"So the last will be rst, and the rst will be last. Ma6hew 20:16

Ukraine Kyiv

March 2014 Kakha Bendukidze

0

5000

10000

15000

20000

25000

30000

1990 1994 2012

Uzbekistan

Kyrgyztan

Armenia

Tajikistan

Moldova

Azerbaijan

Georgia

Turkmenistan

Belarus

Kazakhstan

Ukraine

Latvia

Estonia

Russia

Post Soviet Countries 1990, 1994 and 2012

5th 7th

9th

2012

Tajikistan

Kyrgyztan

Moldova

Uzbekistan

Georgia

Armenia

Ukraine

Azerbaijan

Turkmenistan

Kazakhstan

Belarus

Russia

Latvia

Estonia 0

5000

10000

15000

20000

25000

30000

1990 1994

Post Soviet Countries 1990, 1994 and 2012

5th 7th 9th

Lagging Behind GDP Growth Rates (1994-2012)

0%

2%

4%

6%

8%

10%

12%

0

5000

10000

15000

20000

25000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

USD

, GDP

per cap

ita, P

PP

Ukraine

Poland

How Poland Outperform Ukraine

3

Night Light Test Warsaw Kyiv

0

5000

10000

15000

20000

25000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

USD

, GDP

per cap

ita, P

PP

Ukraine

Bulgaria

How Bulgaria Outperform Ukraine

2.2

0

5000

10000

15000

20000

25000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

USD

GDP

per cap

ita, P

PP

Ukraine

Romania

How Romania Outperform Ukraine

2.3

0

5000

10000

15000

20000

25000

30000

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

GDP per capita (PPP)

Ukraine Grown as Poland Grown as Kazakhstan

Grown as Lithuania 8% GDP Growth Rate

What would happen if Ukraine grew as

Romania

Slovak Republic

Estonia

Russia

Big Governments Weapons of Wealth Destruccon

Excessive taxa=on

Populism

Energy subsidies

Corrup=on Unbalanced social policy

Red tape

Adverse poli=cal selec=on

Wealth destruc=on

Bureaucracy

Government Expenditures as Share of GDP 2013 (IMF)

0%

10%

20%

30%

40%

50%

60%

70% 2008 2013

Budget Decit to GDP 1.1% 9% Public Debt to GDP 12.3% 45%

Spending

Pensions - 17 % of GDP Educacon 6.2 % of GDP Healthcare 3.7% of GDP Subsidies for energy: Pre-tax: more than 5% of GDP (equal to 12% of government revenues )

Post-tax: more than 11% of GDP (equal to 27% of government revenues )

Energy Intensity Electricity, Gas and Oil Consumpcon per Dollar of GDP

(Joules in millions)

0

2

4

6

8

10

12

14

16

18

(PPP)

Natural Gas Consumpcon Germany vs Ukraine

Germany Ukraine

Total consumpcon, bln m3 79 53 Total produccon, bln m3 12 20 GDP (PPP), bln USD 3 378 333 Populacon, mln 81 45 Gas to create $1 GDP, m3 0.02 0.16 Household consumpcon, bln m3 24 16 Transformacon/industry, bln m3 47 32 Gas to create $1 of GDP, m3, without households

0.01 0.1

Hospital Beds by Country 1999-2012 (per 1,000 people)

0 2 4 6 8 10 12 14

New Zealand Georgia

USA Canada Israel

Australia Latvia

Estonia Moldova Romania Bulgaria Lithuania Ukraine Russia Belarus

1999

2012

Reduccon of Hospital Beds (Percent) 1999-2012

0% 10% 20% 30% 40% 50% 60% 70%

Ukraine Russia Belarus Bulgaria Romania

USA Canada

Moldova Estonia

Lithuania Latvia Israel

Georgia Australia

New Zealand

Ukraine in Internaconal Rankings

Corrupcon Percepcon Index 144 Doing Business 112 Easiness of Paying Taxes 164 Press Freedom 131 Global Compeccon Index 84 Index of Economic Freedom - 155

Bureaucracy Level: Ukraine VS Georgia

Ukraine Georgia Documents to export: 6 4 Time to export (days): 29 9 Documents to import: 8 4 Time to import (days): 28 10 To start a business (days): 21 2 To register property (days): 45 2

Ministry of Economic Development, Georgia 2004

Before Restucturing

21 departments 26 agencies 2492 employees

ARer Restructuring

12 departments 12 agencies 600 employees

50% of the government agencies was closed 15-fold increase of the average salaries Complete turnaround of the police forces

Which Is Export-Oriented Country? China:

GDP (nominal) - $8 227 billion GDP (PPP) - $12 610 billion Total export - $2 210 billion Export share in GDP (nominal) - 26% Export share in GDP (PPP) - 18%

Ukraine: GDP (nominal) $176 billion GDP (PPP) - $335 billion Total export - $70 billion Export share in GDP (nominal) - 40% Export share in GDP (PPP) - 21%

Ukraine vs China in Europe China:

Chinas export to EU is 16% of total export Urban employment 371 million people Industry output 46% of GDP 27 million people is engaged in export to EU From Shanghai to Berlin 8400 km

Ukraine Urban employment - 18 million people Ukraine needs 13.5 million people to be engaged in export to

subsctute half of Chinas export to EU From Kiev to Berlin 1200 km

To Do List

Thieves in jail Cut bureaucracy Cut red tape Reduce taxes Kill subsidies Put Maastricht criteria in the Consctucon Create Currency Board Privacze

!

March 2014