Christine Lagarde (IMF), Valeria Gontareva (head of the National Bank of Ukraine), and  Petro Poroshenko Mikhail Palinchak/Getty Images

The Last Hurdle for Ukraine’s Recovery

Ukraine has made remarkable progress on reducing its fiscal deficit and public debt, positioning the economy for strong growth. But, as is so often the case in post-Soviet states, old-school clientelism could quickly smother the promise of prosperity.

KYIV – Ukraine’s capital abounds with signs of hope and anarchy. The country has experienced an impressive economic turnaround, but corruption remains rife. President Petro Poroshenko’s administration has stabilized public finances, but failed to rein in clientelism.

The question now is whether any judicial and legal reforms that Poroshenko undertakes can establish the conditions for strong, sustained economic growth. Since concluding a loan agreement with the government in March 2015, the International Monetary Fund has followed through with four substantial disbursements. But on a recent visit, IMF First Deputy Managing Director David Lipton warned that there are risks of Ukraine “going backwards.”

Ukraine’s problems are not macroeconomic. The government’s current finance minister, Oleksandr Danyliuk, is an avowed free marketeer with a strong record of economic management, as was his predecessor, Natalie Jaresko.

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