Dynamic, sustainable and inclusive growth based on structural modernization of the economy, improvement of the business climate and the efficiency of the public sector is one of the main tasks of the Cabinet of Ministers of Ukraine.

The key task for economic growth is to create equal, transparent and predictable rules of doing business, achieve Ukraine’s integration into regional and global value chains, promote the development of high-tech industries, facilitate the attraction of both foreign and domestic investment in the Ukrainian economy and to develop the export potential of Ukrainian manufacturing companies.

 

Developing industrial production

To upgrade Ukraine’s industry, the following is planned:

to develop industrial clusters and to solve regulation-related problems. The focus will be on the development of environmentally friendly and innovative products;

technical re-equipment of Ukraine’s military industrial complex production facilities;

deregulation of customer-supplied raw materials;

to introduce strategic planning of State investment taking account of medium term budget objectives, wherein projects to get budget financing will be selected on the basis of complete information on their future benefits and expenditure on their execution as well as the need to ensure basic funding for the current project portfolio;

to actively use various forms of public-private partnerships, including concessions;

creation of venture funds to finance innovative projects.

 

Facilitating the development of the agro-industrial complex

New State aid instruments will be developed during year with a view to creating a reimbursement mechanism for expenses related to the transition of agricultural producers to the general VAT regime.

In future, new mechanism will have to be focused on ensuring food security, predictability and stability of product markets through:

increasing the competitiveness of small and medium enterprises, increasing the production of high added value agricultural products; diversifying business opportunities in the agro-industrial sector.

For the first time provides for the allocation of funds from the State Budget of Ukraine for State support of agricultural producers in the amount of at least 1% of agricultural production output in 2017-2021.

In 2017: the number of business entities in the agro-industrial complex to receive partial compensation of the interest on credits is 663; the size of loans, the cost of which has become cheaper due to the receipt of funds from the State budget is about 484 mln USD; the number of agricultural producers to receive transfers from the budget is 12000; the number of agricultural producers to receive compensation for purchases of agricultural machinery and equipment is 4000; agricultural machinery and equipment, the cost of which has become cheaper due to the receipt of funds from the State budget is worth 106 million USD; the number of items of agricultural machinery, the cost of which has become cheaper due to the receipt of funds from the State budget is 3815, including 525 tractors, 40 grain carriers, 40 soil processing machines and 3250 sowing machines; the number of items of agricultural equipment, the cost of which has become cheaper due to the receipt of funds from the State budget is 520.

 

According to the Government approved by the Order of distribution of budget subsidies for the development of agricultural commodity producers and stimulation of agricultural production in 2017, the budget subsidy will be provided in automatic mode.

 

Increasing energy independence

It is supposed in 2017:

to begin the transition of Ukraine’s energy sector to market principles and the development of competition to increase the economic performance of energy sector participants and the efficient utilization of energy resources;

to approve the Energy Strategy of Ukraine for the period up to 2035; to increase natural gas production to 20.3 billion cubic metres by facilitating investments in production facilities and, in particular, by offering tax incentives for new drilling operations and by reforming the licensing and approval system, by facilitating access to land and by conducting transparent auctions of new land plots.

In the medium-term up to 2020: to phase out Ukraine’s total dependence on external sources of energy supply, to diversify routes and sources of energy supply; to transit to a new energy market model, which is based on market principles and envisions the development of competition with a view to improving the quality of services and reducing energy prices; to integrate the Ukrainian energy sector into the EU energy markets and the European energy security system; to implement the European energy security system with a focus on cyber security and energy supply security; to increase domestic energy production.

Quantitative Targets to be achieved by the end of 2017 and in the medium-term: share of energy from renewable sources in gross final energy consumption in 2017 – 8.3% and in 2020 – 11%; domestic natural gas production, million cubic metres: 23.5 (2018); 26.2 (2019); 27.6 (2020);

 

share of one source in total annual imports (coal, natural gas, oil and petroleum products, nuclear fuel) – 30% maximum.

Coal industry reformIn 2016, the volume of coal mining in Ukraine amounted to 5,8 million tonnes. As of January 1, 2017 there were 33 economically active mines.

The main goal of the coal mining sector reform is to to create an economically viable coal industry (break-even performance), capable of fully meeting the national economy’s demands for coal production at market prices.

In the medium-term up to 2020: to optimize the State aid system to coal industry; to denationalize the industry to the maximum extent (mine privatisation); to deregulate the coal product market and to transition to market pricing for coal products; to ensure further use of human capital (redundant workers) and mine infrastructure to create new manufacturing plants, industrial estates, energy parks, etc.

 

Developing renewable energy

The use of renewable energy sources is one of Ukraine’s most important policies directed at saving traditional fuel and energy resources and at environmental protection.

The currently technically achievable energy potential of renewable sources in Ukraine is 68.6 million tonnes of oil equivalent, which is around 50% of the total energy consumption in Ukraine.

An increase in the share of energy from renewable sources in the structure of total energy end-use will make it possible to:

Optimize Ukraine’s fuel and energy balance; increase Ukraine’s energy independence; increase the national economy’s competitiveness; to ensure the renewal of fixed assets in Ukraine’s energy industry (to increase the overall rated capacity of renewable energy facilities up to 10.9 GW); to reduce greenhouse gas emissions; to create jobs in the energy sector and other industries.

 

Developing Ukraine’s raw material base

Our country’s raw material resources have considerable potential, on a par with those of the world leaders in this sector.

Goal to be achieved:

to meet the national economy’s needs in mineral resources by domestic mineral production;

to reduce Ukraine’s dependence on imported mineral resources and to increase the country’s export potential through domestic production of minerals, which are in high demand on the world market;

to create powerful anchor projects to assist the promotion of Ukraine’s positive image on the world market;

to attract geological exploration companies to the Ukrainian market.

In 2017, it is planned to add new reserves: 2 million tonnes of coal reserves and resources; 0.8 conditional units of uranium reserves and resources, 0.8 conditional units of TiO2 titanium reserves, 10 billion tonnes of clay reserves and resources, 50 cubic meters of fossil raw materials, as well as prepare one promising oil and gas site, etc.

 

Transport regulation reform

In 2016, the share of gross value added from transport sector was 6,6% of GDP, the number of persons employed was approximately 0.8 million.

 

The cost of services rendered in 2015 was 13.5 billion USA dollars, or 5.1% of the total cost of services and goods sold in Ukraine.

On average, transport accounts for 12.1% of the total value of goods. The most transport dependent are agricultural products (27.3%), metal goods (10,7%), coal (6.8%), oil (10.7%), gas (5%), retail goods (12.4%), postal and communication services (6.3%), public administration and defence industry (7%).

Quantitative Targets to be achieved by the end of 2017: to introduce a single hub for the provision of administrative service electronically; to approve a plan for the modernisation and technical reequipment of PJSC «Ukrzaliznytsya»; to create the conditions for concession management of infrastructure facilities; to create an inspection system to control vehicle size and weight.

And in the medium-term In: to introduce a new procedure for tariff-setting based on the actual expense structure; to ensure free pricing in competitive market sectors for transport services; to ensure consistency between actual sea port depths in Ukraine and their certified depths; to renovate shipping locks in Ukraine;  to ensure lock modernisation projects are prepared; to improve public road conditions; to lift restrictions on the number of airlines and flights serviced by them between Ukraine and EU countries, on a parity basis; to sign the Agreement on the Common Aviation Area with the EU.

 

Portrait of modern Ukraine

 

• Ukraine is a European country with significant potential and opportunities. It has well developed machine-building, mining and metallurgical, chemical, petrochemical and transport complexes. The country takes strong positions in nuclear power engineering, aircraft engineering and the rocket and space industry.

• Ukraine is one of the 6 countries in the world that can provide manufacturing of a plane from designing to building. In 2016 nuclear power plants produced 52,3% of the total electricity in the country.

Ukraine is among the top 10 countries - the largest steel producers. In 2016, the steelmanufacturing volume in Ukraine grew to 24.2 million tons.

It is a producer of unique energy equipment, exported to more than 100 countries of the world.

For the period from 1992 to 2016, 140 launch vehicles of Ukrainian origin were launched from six cosmodroms of the world, which put into orbit 370 spacecraft on request of 25 countries.

• On the territory of Ukraine there are 4 out of 10 European transport corridors as well as 170 thousand km of roads, 22 thousand km of railways, over 40 thousand km of pipelines. In addition, there are 8 major sea ports in Ukraine, particularly Odessa and Illiychivsk, which are among the largest ports in the world.

• In 2016, 82.2 billion cubic meters of natural gas and more than 13.8 million tons of oil were supplied to European countries via Ukrainian trunk pipelines

• The railways of Ukraine provide 82% of freight and almost 50% of passenger traffic carried out by all types of transport in the country.

• Along with 18 partner countries Ukraine is working on the possibility of arranging multimodal transportation between the regions of the Baltic, Black and Caspian Seas using rail, road, river, sea and ferry services.

• Having a quarter of the world's chernozem (black soil) reserves Ukraine produces and exports large volumes of agricultural products and food. In 2016, the country took first position in the world in sunflower oil production, the fourth and sixth - in production of barley and corn, the eighth – in production of wheat and soybeans etc. Supplies of agricultural products into foreign markets increased to $ 15.3 billion in 2016. The share of this sector in shaping the GDP of Ukraine has increased to 18%.

Ukraine is open for further development of trade, investment and cooperative ties with all regions of the world.

It provides the most favorable regime to 173 countries of the world with application of preferential import duty rates of up to 5%, which covers almost two thirds of all goods imported into Ukraine.

• In its turn, after the entry into force on  January 1, 2016 of the Agreement on Deep and Comprehensive Free Trade Area between Ukraine and the European Union Ukraine has received more liberal access conditions to the EU market with a population of over half a billion people and a GDP of about 19 billion USD.

• Ukraine has world-renowned research innovative developments in the fields of welding materials, nanotechnology, biotechnology, hydrogen energy, artificial intellect and others. Also, 25 industrial parks have been established in the country for the period 30 to 50 years for implementation of innovative projects of estimated investment potential at about 10 billion USD.

Daily Sun,