Investors are watching President Volodymyr Zelenskiy’s approach to land reform as an indicator of his commitment to a reform agenda that carried him to a landslide election victory in April.
Zelenskiy’s party is pushing legislation through parliament to remove a moratorium on the sale of agricultural land that has stood since 2001.
It was a bold move in the face of protests inside and outside parliament, and drew qualified praise from the World Bank and the European Union.
The government says it will add 2-3 percentage points to growth in its first year as it unleashes the pent-up potential of what is already one of the world’s biggest grain exporters.
However, in answer to fears that foreigners will muscle out poorer Ukrainians in purchasing plots, Zelenskiy added a rider: the issue of whether foreigners could buy would be decided by referendum, and not before 2024.
Alexander Rodnyansky, an economist at Britain’s Cambridge University and chief economic adviser to Prime Minister Oleksiy Honcharuk’s government, said the move would be “detrimental to growth, our investment climate”.
“If there is no foreign competition, local oligarchs are mechanically granted an advantage (or given a privilege) at obtaining land, especially because they are the least financially constrained and most powerful agents in the economy,” he said.