Reforms in Ukraine
The pace of reforms in Ukraine is not slowing, it is accelerating.
Over the past three months, Ukraine has made considerable progress in its European path by launching reforms in seven critical sectors such as education, the judiciary, the pension system, healthcare, public administration, cybersecurity and electoral law. We have no intention of slowing the pace of reforms, despite the challenges posed by Russian aggression.
The case for structural reforms: they are starting to bear fruit
ü Economic growth is up: according to the National Bank of Ukraine’s most recent data, real GDP increased by 2% in the third quarter of 2017. The forecast for the whole year has improved to an expected 2,2 % growth (year-on-year). The Bank’s forecast puts real GDP growth for 2018 - 2019 at 3.2% and 3.5% respectively;
ü International trade in goods has risen by 25 % in the first nine months of 2017; with the EU, the increase has been 31%;
ü Capital investments grew by 22.5 % in the first six months of 2017;
ü The construction index rose by 23.8 % in first nine months of 2017;
ü International reserves are up – reserves of the National Bank amount to almost $18.6 billion in October 2017 compared to $7,5 billion in 2014.
ü Ukraine has climbed 4 places in the World Bank's Doing Business ranking.
Reform progress towards the end of 2017
ü Judicial reform
On 3 October, Parliament adopted a bill enabling the relaunch of the Supreme Court. The new Supreme Court of Ukraine is being set up anew through open and transparent competition and with active participation of civil society. MPs also adopted a law amending relevant procedural court mechanisms and introducing the Supreme Court as the single cassation body in Ukraine. New procedural rules for consideration of cases by the Supreme Court were also adopted.
A dedicated Anticorruption Court is envisaged by the Bill on the Judiciary and the Status of Judges, adopted last year. The relevant Parliamentary Working Group is expected to present the draft bill which should comply with the recent Venice Commission recommendations. As soon as the draft bill is prepared, the President will submit it for approval to the Parliament, possibly by the end of the year. In order to speed up the process President sent a letter to the Chairman of the Verkhovna Rada of Ukraine with a proposal to immediately instruct the Head of the relevant Committee to form a Working Group on drafting a proper bill taking into account recommendations of the Venice Commission.
On October 19, the Verkhovna Rada made an important step towards abolishing immunity of Ukraine’s parliamentarians. Two draft constitutional amendments were voted on and submitted for the review of the Constitutional Court. One bill, No.7203, is a presidential initiative, that would remove parliamentary immunity from 2020 onwards. Another bill, No. 6773, was initiated by 158 MPs that would introduce these changes immediately. Parliament supported both and will vote on the bills again after the Constitutional Court’s opinion.
On 9 November, Verkhovna Rada adopted in the first reading the draft law of Ukraine "On privatization of the State Property" (No.7066), submitted to the Parliament with recommendation of National Reform Council. The Law is in line with Ukraine’s commitments to the IMF and makes the privatisation process more transparent, swifter and more secure for potential investors.
ü Electoral code
On November 7, Verkhovna Rada adopted the draft of a new Electoral Code No. 3112-1 in first reading. The draft envisages:
- Introduction of a system of regional open lists at the parliamentary elections;
- Decrease of the election threshold of parliamentary elections from the current 5% to 4%;
- Updated general principles for conducting elections, and role and responsibilities of election commissions and procedures for maintaining the State Voters Register;
- Updated regulations for holding local elections (i.e. elections of deputies of the Verkhovna Rada of the Autonomous Republic of Crimea, as well as regional, district, rural, town, city and district councils).
ü Education reform
On September 25, 2017, President of Ukraine Petro Poroshenko signed the Law “On Education”, passed by the Verkhovna Rada on 5 September 2017. This provides foundation for a comprehensive and systemic school reform by introducing:
- Equal access to quality education for all Ukrainian children, regardless of their place of birth, social status or ethnic origin;
- A gradual increase in learning the state language. Article 7 of the Law ensures that students belonging to national minorities can study in their native language in pre-school and primary school education. In the 5th to 12th grade, a gradual increase in Ukrainian-language instruction is envisaged while subjects in native language will remain integral parts of the school curriculum;
- Implementation will be gradual with a transition period starting in September 2018 until September 2020;
- Pending an assessment by the Venice Commission expected in December 2017, a new bill on secondary education will be adopted incorporating the commission’s recommendations.
ü Pension reform
Adopted by the Parliament 3 October, the reform introduces a completely new system that foresees:
- Introduction of an accumulation pension system from 2018;
- Increase in the pension insurance record from the current 15 to 25 years;
- Flexible retirement age and the possibility of compensation for the absence of a pension insurance for citizens not meeting the requirements for the minimum length of service by paying contributions for the missing years (maximum five years);
- The annual recalculation of pensions with takes into account factors such as economic situation and financial capabilities;
- Increase in pensions starting from 1 October 2017 for the first time in five years.
ü Health care reform
Ukrainian parliament on 19 October passed the Law introducing the long-awaited medical reform. Following the adoption of the bill, a series of changes will be made by 2020 including the introduction of a health insurance system financed by the government, and a mechanism to allow patients to choose doctors and hospitals themselves. The law envisages that some medical services will be covered by the state with no citizens’ co-payments (a list is being finalised) while doctors will be able to set their own prices for services and choose which hospitals and clinics to use.
ü Healthcare reform in rural areas (telemedicine)
- In October, Ukraine's Parliament also passed in the first reading a bill improving the accessibility and quality of healthcare services in rural areas submitted by the President of Ukraine Petro Poroshenko;
- The bill envisages provision for medical care employees in rural areas with free housing and transportation, as well as stimulation of opportunities for education and professional development;
- The Law also prioritises development of telecommunication infrastructure, including through equipping rural medical centres with broadband Internet access, as well as software for electronic healthcare system and introduction of telemedicine.
On October 5, the Parliament adopted the draft Law #2126a “On main principles of the provision of cyber-security of Ukraine”. For the first time, the Law details definitions of issues such as cyber-attack, cyber-security, cyber-threats indexes, or critically-important infrastructure objects. The law defines responsibilities of key state institutions in this area including the State Special Communication service of Ukraine, intelligence agencies, the Ministry of Defence, Armed Forces, or the National Bank.
ü Electronic Trust services
On October 5, the Parliament passed a draft Law No.4685 on electronic Trust Services that is in line with EU and international digital standards. Signed by the president on 6 November, the law will come into force from November 2018 and provides for:
- Creation of terms for development and work of sphere of electronic Trust Services;
- Free work of electronic Trust Services and possibility of free access to these services by suppliers of the electronic trust services that work abroad;
- Increase of citizens’ confidence in electronic trust services, including trans-border services;
- Equal possibilities for access to electronic trust services, including persons with disabilities;
- Free of agreement in the sphere of electronic trust services;
- Rights protection and legal interests of users of electronic trust services;
- Technological neutrality of national technical solutions and prevention of their discrimination;
- Protection against manipulation of personal data during the provision of electronic Trust Services;
- Openness for innovation in sphere of electronic trust services.
ü International Financial Reporting Standards
On October 30, President Petro Poroshenko signed the Law “On Amendments to the Law of Ukraine «On Accounting and Financial Reporting in Ukraine»”, one of Ukraine’s commitments under the Association Agreement with the EU. General requirements as well as the procedure for provision and disclosure of financial reports are improved. Provisions of the national accounting law are brought in line with the EU standards. The Law will come into force on January 1, 2018. Some provisions that concern publication of annual financial reports with an audit opinion on the website of large enterprises and other financial institutions of micro- and small-sized enterprises will come into force on January 1, 2019.
ü Public administration reform
In September Ukraine has launched the second stage of public administration reform by series of legal acts approved by the Cabinet of Ministers on 18 August. The main purpose of the reform is to improve the quality of civil service and public administration in Ukraine, especially through optimisation and reorganisation of key ministries and state agencies. Open competition is underway for new posts in 10 pilot state bodies, including the Secretariat of Cabinet of Ministers.
ü National State Budget for 2018
On September 15, the Cabinet of Ministers of Ukraine voted to adopt the draft law "On the State Budget for 2018". Unlike in previous years, the law was submitted in due time to the Parliament. The budget is expected to be pro-growth and envisages a revenue increase.
ü The 4G-standard services introduction in Ukraine
On November 7 the National Commission for the State Regulation of Communications and Informatization (NCCIR) adopted a decision to organize a tender for 4G mobile licenses in the bands frequencies of 2510-2545 MHz, 2565-2570 MHz, 26-30-2665 MHz, 2685-2690 MHz. The first tender is scheduled for 23 January 2018.
ü Laws related to the Minsk process
On 6 October, the Parliament passed in the first reading the Law on special status for certain areas of Donetsk and Luhansk Regions of Ukraine and Law “On peculiarities of the state policy on restoration of Ukraine’s state sovereignty over temporarily occupied territory of the Donetsk and Luhansk regions of Ukraine”. The former law ensures the extension of the law passed in September 2014 until October 2018 (it was meant to expire by 18 October 2017).
The Law on “de-occupation of Donetsk and Luhansk regions” officially declares the areas of Donbas as “occupied” and explicitly names Russia as the aggressor. Besides, it reiterates the sovereign right of Ukraine to self-defence according to the Article 51 of the UN Charter, gives the President the right to impose martial law in certain areas and makes amendments to laws regulating veterans’ affairs (enhancing their social and legal protection without Parliament’s prior consent).