Ukraine (NBU), Yakiv Smoliy, told journalists the same day that Ukraine will successfully attract a new tranche from the IMF.

"We have four key moments to be discussed: this is the pension reform, land reform, anti-corruption court and the development strategy for state-owned banks," Interfax news agency quoted Smoliy as saying. "I think that consensus will be reached for all the issues and we will receive the new tranche."

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.

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