‘No reason to fear reprivatisation’

Date: 13/10/05

Ukraine's newly appointed economics minister this week sought to distance his administration from the mistakes of the previous government, in an attempt to regain slipping investor confidence in the country.

Arseniy Yatsenyuk, 31, criticised some of the economic policies of former prime minister Yulia Tymoshenko and vowed to let the courts deal with the controversial issue of forced reprivatisations.

Tymoshenko's government, sacked in early September amid allegations of corruption, had slated 29 enterprises for reprivatisation which were sold off cheaply or unfairly before last December's Orange revolution.

The policy had adversely affected confidence, as potential investors waited with uncertainty to see how events unfolded.

"The final position of the government is no more fears of reprivatisation, no more talks, no more lists," Yatsenyuk said.

"I will answer the question [of reprivatisations] only within the legal framework, the government has no right to clean the shareholders or the owners of each particular enterprise. It could be the General Prosecutor or it could be the state property fund that is it."

According to Jock Mendoza-Wilson, director of corporate communications for Ukrainian firm SCM, the message has been clearly received by investors.

"It is clear that the policy is no to future reprivatisations," he said. "I think it is a little early for investors to respond. But I think that you will see them return."

But Yatsenyuk's comments come as Kryvorizhstal, a steel firm bought for &036;800 million (EUR 665m) in 2004 by close contacts of the Leonid Kuchma administration, which is said to be worth at least double that, is about to be sold off after it was taken over by the government.

SCM, the principle shareholder in Kryvorizhstal before the government again assumed control, accepts that reprivatisation will now go ahead.

Aside from reassuring investors, Yatsenyuk faces a tough job at home as growth figures are scaled back, inflation continues to run into double figures and the sheen is taken off the orange revolution.

His main goal for the remainder of this year will be, he said, to bring inflation down to single digits.

It is a goal, according to the former central banker, that was not helped by the Tymoshenko government's decision to cap fuel prices.

"It was very harmful," Yatsenyuk said, "there is no way to restrict or curb prices by restrictive measures from the government."

"This decision was absolutely wrong and it accelerated inflationary pressure, they created a two-month gap which accumulated this inflation pressure and when it was released the acceleration was too high."

"This is why 12-month inflation is around 50% and December to September 7.1%," he added.

Article reports on the attempts of newly-appointed Ukrainian Minister for Economics, Arseniy Yatsenyuk, to regain slipping investor confidence in the country. He sought to distance his administration from the mistakes of the previous government of Yulia Tymoshenko, sacked in September 2005 amid allegations of corruption. Tymoshenko's government had slated 29 enterprises for reprivatisation which had been sold off cheaply or unfairly before the Orange revolution of December 2004.

• Primary Source

Ukraine: Ministry of Economics: Homepage http://www.me.gov.ua/control/en/index

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