The International Monetary Fund (IMF) says that the launch of the land market in Ukraine can generate significant economic gains, according to the Fund`s country report released upon completion of the second review under the Extended Fund Facility (EFF).
”While Ukraine has a vast area of arable land, use of this land is currently limited by legislation, restricting private owners` ability to sell their land to more efficient users and constraining the use of land as loan collateral. Amending the legislation to unlock land-related transactions would generate significant economic gains, including higher incomes and greater tax revenues,” the report reads.
The IMF notes the new legislation on agricultural land sales is expected to be submitted by end-September 2016, being a new structural benchmark under the country`s reform program.
Earlier, the IMF approved the four-year EFF program for Ukraine worth a total of US$17.5 billion in March 2015. Ukraine has already received three loan tranches to the tune of $7.6 billion.
The implementation of the reform program agreed with the IMF will help unlock further financial assistance for Ukraine – from the World Bank, the U.S. government and the European Union.
The moratorium on agricultural land sales, which has been put in place in Ukraine for 15 years, will expire on January 1, 2017. Currently, only individuals can own farmland, but they are virtually unable to sell or buy it. Thus, all agri-businesses in Ukraine lease land for crop production. Yet, experts point to the existence of the shadow land market in Ukraine.
At the same time, experts have different opinions as for the cancellation of the moratorium. Some claim it may spur the shadow land market. Others warn that farmers may lose farmland, which may be bought by foreign companies for a song, considering that the average salary in Ukraine countryside is 80-100USD/month.