UKRAINEINVEST ISSUES THE BUSINESS WEEK, A FREE ON-LINE PUBLICATION CONTAINING A WEEKLY SUMMARY OF IMPORTANT BUSINESS NEWS IN UKRAINE, FOR 23 APRIL, 2018.
Business expectation at seven year high
Business expectations at 7-year high. Business expectations have reached a 7-year high, the National Bank of Ukraine (NBU) reports. Respondents from Ukrainian corporations, especially from processing businesses, are increasingly optimistic about all areas of the business expectation index. The real growth of Ukraine’s gross domestic product was 2.5% in 2017, according to the State Statistics Service, exceeding preliminary estimates of 2.2%. Inflation in March dropped to 13.2% in annual terms, compared to 14% in February.
- Ukrainian agrarian exports reach $2.8 billion in January-February 2018. Exports of Ukrainian agricultural products in January-February 2018 reached $2.8 billion, according to Deputy Agrarian Policy and Food Minister of Ukraine on European Integration OlhaTrofimtseva. «During the first two months of the current year, Ukrainian agrarian exports increased by $102.1 million compared to the corresponding period in 2017 and made up $2.8 billion. The chief products exported remained grains with a share of 35.3%, vegetable oils – 24.1%, and oilseeds - 12%,» she said. The export of poultry meat grew by $29 million, eggs - by $11.4 million, butter - by $20 million, chocolate - by $7.5 million, and wines - by $6.1 million.
- India, Spain, The Netherlands, Egypt and Italy currently top the importers of Ukraine’s agricultural products. “At present the EU accounts for 36.5% of our agricultural export,» Trofimtseva said. During the reporting period, the export of Ukrainian products to the EU grew by over by 28.1%, or by $224.7 million, and reached $1.025 billion. India was the largest importer of Ukrainian agrarian and food products, to the value of $335.9 million. The others in the top five countries importing Ukrainian agrarian products were Spain ($201.1 million), the Netherlands ($199.3 million), Egypt ($189.6 million), and Italy ($185.6 million).
- Finance minister doubts that land reform will be approved before elections. Finance Minister OleksandrDanyliuk considers that parliament will not address the issue of land reform before the next elections (due in 2019) because it is too contentious. Speaking in Washington, he emphasized the need to prepare society in advance with a public information campaign.
Banking & Finance
- Local budgets are expected to grow to UAH 230 Billion as a result of the decentralization reform. Deputy Prime Minister – Minister for Regional Development, Construction, Housing and Utilities, HennadiyZubko has told regional officials that “in January-March 2018 the general fund of local budgets received UAH 51.6 billion,” up by UAH 10 million over the corresponding period in 2017. Above average revenue growth rates have been recorded in 13 regions, the highest being in the Poltava, Sumy and Volyn oblasts.
- Decentralization will yield results in rural areas. Prime Minister Groysman says new administrative and financial opportunities introduced by the decentralization reform, as well as government agrarian support programs will help create new plants and jobs. Support programs include cheap loans, and partial compensation for the cost of equipment, the government’s press service reports.
- Sanctions against Russia not hurting Ukrainian currency market. The devaluation of the Russian ruble following the imposition of new sanctions by the U.S. has not adversely affected the Hryvnia, according to bankers polled by InterfaxUkraine. Board Chairman of RwS Bank VladyslavKravets explained: «For the first time in 25 years of Ukraine’s independence, the sharp decline in the ruble’s exchange rate has not adversely affected the hryvnia exchange rate, which, in turn, also attests to achieving greater energy independence of the country.”
- Ukraine hopes to receive a new tranche from the International Monetary Fund (IMF) of $2 billion in May or June 2018 if the country meets the conditions for cooperation under the Extended Fund Facility (EFF), Ukrainian Finance Minister OleksandrDanyliuk said in Washington. Last week the National Bank of Ukraine (NBU) also predicted that a new tranche could be forthcoming, but in the early third quarter this year. The tranche would shore up the National Bank of Ukraine’s (NBU) reserves and help the country attract loans to offset the budget deficit.
- Ukraine cutting ties with the CIS. President Poroshenko stated last week at the 11th Kyiv Security Forum that Ukraine will officially terminate its cooperation with the Commonwealth of Independent States and close its representative offices at the relevant institutions in Minsk. He also called on foreign partners “to reconsider contractual obligations with the Russian Federation, especially in sensitive areas of cooperation”.
- Economic cooperation programme with Russia to end. Prime Minister Groysman has announced that the government will terminate the program of economic cooperation with Russia established in 2011. He said on 112 Ukraine TV channel that this was a complicated but necessary move. «We are working to redirect our economy from the binding one that Russia constantly imposed on us. It used to bind us, in fact, as a raw material supplement to its economy. And after its aggression our industry began to reorient.»
- Imports exceed exports by $741.1 million, the State Statistics Service reports. The trade shortfall decreased by $249.7 million over January and February this year compared with the same period in 2017, when this index was $491.4 million. Exports increased by 17.9% compared with January-February 2017, amounting to $7376.8 million. Imports grew by 20.3% and reached $8117.9 million.
- Republic of Korea considering investing in the Lviv region. During a visit to the resort town of Truskavets, the South Korean ambassador to Ukraine and Honorary Consul in Lviv discussed the possibility of building a state-of-the-art medical center there as well as the water supply issue in the region, Ukrinform reports.
- European Commission to allocate EUR 268 million for energy saving program in Ukraine. The European Union has launched a five-year program to support energy efficiency in Ukraine and co-financing of the Energy Efficiency Fund. The agreements were reached on 18 April in Kyiv by the Ukrainian government with the delegation of the European Commission. «The result of the talks was signing of the agreement on the allocation of EUR 268 million from the European Commission for the Ukraine Energy Efficiency Programme. The EU’s contribution will total EUR 50 million,» the government’s portal reported.
- Energy efficiency is a priority for EBRD in Ukraine. In 2017 the European Bank for Reconstruction and Development (EBRD) directed 70% of all funds provided to Ukraine to energy efficiency projects. Last year it invested EUR 800 million in Ukraine, up by 37% from the previous year. Since the start of its operation in Ukraine 25 years ago, EBRD has invested a total of $12 billion in the country, some EUR 3.5 billion in the last four years. EBRD official Sergiy Maslichenko told a press conference: «The financing of energy efficiency is a priority for the EBRD’s activities,” Ukrinform reports. Last week, the Cabinet of Ministers established an interim advisory body - the Coordination Council on the Implementation of Reforms in the Fuel and Energy Sector headed by Prime Minister Volodomyr Groysman.
- Brussels and Berlin agree to ensure transit of gas via Ukraine if Nord Stream-2 is built. German Federal Ministry for Economic Affairs and Energy Peter Altmaier and European Commission Vice-President for Energy Union Maroš Šefčovič made the announcement after talks in Berlin, Ukrinform reports.
- Germany reiterates its position on NordStream-2. Altmaier echoed German Chancellor Merkel’s acknowledgement last week that Nord Stream-2 «is a project with a high political context.» While upholding “the possibility and necessity of such an infrastructure project,” he elaborated, “on the other hand” the German government recognizes the need to ensure “the legitimate interests of Ukraine.» «Our goal is, of course, to further uphold the state sovereignty of Ukraine, including safe and sufficient energy supply,» he said.
- Seven companies bid in tender to build two-level interchanges on Kyiv-Odesa, Kyiv-Chop highways. The State Automobile Roads Agency, Ukravtodor, has opened tender bids for contractors to build two-level traffic interchanges on M-05 Kyiv-Odesa and M-06 Kyiv-Chop highways as part of the implementation of the EBRD project «Pan-European Corridors Project/European road of Ukraine II, Improvement of traffic condition of the roads at approaches to Kyiv.» The following companies have submitted bids: FermakInsaatTaahhut A.S. (Turkey), China Road and Bridge Corporation (China), СП PBDiM Sp. z o. o. (Poland) and UkrainianPolish Company with foreign investments UPS LLC (Ukraine), JSC Euro-Asian Construction Corporation EVRASCON (Azerbaijan), Sinohydro Corporation Ltd. (China), AlkeInsaatSanayeveTicaret A.S. (Azerbaijan), and KaunoTiltai LLC (Lithuania).
Science & IT
- Ukraine will invest in modernizing its existing missile technology to maintain competitiveness in the global space market, National Security and Defense Council Chairman, Oleksandr Turchynov says. Ukraine maintains its place as one of 10 countries that is space-faring.
- Government creates special commission on population census. The Cabinet of Ministers has endorsed the establishment of an interdepartmental commission on an all-Ukrainian population census. The decision on the next census had been postponed to 2013, and then to 2016, and then 2020. First Deputy Prime Minister - Minister for Economic Development and Trade Stepan Kubiv noted that the last census of population in Ukraine was conducted in 2001, and currently it is «an extremely urgent issue». The size of the population recorded in 2001 was 48.457 million, but much has changed since then.
- More than 100,000 tourists are expected in Kyiv when it hosts the 2018 EUFA European Champion’s League Final on 26 May. The capital’s mayor Vitaliy Klychko was in Nyon, Switzerland, for the draw for the semi-final of this major soccer competition. At the ceremony on 13 April he promoted Kyiv as a modern European city undergoing dynamic development and invited visitors to sample its history, culture and recreational facilities.
- Chornobyl is a growing tourist attraction. Last year 60,000 tourists visited the site of the worst nuclear catastrophe in history, which occurred in April 1986, and the exclusion zone around it. Anton Taranenko, the chief of Kyiv’s Tourism Department told a press conference that other popular tourist spots around Kyiv are the Pyrohiv open air museum of traditional Ukrainian architecture and way of life, and the former opulent residence of ousted President Viktor Yanukovych in Mezhyhirya, which has been transformed into a Museum of Corruption.
- Boryspil airport wants to boost passenger flow by 19% in 2018. The state-owned enterprise aims to handle around 101,500 flights this year with a volume of 12.55 million passengers, Interfax-Ukraine reports.
- Ukrzaliznytsia has improved its financial results and achieved profitable growth, according to its acting Board Chairman YevhenKravtsov and Ernst & Young auditing company. “One of the world’s best auditing companies has confirmed the right direction and implementation of the strategy for reforming PJSC Ukrzaliznytsia,” Kravtsov writes on his Facebook page. “We are entering a new level of economic stability. Losses in 2016 were estimated at billions and amounted to UAH 7.3 billion, at present we have a profitability index of UAH 100 million per year. In 2017, the financial result of the company improved by UAH 7.4 billion”. Ukrzaliznytsia’sEBITDA grew by UAH 390 million, “which positively affects the perception of the company in the western financial markets.» Ukrzaliznytsia also significantly increased capital investments up to UAH 0.9 billion, effecting “the largest update of its rolling stock and equipment for the last four year.»