Ukraine was ranked 150 in the rating of 2018 Economic Freedom Index by the Heritage Foundation.
“Ukraine’s economic freedom score is 51.9, making its economy the 150th freest in the 2018 Index. Its overall score has increased by 3.8 points, reflecting improvements in eight of the 12 economic freedom indicators and particularly significant improvements in monetary freedom and investment freedom,” the report on Ukrainian economics said.
However, Ukraine is ranked last among 44 countries in the Europe region, and its overall score is below the regional and world averages.
At the same time, the review acknowledged Ukraine’s progress in reforms to make the country more prosperous, democratic, and transparent, given Russia’s 2014 occupation of Crimea and ongoing aggression in the eastern part of the country that badly damaged economic growth.
The review emphasized that more improvements are needed, including fighting corruption, developing capital markets, privatizing state-owned enterprises, and improving the legislative framework and the rule of law.
Corruption in the judicial system is viewed as one of the serious problems. “Judges are largely seen as protectors of business and other powerful sources of influence. Corruption remains a serious problem for Ukraine, and progress on increasing accountability is quite slow”.
The tax system is also among the weak points of the economy. “The top individual income tax rate is 20 percent, and the top corporate tax rate is 18 percent. Other taxes include value-added and property taxes. The overall tax burden equals 35.5 percent of total domestic income. Over the past three years, government spending has amounted to 42.8 percent of total output (GDP), and budget deficits have averaged 2.6 percent of GDP. Public debt is equivalent to 81.2 percent of GDP”.
Apart from that, the political instability continues to compound regulatory uncertainty in commercial transactions. “Ukraine has a well-educated and skilled labor force, but the labor code is outmoded and not enforced consistently. The government has reduced energy subsidies and is ending some special tax breaks for agriculture,” the report said,
The rating reviews the economies of 180 countries. Hong Kong, New Zealand, and Singapore are considered the best for economic freedom, while Cuba, Venezuela and North Korea are seen as the worst.