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The Verkhovna Rada of Ukraine on Aug. 23, 2023 in Kyiv, Ukraine. (Andrii Nesterenko/Global Images Ukraine via Getty Images)
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Editor’s note: This is issue 43 of Ukrainian lawmaker Yaroslav Zhelezniak’s weekly “Ukrainian Economy in Brief” newsletter, covering events from Feb. 12-18, 2024. The digest highlights steps taken in the Ukrainian parliament related to business, economics, and international financial programs.

The Kyiv Independent is republishing with permission.

IMF benchmarks in focus

Lawmakers submitted an alternative draft law on restarting the Economic Security Bureau of Ukraine (ESBU) in line with international recommendations.

On Feb. 12, Yaroslav Zhelezniak, first deputy head of the Committee on Finance, Tax and Customs Policy, and other lawmakers submitted draft law №10439-2 on restarting the ESBU. The draft law №10439-2 was designed as an alternative to the Cabinet of Minister’s previously registered bill (№10439).

The alternative draft law №10439-2 was developed in cooperation with the Anti-Corruption Action Center (AntAC), International Development Law Organization (IDLO), business associations and international partners of Ukraine.

The text contains all the recommendations to guarantee that it ensures the real restart of the ESBU according to the best practices and meets all Ukraine’s obligations under international financial programs.

Ukraine receives over $42 billion from international partners in 2023
Foreign aid is crucial for Ukraine as the financial pressure caused by the full-scale Russian invasion grows. Finance Minister Serhii Marchenko said previously that the country would need at least the same sum in 2024 as last year.

The alternative draft law №10439-2 also eliminates all problems and shortcomings which were found in the governmental draft law №10439 and were vastly criticized by the stakeholders from business, NGOs and international partners. Provisions on the staff re-certification and competitive selection of the BES’s director and employees were particularly criticized.

Among of the crucial provisions of the alternative draft law №10439-2 are the following:

  • Competitive selection of the BES director with the decisive vote of international representatives;
  • majority of international representatives in the selection and re-certification commissions;
  • start of recertification process immediately after the appointment of newly elected director, ending not later than in 18 months after that;
  • all staff appointed as a result of old procedures have to pass the recertification.

The same group of lawmakers also submitted the draft law №10440-3 with amendments to the Criminal Procedure Code which is an alternative to the CMU’s draft law №10440. The alternative draft law is aimed to ensure additional protection of business interests during searches, seizure of property and other procedural actions, as well as reducing the illegal pressure of law enforcement on business.

World Bank priorities

The Parliament will try again to consider three draft laws from the Development Policy Loan (DPL).

On Feb. 21, the Verkhovna Rada of Ukraine is going to consider three draft laws from the World Bank DPL.

First of all, the Parliament has to consider in the second reading the draft law (DL) #5865 on financial markets and strengthening the independence and institutional capacity of the National Securities and Stock Market Commission (NSSMC) in accordance with the IOSCO Principles.

As we reported in Issue 42, the draft law was withdrawn from the parliament’s agenda the week before according to the demand from the Office of the President which opposes the competitive selection of the NSSMC’s members.

World Bank to disburse $500 million for Ukrainian businesses in 2024
The matter was discussed during a meeting between the ministry’s team and the World Bank mission headed by Arup Banerji, the World Bank’s regional country director for Ukraine and Moldova.

The Verkhovna Rada will also consider in the second reading the DL #5593-d on state-owned enterprise corporate governance reform and the draft law #9266 electronic crop receipts as a new financial instrument for farmers. Both had to be voted on Feb. 7, but the parliament didn't have time due to cutting down one plenary meeting.

On Feb. 19, the Committee on Finance, Tax and Customs Policy reviewed again and approved the tables of amendments for the draft laws #5865 and #9266, so they are ready to be adopted by the Parliament.

Other key economic issues

The Prosecutor General's Office will check the legitimacy of the ESBU decisions.

In January, the Prosecutor General's Office decided to check the legitimacy of the Economic Security Bureau of Ukraine's decisions to close criminal proceedings regarding illegal gambling (under the article 203-2 of the Criminal Code of Ukraine).

The ESBU closed an abnormal number of the proceedings regarding illegal gambling in the last month of 2023. In December 2023, the ESBU closed 84.2% (64 out of 76 criminal offenses) of all criminal offenses closed in 2023 under the article 203-2. Such statistics may indicate potential violations of the ESBU and illegal opening or illegal closing of the criminal proceedings aiming to gain an undue benefit.

Proceedings regarding 70 criminal proceedings were closed due to the established absence of the event of a criminal offense. Another six criminal proceedings were closed due to the established absence of elements of a criminal offense in the acts of suspects.

The draft law on mobilization is postponed till the first week of March.

The Cabinet of Ministers’ draft law on mobilization #10449 wasn’t included in the parliament’s agenda for the current week.

Lawmakers have the right to submit their amendments for the second reading until Feb. 21. Most likely, the Committee on Security and Defense will deal with more than 1,000 amendments.

Considering the sensitivity of the matter, it’s unlikely that the Committee will push the process and try to submit the document for consideration faster.

Most likely the Verkhovna Rada will consider the draft law on mobilization not earlier than on March 6-8.

Reuters: Ukrainian businesses fear new mobilization law could paralyze economy
Ukrainian business associations are calling for reforms of the country’s new mobilization law, fearing that its draft policies could cripple an already-struggling domestic economy, Reuters reported on Feb. 19.

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