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Cabinet of Ministers has approved the concept of economic development of Donetsk and Luhansk oblasts

Published 23 December 2020, at 13:36

Today, on December 23, 2020, at its meeting the Cabinet of Ministers of Ukraine has approved the concept of economic development of Donetsk and Luhansk oblasts.

"I would like to emphasize that we are talking about addressing issues of socio-economic nature in the Government-controlled area of Donetsk and Luhansk oblasts. This concept will form the basis for the Strategy of economic development of Donetsk and Luhansk oblasts. Therefore, first we are talking about the Government-controlled area. Currently we have room for experiment and establishment of the grounds for the international community to begin to consider the future Strategy of economic development firstly of this region, and then the other regions of Ukraine as part of its own economic policy," said Deputy Prime Minister of Ukraine Oleksii Reznikov.

He noted that by 2014, Donetsk and Luhansk were extremely powerful industrial and agricultural regions. But as a result of the armed aggression of the Russian Federation, these territories were destroyed. "Like I said the economic losses are numerous. Experts estimate that the minimum economic recovery of Donetsk and Luhansk will require about 20 billion dollars. These figures are approximate, but the only thing that is clear right now is that they are astronomical, and it is impossible to solve these issues at the expense of the state budget, donors or regular loans. Only investors are capable of it," Reznikov added.

He explained that the approach of the Concept of the future Strategy was based on establishment of opportunities and incentives for investments through:

  1. Designation of priority development territories and clusters;
  2. Introduction of tax incentives in the form of directing a part of corporate profits to reinvest in their own development;
  3. Dissemination of international commercial arbitration standards;
  4. Military-political risk insurance;
  5. Infrastructure development.

"Creating employment opportunities and community capacity development are the priorities. We are talking about tens of thousands of job places. The future Strategy, which will be developed on the basis of current concept, will be fully in line with the logic of the decentralization reform, which was implemented largely with the support of European partners. Western investments, together with domestic ones, may play a vital role in transforming regions into the engine of economic development. And when investors see that even on risk areas, inter alia near the contact line, they can work effectively, develop and gain efficiency, then they will definitely see the rest of Ukraine as attractive for them. And it depends on us whether the future Strategy will be successful. I thank my colleagues for their support," said the Deputy Prime Minister of Ukraine.

The concept was supported with one day for technical and legal corrections together with the Ministry of Finance and the Ministry of Economy.

"A matter of fact, I will open the veil a little bit. NJSC Naftogaz of Ukraine launches a project to develop Yuzivska gas field. Most of the site is located in Donetsk oblast. This is a big investment project, which fits perfectly into the key principles of our concept. After all, it is Ukrainian investments, additional taxes and job places, community development, and in the future international investments," summed up Oleksii Reznikov.

Let us recall, that in pursuance of the Government's decision to adopt the Concept, the Ministry for Reintegration of TOT plans to develop a Strategy of Economic Development of Donetsk and Luhansk oblasts based on 42 international cases and submit it to the Cabinet of Ministers for approval by April 2021.

The future Strategy of Economic Development of Donetsk and Luhansk oblasts will focus primarily on the needs of the people and the territorial communities in which they reside.