East West Debt, solving defaulted trade and bank debt

East-West Debt oct. 2002 news, update : UKRAINE

Ukraine The economic situation in Ukraine has continued to improve in 2001. Real GDP growth is estimated to have increased from almost 6% in 2000 to 9% in 2001, mainly due to the dynamic growth of industrial output and a good grain harvest, resulting from favorable weather conditions and a lessening of government Development Bank by the end of 2002. The IMF controls in agriculture.

Ukraine's external current account surplus narrowed from 4.75% of GDP in 2000 to 3.5% in 2001, mainly because of strong import growth driven by the expansion of domestic demand. Export growth remained dynamic, but slowed in the course of the year. The competitiveness of the Ukrainian economy was preserved, as the real effective exchange rate has remained stable since mid 2000. As a result of the debt rescheduling agreement with Paris Club creditors concluded in July 2001, the debt service burden was moderated.

The nominal exchange rate of the hryvnia remained stable in 2001. With the National Bank of Ukraine (NBU) continuing its extensive purchases of foreign exchange on the interbank market, Ukraine's official gross international reserves increased to $3.1 billion in December.

Some progress has been made on structural reforms. The overall health of the financial system has improved but weaknesses remain with regard to a number of banks. A new Land Code was adopted, which allows for private ownership of land in the medium term.

However in order to overcome weaknesses in the business environment and promote private investment, the government needs to take measures to improve the privatization climate and to level the playing field for all investors. Only when this is achieved, foreign direct investment, which remains quite low in Ukraine, will start growing.

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