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IFC Urges Ukraine Push on Regulatory Reform to Boost Economic Growth


In Kiev:
Olena Harmash
Phone: +380 44 490 64 00
E-mail: oharmash@ifc.org

Kiev, Ukraine, November 4, 2011—A study by IFC, a member of the World Bank Group, found that the system of permits, inspections, and technical regulations in Ukraine remains a burden for businesses, costing them nearly $900 million last year and hampering their efforts to grow and create jobs.

The IFC study, “Investment Climate in Ukraine as Seen by Private Businesses 2011,” surveyed approximately 2,000 businesses and found that 46 percent of them resorted to unofficial means to resolve issues with state officials. Ukrainian companies surveyed spent an average of 10 percent of company revenue in 2010 to comply with official regulations.

“Less regulation and a transparent economic environment will help promote growth and enable Ukrainian businesses to attract more investments,” said Elena Voloshina, IFC Head of Operations for Ukraine. “Ukraine has made some positive steps forward to ease the regulatory burden for private businesses over the past year. However, poor implementation and the slow pace of reforms remain among the key barriers to private sector growth.”

Since 2009, Ukraine has made some progress, particularly in the reform of technical regulations. However, the IFC study found that local entrepreneurs have not fully benefitted from the regulatory changes due to the low level of implementation, which significantly undermines the reform process.  

The study also recommended steps to improve the investment climate. These steps include decreasing the number of permits and the number of businesses subject to licensing; extending the scope for self-certification; enforcing the use of inspections checklists; and streamlining norms and requirements.  

IFC’s Ukraine Investment Climate Advisory Services Project is supported by the Canadian International Development Agency; the Dutch Agency for International Business and Cooperation; the Swedish International Development Cooperation Agency; and Switzerland’s State Secretariat for Economic Affairs, SECO.

About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilizing capital in the international financial markets. In fiscal 2011, amid economic uncertainty across the globe, we helped our clients create jobs, strengthen environmental performance, and contribute to their local communities—all while driving our investments to an all-time high of nearly $19 billion. For more information, visit www.ifc.org.

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To read the report, visit www.ifc.org/ifcext/uspp.nsf/AttachmentsByTitle/Ukraine-IC-Report_Nov2011/$FILE/Ukraine-IC-Report_Nov2011_ENG.pdf