Reforms in Ukraine – long road to success

Key facts •  18 priority reforms •  Reform efforts are coordinated by National

Reforms Council "(consisting of the President, the Prime Minister, the Speaker of the Parliament, Ministers, Chairmen of parliamentary committees and civil society representatives)

•  The Council approved "Ukraine 2020“ "(A strategy for Ukraine's sustainable development, which defines goals, priorities and KPIs for the reforming process)

*Information by National Reforms Council, Ukraine Crisis Media Centre, Reanimation Package of Reforms, VoxUkraine

Economic Reforms •  State property (SOEs) •  Tax reform •  Agriculture •  Public procurement •  Banking system •  Deregulation and supporting SMEs •  Energy sector

Reforming Governance •  Anti-corruption •  Judicial •  Law enforcement agencies •  Public administration •  Election legislation •  Decentralization and the local "

self-government

Other Reforms •  Constitutional •  Security and defense •  Promoting Ukraine’s interests abroad •  Education •  Healthcare

"Reforms Progress"

12 out 18 reforms are on schedule"

Facts and Figures •  Fastest progress in public procurement and public finance,

rehabilitation of banking system, deregulation and energy sector •  Most legislative progress – anti-corruption"

(National Anti-Corruption Bureau, patrol police, open state registers, etc) "

Index for Monitoring Reforms (iMoRe) 03.03.16

Key Achievements •  MACROECONOMIC STABILIZATION "

"- growth of foreign currency reserves" from $5,6 bln to $13 bln"- regaining investors’ trust – $3.1bln FDI in 2015 "- IMF program strictly followed "- debt restructuring deal of $12 bln"- Standard & Poor’s upgraded Ukraine’s rating to “B-” and “B”

"

Key Achievements •  CREATING BUSINESS-FRIENDLY

ENVIRONMENT""- registering a business online" and in just 1 day"- number of controlling and regulatory" functions cut by half (from 1032 to 681)"- Better Regulation Delivery Office "- DCFTA fully implemented on 1. January

Key Achievements •  ENERGY REFORM"

"- diversification of natural gas imports " (not imported from Russia any more) "- direct subsides only for those in need"- Naftogaz became profitable

Key Achievements •  COMBATING CORRUPTION ""- new corruption-free police"- National Anticorruption Bureau"- e-procurement – annual savings" up to $2 bln"- around 800 civil servants dismissed" under lustration law "- removal of intermediaries from gas market

"

Ministry of Economic Development and Trade

•  Reforming SOEs "(277 CEOs selected by transparent procedure, financial reports published)

•  Public procurement "(Launched e-procurement system, $58 mln saved)

•  Deregulation and supporting SMEs "(41% of permission documents canceled, 100 regulatory barriers dismissed, registering business in 1 day)

•  Export promotion " (The WTO Agreement on Trade Facilitation ratified, negotiations on FTAs with Canada and Turkey, DCFTA implemented on 01.01.2016)

•  Reforming the ministry "(80% of leadership is new, 50% of staff made redundant)

Public Procurement in Ukraine •  In 2015 Ukraine ranked

#130 by Transparency International for corruption perception (in a group with Cameroon, Iran, Nepal, Nicaragua, Paraguay, Nigeria, Guinea, Kenya, Laos, Papua New Guinea, Uganda)

Losses in the Public Procurement

UAH25bn (ca $1.1bn) – conservative estimation of

“corruption tax”

UAH25bn (ca $1.1bn) – losses caused by limited competition

UAH250bn (ca $11bn)

10%

10%

At least UAH50bn (ca $2.2bn) per annum – losses from corruption and limited competition

Trusttowardinstitutes

-80

-60

-40

-20

0

20

40

60

VolunteersstartedworkingonPPreform

•  Just after the Revolution of Dignity, "a group of volunteers decided to start a reform in public procurement

•  eProcurement system ProZorro seen as the key element of the reform

•  At times a team of up to 300 people worked on ProZorro

“Goldentriangleofpartnership”inthecore

Commercial platforms

Civil Society: monitoring and

control of procurement

Government: "“the rules”,

professionalization and data storage

Commercial platforms: suppliers

acquiring and service

What is ProZorro?

Our Principles •  Open code, always available for audit, control,

& scalability •  Compulsory auction for effective price reduction •  Competition among platforms to improve

services •  Transparency (everyone sees everything) •  Teamwork (Agile groups)

HistoryofProZorro

March2014Volunteers’ team setup

April-May2014First search & first concept

August,2014Georgians & concept review

February,2015MVP development & launch

September,2014ePlatforms & final concept; first “seeding”

April,2015Volunteers move into gov’t

June,2015First donor support

May,2015MinDefence & small procurements’ pilot

December,2015New Law on eProcurement approval

April,2016Law comes into force, system’s scale up

Results of the pilot up-to-date 8 commercial platforms & 3 joining

3,500 + contracting authorities

10,000+ suppliers

63k+ tenders for $512m

Savings come to

$58m

bi.prozorro.org

BI modules are owned by Transparency International Ukraine

The law of diffusion of innovation

Concept & MVP Pilot Scale Up & Implementation

Gov’t Low Medium High

NGO High High Low

Business Medium High Medium