The World Bank poured a tub of cold water on Ukraine
With the growth rates that the Ukrainian economy demonstrates today, Ukraine will catch up with Poland in 100 years.
Satu Kahkonen, Director of the World Bank for Ukraine, Belarus and Moldova, stated this in an interview with Economic Pravda.
“Ukraine cannot afford to stray from the path of reform. There are two reasons for this. The first reason is that Ukraine has not yet recovered from the crisis of 2014-2015. Per capita income is still lower than the corresponding figures in 2014-2015. If the country’s GDP growth remains at the same level, then it will take Ukraine another hundred years to catch up with neighboring European countries, such as Poland,” said the World Bank representative.
She cites the international economic situation as the second reason for continuing reforms.
“Right now she is unstable. Ukraine cannot expect external market demand to pull through the economy. Steps should be taken to attract international and domestic investment. There are risks, but wishing all the best for Ukraine, I hope that the reforms will not stop and there will be no reversal,” added Kahkonen.
It's worth noting that Ukraine's GDP growth is projected to be at 3% this year. Notably, starting in 2020, as stipulated in the 2015 Ukrainian debt restructuring agreement, Ukraine will be required to repay creditors with so-called VRI shares—a replacement value instrument, that is, a valuable obligation to pay interest on economic growth, in addition to the principal and interest.
As Kyiv economists note, Ukraine will have to give up 30-40 percent of its growth to external creditors if GDP growth exceeds four percent.
The World Bank has poured a bucket of cold water on Ukraine.