Statement by Jannes Hutagalung at the meeting of May 20, 1999

~ - ; .-~ - .' ... i_) .: , r,; l •f 87395 .__ i''' .. , . \. ~,,-[l.)(ill''td-ll l , U. • . l o-~\·c>!oprn·'['i '\,.... """ t 1 '"' . l .,. \ .. .- ,"; ) I ', · \,. 'I · < '1 1. •.... \.. ~ ' \:"i \ ~,,!t: . 1 .lt~'r"1 .... ~! ... tJ .... ....._ u,In\·"stn'er1t C.: -. 1 (J' 1u·lr~r''·-"··· c ... .....~. 1·~· -' (l·-'r','\ .·'.::-~.i. .... ~ . ... - F 0 R 0 F F I C I.\ L {Sf 0 \ l 't EDS99-159 May 19, 1999 Statement by Jannes Hutagalung Date of Meeting: May 20, 1999 Ukraine: Country Assistance Strategy - Progress Report We welcome the discussion of this progress report on the implementation of the Bank's CAS for Ukraine. We also wish to register our appreciation to management and staff for their efforts in providing us with this candid and timely update following the last update in May 1998. Ukraine's performance in the implementation of the CAS has fallen well below expectations, largely as a result of the overestimation of the Government's political will to inculcate the momentum and the capacity to implement major institutional reforms. We agree with the proposed lending strategy, recognizing the implementation problems and the uncertainties confronting the Bank as it rounds off the implementation of this CAS and prepares for the upcoming one. We therefore support the proposition to have performance indicators as triggers for moving to the medium-case lending scenario. This must be preceded by the resolution of the effectiveness issue thus, allowing progression to the low-case lending scenario from the current de facto zero-case scenario. The performance measures recommended in the report will directly address critical issues facing Ukraine in the next 18 months and, we definitely agree that these indicators should be framed as outcomes, for which the Government must devise the method for achieve these. However, we are concerned with the lack of any performance indicator on the social and poverty dimension, which would help arrest any further deterioration of poverty and basic social services in the meantime. Perhaps some concurrence between the Bank and the Government on the policy focus in this area would be an important stepping stone towards better collaboration. Finally, we reiterate that the overall improvement of the Ukraine economy ultimately rests on the political will of the Government to move forward with the necessary measures. In this regard, we believe that the Bank should speed up and deepen efforts to broaden stakeholder participation in the reform efforts and increase public education on the causes and - .' ! / 1,, '.:. -:· ' -, ~ -· - ;. ~ ' .. : : · _--.. ~- ' . : ~ L - .. - . ',. . ~ ·- . -~ • 1 . ... ~ ' - • effects of poor economic performance. The public must have some general awareness of the consequences of the policy options and see how it relates to their daily lives and their longer-term plans.