Land Bank Project Set for Major Expansion
Ukraine's State Property Fund (SPF) is pushing forward with plans to enlarge its Land Bank project, aiming to increase the area of state-owned land available for sublease through public auctions. The initiative is designed to boost state budget revenues. SPF Head Dmytro Natalukha announced that the total land bank could grow to roughly 120,000 hectares, marking a substantial step forward for the program.
Currently, the first pool of the Land Bank includes around 90,000 hectares of state land. The Fund intends to assemble an additional 30,000-hectare pool by the end of the month. This expansion is expected to nearly double the budget revenue generated from leasing state agricultural plots. Dmytro Natalukha explained:
“So our land bank will expand to about 120,000 hectares. That means more land traded on Prozorro and more money flowing into the budget.” - Dmytro Natalukha
Resistance and Opportunities
The Land Bank project has been running for two years, but its implementation has faced pushback from the National Academy of Agrarian Sciences (NAAS). This institution has been the most vocal opponent, resisting land transfers through lawsuits and obstruction. Dmytro Natalukha commented:
“There were lawsuits and sabotage, but this process is now irreversible and just needs to be pushed through.” - Dmytro Natalukha
The State Property Fund is also exploring the possibility of issuing land bonds backed by long-term sublease contracts. Natalukha emphasized that the state has no intention of interfering in setting market rental rates: “We cannot and do not want to influence it. This is a clear example of how the market itself creates both price and demand.”
Additionally, the SPF continues to overhaul the leadership of state-owned enterprises following audits. Over the past four months under the new team, dozens of competitions for executive positions have been announced, and many enterprises have seen changes in directors and supervisory board members.
The expansion of the Land Bank project could significantly strengthen Ukraine's financial stability by increasing state budget revenues. It also represents a key step in developing the land lease market, though opposition from NAAS may complicate progress. The project's success will depend on the State Property Fund's ability to overcome legal and administrative hurdles and effectively manage resources to attract more investors to this sector.
As the State Property Fund advances its plans to expand the Land Bank, it's essential to consider the broader context of its assets. Recent revelations indicate that a significant portion of the Fund's holdings, approximately 80%, are classified as non-liquid. This situation raises questions about the overall efficiency and management of state resources, highlighting the need for strategic initiatives like the Land Bank project. For a deeper understanding of this issue, read more about the challenges faced by the State Property Fund regarding its non-liquid assets.