Ukraine Should Curb Government Role in Grain Market, EBRD Says

Bloomberg, 2011-03-31 by Kateryna Choursina and Claudia Carpenter

Ukraine’s government should reduce its role in the country’s grain market to encourage private investment and spur growth, according to the European Bank for Reconstruction and Development.

“The government interference goes way too far,” country director Andre Kuusvek said today at Dragon Capital’s 7th Annual Ukraine Investor Conference in Kiev. “What is happening in the grain sector is appalling,” he said, calling the distribution of quotas for cereal exports “anything but transparent.”

The quotas, imposed in October, are an “exceedingly ill- targeted tool” for trying to curb food-price inflation, the American Chamber of Commerce in Ukraine said last week. The government also has drafted legislation that would require grain traders to make partial advance payments for exports while exempting so-called state market operators.

“The government should not be talking about creating grain export monopolies,” Kuusvek said.

Ukraine should revise the quota system because it is “not efficient,” Martin Raiser, the World Bank’s director for Ukraine, Belarus and Moldova, said at the conference. Allotment of the quotas “is not transparent,” which is “not a very good signal if Ukraine wants to attract investments,” he said.

The government yesterday approved an extension of the quotas, which had been scheduled to expire today, to July 1.

To contact the reporter on this story: Kateryna Choursina in Kiev at kchoursina@bloomberg.net

To contact the editors responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

To contact press office at Dragon Capital: pr@dragon-capital.com