- United Business Front Forms to Defend Central Bank Independence
- Smoliy’s Resignation Forces Finance Ministry to Cancel $1.75 Billion Bond Offer
- IMF, EU Watch to See If Ze Keeps Central Bank Independent
- EIB Loans €50 million to Kyiv’s City
Foreign investors, national investors and international financial institutions closed ranks yesterday to protest the resignation of Yakiv Smoliy, governor of the National Bank of Ukraine. The central bank chief told President Zelenskiy last Wednesday evening that he was resigning in the face of “systematic political pressure.”
“The NBU is the most trusted institution among foreign institutional investors and the business community,” joint statement by five leading business groups, including the American and European Chambers and the Union of Ukrainian Entrepreneurs. “The resignation of Yakiv Smoliy due to political pressure sends the wrong message to the business and investment communities.”
As analysts worried that the resignation could derail the $5 billion IMF deal, the resignation claimed one concrete victim: the Finance Ministry’s placement of $1.75 billion of Eurobonds. Until the offering was scrapped Thursday morning, the bonds were four times oversubscribed and yields had dropped 50 basis points, to 7.3%.
Finance Minister Serhiy Marchenko told reporters that the government’s policy on future Eurobond offerings is “to take a certain a pause, and then decide what and how we will do.” He called Smoliy’s resignation “absolutely extraordinary.” For the international bond launch “there could not be a worse moment” for the resignation news.
Exchange markets reacted poorly to the surprise resignation of Smoliy, seen as a key to Ukraine’s macro-economic stability. The hryvnia fell 1.5%, to 27.18/dollar, its weakest level in three months. To stem the hryvnia’s slide, the central bank sold $150 million during the day, $100 million in the first hour. Naftogaz also entered the interbank market and sold $50-100 million, dealers told Interfax-Ukraine.
President Zelenskiy accepted Smoliy’s resignation and the Rada Finance Committee approved it. The Rada is to debate the resignation. If a simple, 226-member majority of Rada votes to approve Smoliy’s resignation, the bank’s first deputy governor, Kateryna Rozhkova, will serve as acting governor. Winning consensus approval of a successor will be difficult as the government no longer has a working parliamentary majority. Concord Capital’s Alexander Paraschiy writes: “We believe it’s very likely that parliament will collect enough votes to approve Smoliy’s resignation.”
Rozhkova, who may take over the central bank as acting governor, is no friend to corrupt bank owners, writes Anders Aslund, the Atlantic Council economist. “She has a reputation as a true iron lady. It was Rozhkova who, together with Valeria Gontareva, closed down more than 100 of Ukraine’s 180 banks from 2014 to 2017….Prior to this industry clean-up, it was commonplace for banks in Ukraine to have banking capital equal to about eight percent of banking assets, with owners taking 80-90 percent of assets for themselves as “loans” never to be paid back. Since 2014, the NBU has put a stop to such practices, and the former beneficiaries are not happy about it.”
An IMF spokesman reacted to the resignation, saying in Washington: “The independence of the NBU is at the center of Ukraine’s IMF-supported program, and why it must be maintained under his successor.” With an IMF team due to arrive here in coming weeks for a planned review of the June deal, analysts look for clues as to the future of $10 billion in international financial institution aid to Ukraine this year.
The EU’s €1.2 billion macro-financial assistance program for Ukraine “could be jeopardized” if the IMF considers its program with Kyiv “off-track” because of Smoliy’s resignation, a European Commission spokesperson in Brussels tells EURACTIV. “The existence of – and adherence to – an IMF program is an essential precondition for disbursements” under EU macro-financial aid programs, the Commission spokesperson said.
Separately, Peter Spano, spokesman for EU foreign affairs, said Smoliy’s resignation “under the influence of likely political pressure sends a worrying signal.” Referring to Ukraine’s central bank, Spano, a Slovakian, said: “Undermining the activities of this important institution would jeopardize confidence in and support for the reform program of Ukraine.”
In Kyiv, G7 ambassadors tweeted about the independence of the central bank: “To undermine this crucial institution would be a big step back and jeopardize the credibility of and support for Ukraine’s reforms.”
Western analysts are caustic about the resignation:
Melinda Haring, deputy director of the Atlantic Council’s Eurasia Center wrote: “With the resignation of the supremely competent governor of the National Bank of Ukraine, the reform project in Ukraine is dead or on serious life support.“
Roman Waschuk, former Canadian Ambassador to Ukraine, wrote in the same Atlantic Council blog: “As foreshadowed in Zelenskiy’s hit TV series ‘Servant of the People,’ we are now witnessing mounting resentment at Western lecturing and financial strictures, which are derided as ‘external control.’ This has culminated in effectively telling the IMF and international investment community to go to hell, after having first pocketed an initial IMF tranche of USD 2.1 billion.”
Andy Hunder, president of the American Chamber of Commerce in Ukraine, wrote: “Some investors have already put new investments on hold, as the decisions of the government do not correspond with their stated intentions to attract FDI. Businesses are now concerned about the future independence of the National Bank of Ukraine and the continuation of the country’s IMF program.”
With the media filled with lists of potential central bank governors, Timothy Ash warns: “If the candidate is not sufficiently reform minded, the risk is the entire NBU board resigns – and the IMF pulls the plug on the USD5bn IMF Stand By Arrangement.”
The European Investment Bank has agreed to loan €50 million to UNIT.City innovation park for the construction of four buildings totaling 70,000 square meters at the complex in northwest Kyiv’s Lukianivska district. Vasily Khmelnitsky’s UFuture Group, owner of UNIT.City, will finance the rest of the €110 million project. At buildout, at the end of 2023, the new ‘campuses’ are to provide workspaces for 15,000 tech workers at tenant companies.
With a non-profit IT education academy at its core, “the project will contribute to creating one of the biggest hubs merging dedicated infrastructure with an innovation ecosystem for IT and technology companies in Central and Eastern Europe,” summarizes UNIT.City. “It will put together start-ups and IT training, high technology companies and R&D centers, incubators and accelerators within a 25 ha inner-city site.”
Dragon Capital is investing $5 million for the purchase and renovation of a five-story office building to create a permanent home for the Kyiv School of Economics. With the first students expected in September, the building will have modern lecture halls, a conference hall, a student lounge and the capacity to train 600 students at a time. Located at Mykola Shpak 3, between Peremoha Avenue and the US Embassy, the 4,441 square meter building also will house the Center for Economic Strategy and VOX Ukraine.
The building will be named after Dragon, a longtime supporter of KSE. Tomas Fiala, Dragon’s CEO, said: “We are confident that Kyiv School of Economics provides the best economic education in Ukraine that is on a par with leading global universities.”
Tymofiy Mylovanov, KSE president and former Economy Minister, said: “The School has not had a home for 25 years, and now, thanks to Dragon Capital, we will be able to give our students a sense of true alma mater and create a platform for the development of economic thought in the country.”
- Central Bank Chief Quits
- Smoliy’s Departure Could Hit $5 billion IMF Deal, Derail Sale of $1.7 billion Eurobonds
- Dragon CEO Fiala: ‘Last Straw’
- Ze Says All Will Be OK
- Rada to Vote Casino Bill
- Crackdown Starts on Speeders and Drunk Drivers
- Flights Re-Start to Turkey and Poland
In a shock move, the head of Ukraine’s central bank unexpectedly resigned last night, blaming “systematic political pressure” that “makes it impossible for me, as the Chairman, to effectively manage the National Bank.” A Rada committee is expected to review the resignation by Yakiv Smoliy. If accepted it would go to a full Rada vote.
Running the central bank for the last three years, Smoliy is seen by foreign investors as an anchor for Ukraine’s macro-economic stability. He and his team are largely credited with Ukraine’s strong numbers: 2% inflation, $25 billion reserves, and a stable exchange rate through corona crisis. Over the last year, his team slashed Ukraine’s prime interest rate by two thirds – from 18% to 6%.
The resignation could rattle the $5 billion IMF Standby Arrangement, approved only three weeks ago. On approval of the program, after nine months of negotiations, IMF Managing Director Kristalina Georgieva, made three calls for continued central bank independence in a 371-word statement. She wrote June 9: “The National Bank of Ukraine (NBU) has skillfully managed monetary policy during a very challenging period. Central Bank independence should be preserved.” The IMF deal unlocks billions more in soft loans from the World Bank and the EU.
Timothy Ash emailed from London last night: “Macro stability is now under threat…There must now be huge question marks about the future of the IMF program. The Fund will want to see a credible replacement for Smoliy.”
The votes are probably in the Rada to accept the resignation. One faction of President Zelenskiy’s party is loyal to Igor Kolomoisky, the oligarch fighting in courts to reverse nationalization of his former bank, PrivatBank. In 2016, the bank was bailed out with $5.5 billion in public money. Return of PrivatBank is a red line for the IMF. Pro-Russian TV stations, about half of Ukraine’s media market, campaign against the IMF. In a nationwide poll completed two weeks ago for the Kyiv International Institute of Sociology, 61% of respondents said it is better not to cooperate with the IMF and to receive new loans. Since April, respondents in favor of working with the IMF dropped from 32% to 24%.
Zelenskiy issued a statement last night: “Ensuring the central bank’s independence remains our priority.” He said discussions about the central bank must be “professional.”
Political pressure may have come to a head last Tuesday when Smoliy vowed to fight the central bank Board to win renewal of the 7-year contract of his deputy, Oleh Churiy. Only six weeks ago, Smoliy told BBC Ukraine that he intended to stay until the end of his own seven-year contract. He said: “My tenure ends in 2025. That means that there’s still time and there are a lot of tasks that we need to do.”
Smoliy’s resignation went public three hours after terms were announced for Ukraine’s big return to the Eurobond market. Ukraine seeks to place $1.75 billion worth of 12.5 year bonds with an annual yield of 7.3%. Yesterday morning New York time, these terms were passed to Bloomberg as ‘final.’ But investors may have second thoughts overnight. Goldman Sachs International and J.P.Morgan are the bookrunners.
Timothy Ash writes again from London last night: “Questions being asked whether this deal can be closed given the news of the resignation of the central bank Governor. Is this material news which should have been revealed to investors in the course of the marketing today?….The danger here for Ukraine is that investors will be sold bonds which could immediately trade down very significantly on this news. Some investors may decide to walk away prior to settlement.”
A final bill legalizing gambling is to be passed by the Rada, David Arakhamia, chair of the Servant of the People faction told reporters. Gambling is to be limited hotels. Licenses are expected to become a major source of revenue for the government.
Of the $2.4 billion Covid-19 Anti-Crisis Fund, 54%, or $1.3 billion has been allocated for road construction and maintenance, Prime Minister Shmyhal writes on Facebook. After a Cabinet of Ministers meeting, Infrastructure Minister Vladyslav Krikliy said: “This is an additional 1,459 km of public roads this year.”
Kyiv’s new tow trucks are towing illegally parked cars at the rate of 100 a day. From April through June, 9,065 cars were towed from central Kyiv, ringing up $185,000 in parking fines. For drivers who are slow learners, the traffic police are marking illegal spots: “A place for lovers of fines.” July 1, Ukraine introduces a tougher punishment for drivers for driving while intoxicated. In particular, for offending drivers, the amount of fines increases significantly.
Drunk driving now is a criminal offense in Ukraine. Maximum fines for first time offenders tripled, to $1,275. Repeat offenders face a fine of $1,900 and loss of license for three years.
Speeding fines would increase 6-fold, to $130, under a bill that the government plans to submit to the Rada in September, Anton Gerashchenko, Deputy Internal Affairs Minister, told reporters. Last week, Ukraine’s new speed cameras clocked 223 cases of cars moving faster than 170 kph (106 mph). The champion was a Mercedes Benz recorded traveling at 210 kph (130 mph) on the Kyiv-Kharkiv highway. The top repeat offender was the driver of a Mitsubishi Lancer. He was clocked 22 times in one week traveling at 170 kph in a 110 kph zone.
Flights resumed from Ukraine to Turkey and Poland. Ukrainian tourists can fly to Turkey without self-isolation and testing. Last Tuesday, Poland’s Council of Ministers announced that they will not follow the EU’s ban on visitors from Ukraine. Last week, Wizz Air flew from Kyiv Sikorsky to Krakow, Warsaw and Wroclaw.
Polish farmers want Ukrainian workers to come back, Poland’s Minister of Agriculture and Rural Development, Jan Krzysztof Ardanowski, told Ukraine’s Ambassador to Poland, Andriy Deshchytsia, in a special meeting in Warsaw on Monday. The Minister said: “We want the citizens of Ukraine to come willingly to work in the agricultural and consumer sector of Poland, because the needs for are very high.”
Wizz Air opened its new base in Lviv yesterday, stationing one Airbus A320 at the airport. Today, Wizz Air will fly from Lviv to five EU cities. Infrastructure Minister Vladyslav Krikliy said yesterday that Ukrainian tourists also can fly to: Albania, Croatia, Egypt and Montenegro.
- Ukraine Returns Today to Eurobond Market
- EU Closes to Ukrainian Tourists, Probably for Summer
- EU Employers Struggle to Bring in Ukrainian Workers
- Kyiv Sikorsky Airport Cuts Staff in Half
Four months after the start of the corona crisis, Ukraine returned to the Eurobond market with an offer to place up to $750 million worth of 12-year Eurobonds. The money would go to repurchasing Eurobonds maturing in 2021 and 2022. Goldman Sachs International and J.P.Morgan are acting as dealer managers. The deal is to close on Monday.
With the bonds trading slightly above par, the government evidently hopes to save money with a low interest rate on the new bonds. Ukraine’s 12-year bonds currently have yields of 7.25%, nearing the pre-crisis levels of February. Depending on market demand, the government is free to go higher – or lower – than $750 million.
Concorde Capital’s Alexander Paraschiy writes: “Following the arrival of IMF and EU money, this is indeed a good time to offer new Eurobonds….The only explanation for such debt liability management is the government’s possible attempt to reach a record-low interest rate on the new bonds. So we will look forward to seeing whether it will succeed in that.”
Facing the weakest investor demand since late May, the Finance Ministry sold only $94 million worth of hryvnia bonds yesterday. Interest rates were little changed from last week’s level and there was not enough demand to sell 9-month and 1-year bonds. For 2- and 3-year bonds, the weighted average rates were unchanged – 10.39% and 10.47% respectively.
The EU is closed to tourists from Ukraine, probably for the rest of this summer. With Ukraine’s corona infection rate 3.5 times higher than the EU average of 16/100,000, Ukraine did not make the ‘green’ list of 15 countries that the EU accepts. Scheduled to be updated every two weeks, the ‘red’ list also includes the US, Brazil and Russia.
Ukrainian workers, students and diplomats will be allowed to enter the EU. The ban does not apply to transit air passengers, traveling, for example, from the US to Ukraine via an EU airport. Rules do not apply to EU citizens and residents arriving from Ukraine, however place of residence will take precedence over nationality. Although countries can make their own decisions about opening their borders, all 27 EU nations, plus Switzerland, Iceland, Liechtenstein and Norway – are expected to comply.
Although new corona cases dipped over the weekend, a surge is expected in Odesa, Health Minister Maksym Stepanov predicted yesterday. Breaking out of quarantine, crowds of holiday revelers hit beaches, nightclubs and restaurants. “Not wearing masks, failing to observe social distancing and use hand sanitizers – all this leads to a spike in the COVID-19 incidence,” he told reporters. Noting that the national infection rate has jumped from 37/100,000 two weeks ago to 51/100,000 today, he said: “We have such a crazy growth rate over the past two weeks.”
“Poland Needs Migrant Workers. The Pandemic Has Kept Them Away,” headlines a Foreign Policy article from Warsaw. “Poland has become the European Union’s largest importer of foreign workers,” writes Maria Wilczek. The 2 million Ukrainians who have worked in Poland since 2014 are credited with 13% of GDP growth. She cites a blueberry grower in Olchowiec who hires 800 workers every harvest season. In 2014, the workforce was 90% Polish. Last year, it was almost all Ukrainian.
To cope with the corona emergency, Poland is tailoring 2-week quarantine rules to allow farm workers to take free corona tests and then work immediately under isolated conditions. Polish farmers are employing African university students and unemployed Filipino restaurant workers. But, Wilczek writes, they prefer Ukrainians, partly for linguistic and cultural affinities, partly for experience with agricultural work.
Finland plans to bring almost 9,000 Ukrainian workers to collect harvests this year, Finnish Migration Service representative Tuuli Huchtilainen tells Russia’s RIA Novosti. Last year, Ukrainians surpassed Estonians as Finland’s largest nationality for seasonal labor. The average monthly salary for seasonal work in Finland is €1,300 a month, triple the level in Ukraine.
Betting that the EU will re-open to Ukrainian travelers, Wizz Air announced yesterday that it will launch five new routes between the EU and three Ukrainian cities. Starting Sept. 1, Wizz Air will fly three times a week from Lviv and Kyiv Sikorsky to Pardubice, a Czech city 120 km east of Prague. Starting March 29, Wizz Air will launch flights from Odesa to Bologna, Rome and Milan Malpensa. A Kyiv-Salzburg flight that was to start today has been postponed until July 15 due to Austria’s extension of its ban on flights from Ukraine.
“We predict a slow recovery in demand for air travel and expect a return to the pre-quarantine level in a few years,” Levchenko writes. Last year, Kyiv Sikorsky handled 2.6 million passengers, 90% of them flying on Wizz Air. Until mid-March, when the coronavirus killed international travel, Wizz Air flew from Sikorsky to 28 EU cities.
On the Move:
Arub Banerji has been appointed World Bank country director for Belarus, Moldova and Ukraine. Previously, Banerji, an Indian national, was director for the European Union. Prior to joining the World Bank in 1998, Banerji taught at the Center for Development Economics at Williams College, Massachusetts. His predecessor in Kyiv, Satu Kahkonen, from Finland, is now country director for Indonesia and Timor-Leste.
- Asia Cooks With Ukraine’s Sunflower Oil
- Fruit and Veggie Growers Reorient from Russia
- Ukraine Feeds China Blueberries
- Pigs Will Fly
- Corona Hospitalizations Triple
Refined sunflower oil production is up 23% through May, compared to the first five months of last year, reports Ukroliyaprom, the vegetable oil industry group, citing the State Statistical Service. During the same time, the share of oils and fats in Ukraine’s overall food exports rose to 34%. Through May, Ukraine exported $2.7 billion of oils and fats, largely to Asia and the EU.
Sunoil prices remained firm through the coronavirus crisis, hitting $775/ton last week. Ukraine is the world’s largest sunflower oil exporter. With Asian demand strong, Ukraine next year may produce 3% more sunoil yoy, for a total of 6.9 million tons, forecasts APK-Inform agriculture consultancy. The sunflower seed harvest starts in two weeks.
Australia is expected to grab wheat market share from Ukraine in Southeast Asia this year, reports S&P Global Platts. After three years of drought, Australia expects to see its wheat harvest jump 79% to 26.7 million tons, just below Ukraine’s forecast crop of 26.9 million tons. Indonesia, the world’s second-largest wheat importer, is Australia’s northern neighbor.
Breaking Ukraine’s 3-month pause in business conferences, Grain Ukraine, will be held this week in Odesa. Trimmed to a one-day, invitation only, partly outdoor event at the Buddha Beach Resort Club, the July 10 conference will feature panels on the new land market law, the prospects for export quotas, trends in oil processing and new investments. “We decided to make the conference happen this year,” says Andriy Stavnitser, founder of Grain Ukraine and co-owner of TIS port. “The market, especially in times of crisis, needs to stay connected.”
The World Bank is loaning $200 million to Ukraine to facilitate a private farm land market by: creating a universally accessible state Agrarian Register, conducting an inventory of state lands, creating an automatic notification system for changes in the state land cadaster, and conducting satellite mapping of Ukraine. The loan is to fund the ‘Accelerating Private Investment in Agriculture’ program.
Ukrainian fruit and vegetable producers have almost completely re-oriented their exports away from Russia, reports EastFruit, a news site focusing on the trade of fruit and vegetables ‘east of the European Union.’ In 2013, 29% of Ukraine’s exports went to Russia. Now, EastFruit, reports: “According to traders, the real share of the Russian market in the supply of vegetables and fruits from Ukraine is from 3 to 5% in value terms.” Instead, destinations are: EU – 67%; Middle East – 14%; and Belarus – 7%.
Ukraine is now the world’s largest supplier of frozen blueberries to China, reports Produce Report. By increasing sales 5-fold this spring to $6 million, Ukraine edged out surpassing Canada, Sweden, Latvia, Belarus, Russia and Poland. By 2025, China is expected to surpass the US as the world’s largest producer and consumer of blueberries.
To attract foreign pig farmers, Ukraine’s Meat Industry Association has declared an ambitious goal of more than tripling the nation’s pig population to 20 million by 2025. Mykola Babenko, executive director of the Association, notes that that pork prices rose by 48% last year in the EU, while “hundreds” of pig farms in the Netherlands are receiving state aid to shut down due to concerns about air and water pollution. In the six years since African swine fever appeared in Ukraine, more than 2,000 small pig farms have closed. Only major investors can afford the sanitary measures needed to protect herds from the virus.
“Our goal is to help solve the problem of global pork shortage and make Ukraine one of the leading competitors in the meat market. Ukrainian chicken has already achieved global success, now it’s pork’s time,” Babenko writes in an essay picked by the Britain’s influential Pig Site. He promises: “Ukrainian and foreign farmers who have interest in pig farming projects [will see] return on investment rate of about 100% per year. We guarantee sustainable profits, sales, legal protection and comprehensive investment support.”
Ukraine’s livestock populations dwindle as households give up family cows and dairies do not pick up the slack, according to new animal census numbers from the State Statistical Service. On June 1, the yoy drops were: cows – down 6.6%, to 3.47 million; pigs – down 5.9%, to 6 million; sheep and goats – down 6.3%, to 1.5 million; and chickens down 1.5%, to 231 million.
With the drop in livestock, milk production was down 3.65% through May, to 3.6 million tons. Meat production was up 1%, to 1.4 million tons. And wool production was down by 10%, to 506 tons.
To start winterizing apartment buildings in the summer, the IFC has signed a deal with KredoBank and the Energy Efficiency Fund to provide loans to homeowners associations while their grant applications are being processed. Last October, the $235 million Energy Fund was set up with EU and IFC aid to modernize Soviet-era apartment building to cut heat losses. Lviv-based KredoBank, a unit of PKO Bank Polski Group, will provide bridge loans to jump start the work.
Since the corona crackdown eased in mid-May, corona hospitalizations have tripled, pneumonia cases have tripled and the daily death toll has doubled, to about 18, Health Minister Maksym Stepanov told reporters. With new positive cases running at about 1,000 a day – three times the rate of one month ago, the World Health Organization has put Ukraine in the list of countries with a high rate of Covid spread.
After a corona outbreak infected five people at Kyiv’s Troieschyna market on Friday, Mayor Klitschko hinted he might shut down the metro again. “If the number of patients increases and the number of free beds in basic hospitals decreases significantly in the coming days, we will be forced to return to severe restrictions, including in the work of public transport,” Klitschko said. “And, I emphasize, we are getting closer to such a decision.”
About 20% of Ukrainians infected with coronavirus need hospitalization, Oksana Koshalko, a Health Ministry said on the TV program Freedom Live. And 5% of total cases end up in intensive care, she said. Since March 13, 1,147 Ukrainians are known to have died of the virus.
President Zelenskiy at an inter-ministerial meeting last weekend: “In Odesa, clubs are already working, showbiz stars are doing gigs, beaches have opened to public. Rumors are being spun that no one get sick outdoors. However, this isn’t true. In this regard, the situation has deteriorated. Odesa used to have one of the lowest figures for the corona spread, but today the number of new daily cases is much higher.”
- The World Bank Gives Green Light to First Phase of $1 billion for Ukraine
- Kherson Becomes Public Private Partnership Poster Port
- Experts Estimate 2020 GDP Drop
- UZ Angles for Piece of Booming China-EU trade
The World Bank approved a $350 million to Ukraine Friday to support the creation of a private farmland market, to help state banks dispose non-performing loans, break up the monopoly in gas distribution and to strengthen the social safety next for elderly during the Covid-19 pandemic. This Development Policy Loan is designed to be the first of two. It comes in addition to two loans totaling $285 million recently approved by the Bank.
In Ukraine’s first major infrastructure concession, a Georgian-Swiss consortium signed papers to run Kherson Sea Port for 30 years as public private partnership. Shota Hadzhishvili, founder of Risoil SA., one of the partners, said: “We plan to use all the possibilities of shipping on the Dnipro, including the acquisition and construction of modern vessels.” Located near the mouth of the Dnipro, the river port can load ships capable of delivering grain throughout the Mediterranean.
President Zelenskiy promised on Facebook: “This is only the first such agreement. There will be more to come!” Infrastructure Minister Vladyslav Krikliy said final papers for the Olvia port concession will be signed in July. He said the next port concession will be Chornomorsk, Ukraine’s third largest commercial port. The IFC, lead advisor on the concession, said: “Ukrainian seaports operate at only about half of their potential capacity due to many years of underinvestment and significant degradation of the country’s infrastructure.”
IFC, a unit of the World Bank Group, is working on more than five pilot concession projects to mobilize private sector investment in roads, airports, railways, energy, and healthcare. Jason Pellmar, IFC regional manager, said: “IFC has a strong track record of structuring high-impact PPPs and concessions. This port project will help boost the development of Ukraine’s infrastructure sector and bolster its agricultural exports.”
The US, Hungary, and Sweden are offering aid to help Ukraine’s Carpathian region recover from what the European Commission calls the area’s worst floods in half a century. A tally prepared Saturday summarized the damage: flooding in 180 towns and villages in Ivano-Frankivsk, Chernivtsi, Lviv, and Ternopil regions; 202 km of roads and 94 bridges destroyed, and 620 km of roads and 259 bridges damaged.
A snap poll of participants at a European Business Association webinar last Thursday found that: 68% of companies have fully or partially returned to the office; 60% plan to keep the company’s staff unchanged; 28% are thinking about downsizing; and 13% are looking for new employees. On salaries, 69% plan no change, 21% think about a reduction, and only 9% are mulling pay hikes.
The GDP 2020 Predictions Sweepstakes are underway:
ICU Investment Group’s head of research Serhiy Nikolaichuk: Q2 down 10% yoy; 2020 down 6.7%, followed by a 5.7% rebound in 2021.
Dragon Capital’s Tomas Fiala: 2020 down 7% yoy; 2021 up 4%. He tells a EBA conference: “The GDP is expected to drop by approximately 7% in 2020, while during the previous two crises the economic decline reached 15-16%…The economy will return to the level of early 2019 only by 2022.”
IMF’s Resident Representative in Ukraine Gösta Ljungman: “At the end of 2021, GDP will be about 6% lower than 2019. Ukraine will only return to pre-quarantine GDP level in 2024.”
The central bank bought $424.5 million last week – almost four times the $110 million it bought the previous week. With these purchases, the hryvnia dollar exchange rate stayed little changed – 26.7 hryvnia/USD. In the first half of this year, the National Bank of Ukraine has bought a net $922 million.
Shipments from China to Ukraine by Alibaba’s Cainiao Smart Logistics Network are up 74% yoy during the first five months of this year, reports Ukrposhta. Of the 665,000 kilos of goods, the most popular categories were: electronics, clothes, children, beauty, health, home and garden.
Ukrzaliznytsia is preparing to receive one container train a week from China this summer. In June, one train from Yantai arrived at Kyiv Liski on June 9. A second is to arrive this week from Wuhan. A third left Nanchang for Kyiv on Friday. “Container trains between China and Ukraine may become regular in the near future,” Ukraine’s state railroad said. “Ukrzaliznytsia is ready to accept 5 or more such trains a month.”
Separately, Ukrzaliznytsia hopes to attract the transit of EU-bound Chinese container trains by using two stretches of Soviet wide gauge track that reach into Poland. This would allow shippers to bypass the backlog of trains at the rail gauge break on Belarus’ western border. This summer, Poland’s state-owned railway company PKP is establishing a subsidiary to manage international traffic on a 30km stretch of dual gauge track from Poland’s border with Volyn to Chelm. The Polish border crossing is 70 km west of Kovel, a western Ukrainian railroad junction city where tracks converge from five directions.
Recently, PKP made a test run with a Chinese container train through Ukraine on a longer, parallel line from Hrubieszów to Sławków. The goal is to use this 400 km line from the Volyn Region border to an industrial city near Krakow to bring containers halfway across Poland for final delivery by truck to Germany or the Czech Republic. January-May, the volume of rail traffic though Kazakhstan’s two rail gauge breaks with China, increased by 28% yoy, to 8 million tons.
Ukraine’s Health Ministry has updated its ‘red list’ of countries for coronavirus. Travelers from these countries face Covid test on arrival, or two weeks of self-isolation. The list, little change from a week ago, includes: US, UK, Canada, France, Spain, Russia, Belarus, and Moldova. The countries have infections above 40 active cases per 100,000 people. Ukraine has 50 cases per 100,000. By Wednesday, the EU is to announce its ‘red list’ of countries. The US and Russia are expected to be on the list. It is unclear about Ukraine.
Last Saturday, Air Astana resumed flights between Almaty and Kyiv Boryspil. Flying three times a week, the flight is timed for transfer to onbound flights to Seoul. Each passenger is to pass a temperature check and show a recent certificate of a Covid test with a negative result.
The original English version is from our partner UBN – Ukraine Business News. For more information and news archive, go to: www.ubn.news.
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