The pro-Russia insurgency will see Ukraine's economy shrink by eight percent, even worse than feared, but Kiev must still not turn back from comprehensive reforms, the World Bank said Thursday. "Disruption in economic activity in the east has resulted in a sharper GDP decline than we expected," said Qimiao Fan, the bank's director for Ukraine, Belarus and Moldova, who presented the latest report in Kiev.
"There is no easy way out of the current crisis," Fan added, urging the Ukrainian government to continue with structural reforms to turn the situation around. Despite the risks of a drawn-out confrontation in the east, which has already killed more than 3,200 people and ravaged industrial infrastructure, Kiev's leaders must tackle institutional problems and "continue macroeconomic adjustment and structural reforms," he said.
Besides combatting corruption, Ukraine must deregulate the economy by getting rid of its "outdated laws that date back to Soviet times." Kiev must also make sure that the burden of the reforms is shared so that they do not impact only the vulnerable parts of the population, bank officials stressed. "The public needs to perceive that strict reforms are fair," said lead economist Lalita Moorty. "When high-level corruption goes unchecked, clearly that would rule out any public support for reforms." The remarks followed similar calls by US Secretary of Commerce Penny Pritzker, who promised Kiev at the weekend that Washington would showcase the country to American investors once it sees commitment to reform, notably if anti-graft legislation is approved within weeks. Ukrainian lawmakers are expected to vote on the bills, which include the establishment of a special anti-corruption bureau and tougher punishment for graft, on Tuesday.
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