World Bank welcomes Ukraine president's comments on corruption law

By Alessandra Prentice

KIEV (Reuters) - The World Bank is encouraged by signs from the Ukrainian president that a draft law to create an anti-corruption court could be revised following international criticism, the lender's Ukraine director Satu Kahkonen said.

Ukraine's Western backers want the authorities to establish an independent court to handle corruption cases as a condition for more aid. Critics of President Petro Poroshenko accuse him of dragging his heels over establishing such a court.

The World Bank and the International Monetary Fund wrote to Poroshenko's office this month to express concern over a draft law they said did not meet the recommendations of a European rights and legal watchdog.

On Tuesday, Poroshenko told foreign diplomats the legislation could be amended after a first vote in parliament to make it more effective.

"I very much welcome that statement," Kahkonen told Reuters by telephone on Wednesday.

"Looking forward, whether I'm going to be optimistic or pessimistic, will depend very much on what is going to happen with the anti-corruption court and land reform," she said, when asked about the general outlook for Ukraine.

Establishing the court and lifting a moratorium on the sale of farmland are among reforms Ukraine must implement to qualify for further World Bank funding worth $800 million.

"These are two major reforms that many people are watching - investors are watching. These are two reforms that actually do matter for investment and for investors to come in and for growth to really take off in Ukraine," Kahkonen said.

Since a 2013-14 pro-European uprising, Ukraine has received over $5 billion from the World Bank and $8.4 billion from the IMF among other backers.

However disbursement was held up last year over perceived backtracking on reform commitments. Kahkonen said the World Bank had been working with the government on land reform over the past year, reviewing and providing technical assistance with draft legislation.

The issue is sensitive in Ukraine - once the bread basket of the Soviet Union - and many doubt the authorities would risk political capital by pushing the reform through parliament ahead of presidential and parliamentary elections in 2019.

"The preparatory work for land reform has quietly moved forward and is very well-advanced," Kahkonen said.

"The indications we had prior to the holidays was that this would be on the government agenda in early 2018," she said, recommending the government improve the way it got its message across to the public to dispel widespread misconceptions about the reform.

She said the World Bank was also still working with the government to address international backers' concerns about a landmark pension reform passed last October.

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