On March 31, 2020, the Draft Law on Amendments to Certain Legislative Acts of Ukraine Concerning the Circulation of Agricultural Land was adopted in the second reading. It lifted the moratorium and established the land market from July 1, 2021. The bill was signed by the President on April 28, 2020. It states that:
From July 1, 2021, the moratorium on the sale of agricultural land will be lifted.
From July 2021 to January 1, 2024 there will be restrictions on the purchase of land - no more than 100 hectares in per person. From 2024, the limit will be increased to 10,000 hectares per person.
From July 1, 2021 to January 1, 2024, only private individuals will have a right to purchase land.
The issue of granting the right to purchase agricultural land to foreign citizens must be decided by referendum.
To ensure the proper legal framework for the functioning of the land market, a number of bills were additionally adopted: №0858 on combating raiding, №2195 on electronic auctions, №2194 on deregulation in the field of land relations, №2370 on national geospatial data infrastructure, №2280 on land use planning.
Thus, all the necessary laws for the technical launch of the land market have been adopted. But due to extremely strict restrictions on land purchase, it will not ensure full use of the potential of agricultural land to increase productivity.
As in other key areas of reform, the main challenge is the reluctance of politicians to lose control of institutions that must be politically independent in an effective democracy and economy.
In the area of economic reforms, it creates a risk of halting and rolling back reforms in key areas such as the independence of the National Bank of Ukraine, as well as in the privatization and depoliticization of corporate governance of state-owned enterprises. It also hinders the strengthening of the Antimonopoly Committee, which could become a powerful mechanism for de-monopolization and de-oligarchization.
An important challenge, in particular, regarding the implementation of recommendations in the field of budget policy and optimization of public expenditures, is the incomplete public administration reform. Strategic planning and revision of expenditures is not possible without the civil service and government procedures of a different quality than currently available. This problem was further complicated during the pandemic, when the already limited resources of the public administration system were aimed at minimizing its consequences, rather than complex reforms.
High share of redistribution of expenditures through public finances remains to be one of the key problems, which in 2020 amounted to more than 45% of GDP, which negatively affects the growth of the country's economy. Economic theory, confirmed by practical experience, determines the relationship between the level of national expenditure and GDP growth. According to CASE Ukraine (2021) and the Center for Economic Strategy (2015), the optimal range for our country is the range of 33–37% of GDP, at which the GDP growth rate will be the highest.
Finally, a serious barrier and challenge to the implementation of certain economic reforms is their unpopularity among citizens. This applies to the already mentioned land reform, as well as the market formation of prices and tariffs, primarily for energy. Rising inflationary pressure will threaten further rollback of reforms in pricing and tariff policy.
The monitoring revealed that the progress in the field of economic reforms in 2020-2021 was extremely insufficient. Recommendations on priority actions for 2020-2021 remain relevant.
The priority steps of economic reform next year should be:
Preservation of macroeconomic stability. It is necessary to prevent further regression in the independence of the NBU and to maintain a credible policy of inflation targeting in order to prevent the unwinding of the inflationary spiral. Cooperation with the IMF should be resumed to ensure cheap debt refinancing with minimization of expenses of money of taxpayers for their service. With Ukraine's exit from the coronavirus crisis, the budget deficit should return to a comfortable level of 2-3% of GDP for assessing Ukraine's credit risks.
Privatization of state enterprises. The experience of 2020-21 shows the lack of resilience of corporate governance procedures of state-owned enterprises to political interference. Privatization, even of minority interests, significantly reduces the influence of politicians on the operational activities of state-owned enterprises, and the associated inefficiencies and corruption risks. Therefore, it is necessary to accelerate the privatization of state and municipal enterprises, as well as state-owned banks.
Strengthening the antitrust policy. It is necessary to introduce transparent selection of members of the Antimonopoly Committee with the participation of independent experts with a casting vote, guarantees of political dismissal, and to strengthen sanctions for violations of antitrust law and non-compliance with the requirements of the Committee. An antitrust law that requires the sale of a business share that exceeds the concentration limit should be enacted.
Optimization of national expenditures. The fiscal policy aimed at reducing the share of national expenditures to 33-37% of GDP, as well as fiscal rules that would limit the share of redistribution of GDP through budgets shall be introduced. This should give impetus to the strategic revision of public spending.
Institutional reform of regulatory bodies. It is necessary to continue and complete the reform of the State Tax Service of Ukraine, which is currently successfully moving in line with the reform plan approved by the Cabinet of Ministers. It is necessary to ensure the reform of the State Customs Service of Ukraine, which is currently slowing down, in particular in the direction of recruiting employees in open competitions, as well as providing them with a decent salary and automation of processes. By the end of 2021, a single analytical body for the investigation of economic crimes (Bureau of Economic Security) should be established with restrictions on "old" staff working in the new body, while by the end of 2021 the tax police should be abolished and other law enforcement agencies (Ministry of Internal Affairs of Ukraine, Security Service of Ukraine, etc) should be deprived of functions of investigation of economic crimes in accordance with the Law of Ukraine "On the Bureau of Economic Security of Ukraine" of January 28, 2021 № 1150-IX.
Reform of effective regulation and creation of better conditions for doing business. The introduction of an efficient market economy is impossible without completing the transition from total administrative control to proportional and effective rules in the markets. It is worth continuing and completing the reform of market rules in areas such as urban planning, electronic communications, forest management and timber market reform.