KYIV, Nov. 6 - The Ukrainian economy lost about $1 trillion in unrealized potential over the past 10 years due to rampant corruption, stalled economic reforms and poor governance, Prime Minister Denys Shmyhal said Friday.
The finding is part of a massive audit ordered by President Volodymyr Zelenskiy before the government goes ahead and releases a new strategic plan to stimulate growth during the next 10 years.
The plan, which is likely to be released in March 2021, seeks to encourage investments in mining and extraction of natural resources, better use of water resources for irrigation and more efficient use of farming land.
“One trillion of U.S. dollars was lost by the people of our country due to incomplete reforms, lack of long-term economic strategy, corruption and poor governance," Shmyhal said.
The government now plans to recapture this unrealized potential during the next 10 years by improving the governance and attracting private investments. The biggest chunk - about $409 billion – is supposed to come from developing deposits of oil, natural gas, iron ore and precious metals.
"There are more than 12,000 known and explored mineral deposits in Ukraine, but only a third of them are currently being developed,” Shmyhal said.
A better use of farming land will probably add $85 billion to the economy over the next 10 years, while more efficient use of forestry is expected to add $40 billion with water resources adding $12 billion.
“We have to expand the area of our forests and use wood mainly for our own furniture production,” Shmyhal said. “An effective irrigation system in the southern regions of Ukraine would increase [grain] yields by 2.5-3 times.”
Meanwhile, despite the government’s ambitious targets, most analysts remain skeptical that Ukraine will be able to quickly tap its potential due to massive vested interests and divisions that remain within economic sectors.
“Will the 2030 strategic plan work?” Tymofiy Mylovanov, a former minister of the economic development and agriculture, said. “I don’t think so.”
Ukraine’s biggest companies and even entire industries are owned by a handful of oligarchs, powerful and well-connected businessmen that control huge power via political parties and connection to government officials. This will be enough to derail any significant reforms, he said.
“They want the government to fight the oligarchs, but the power is with the oligarchs, not with the government,” Mylovanov said. “This is the reason why the strategic plans don’t work.” (tl/ez)