- Prosecutor General Sacked
- Markets Sell Ukraine
- Facing Skeptics, PM Shmygal Vows to Work With IMF
- Analysts Forecast Central Bank Will Cut Key Rate Next Week
- Zelenskiy in His Own Words on Reasons for the Purge
Prosecutor General Ruslan Ryaboshapka was sacked in a Rada vote last night, the latest casualty in a government purge that leaves analysts questioning Ukraine’s free market momentum. Ryaboshapka, a former official at Transparency International, was supported by Western governments for his efforts clean up Ukraine’s judiciary. Ruling party MP’s complained he did not indict former President Poroshenko. Ruling party MP’s propose one of their own: Serhii Ionushas, an MP who did intellectual property work for President Zelenskiy’s TV studio.
The cabinet overhaul prompted Morgan Stanley to cut Ukraine’s hard-currency debt to ‘dislike’, strategists Alina Slyusarchuk and Simon Waever wrote Thursday morning in an emailed report. By the end of the day, Ukraine’s dollar-denominated sovereign bonds had suffered a second day of sharp declines. The 2032 bond fell 3.76 cents in the dollar to 105.51 cents, according to Refinitiv. Both the 2027 and 2028 issues lost more than two cents as well. Many bonds traded at multi-month lows.
Foreign holdings of government hryvnia bonds fell this week by 2%, to about 124.4 billion hryvnia, or $5 billion, reports the National Bank of Ukraine. Although foreign holdings of the bonds are up by 7.3% this year, growth stopped in mid-February.
Opinion roundups – on Bloomberg and elsewhere – were generally skeptical Thursday.
“There is disbelief with this cabinet reshuffle,” Timothy Ash writes from London after a day talking to traders and analysts. “The general line I have heard is; what is President Volodymyr Zelenskiy doing?…Markets had rewarded his team and Ukraine with a collapse in borrowing costs, on hard currency debt from 10% to less than 6%, and in hryvnia from 20% to 10%. Conditions were well set for recovery. In the midst of all that he has decided to almost completely change the team, ousting the reformers, and going back in time to a team that would not look out of place in a Viktor Yanukovych cabinet, circa 2011.”
Concorde Capital’s Zenon Zawada writes in Kyiv: “To its detriment, the Zelenskiy administration is plagued by subservience to the reckless billionaire Ihor Kolomoisky, an IMF skeptic who is trying to retake Privatbank…We view these personnel changes as insignificant in the grand scheme of the ultimate goal for Ukraine, which is for the nation to become a rule of law society integrated in Western institutions.”
After a day of skeptical press, Ukraine’s new Prime Minister Denys Shmygal wrote Thursday night that the new government will continue “constructive” work with the IMF. “Changing the government means that we want even better and faster reforms in Ukraine,” he wrote on Facebook. “The government will continue prudent fiscal policy and constructive cooperation with the International Monetary Fund and other creditors of Ukraine…Cabinet is ready to accept new challenges and move faster on reform path and integration with the EU.”
Shmygal got a positive review from Andy Hunder, president of the American Chamber of Commerce in Ukraine. “I was impressed with Denys Shmygal as regional governor when I visited Ivano-Frankivsk six weeks ago,” Hunder wrote in an Atlantic Council morning after roundup of opinion on the cabinet changes. “He was one of the most business-friendly governors that I had met in Ukraine. He’s coolheaded, prudent, a no-nonsense kind of guy. The feedback that I got from companies in the region about him was positive throughout.”
The European Business Association notes it had a good working relationship with outgoing Prime Minister Honcharuk. “In recent months, EBA member companies have engaged in a fairly constructive dialogue with most ministries and observed a prompt reaction to the appeals of the business community,” the Association’s press office emailed Interfax Ukraine. “So we really hope that the decision to restart the government was made after a thorough analysis of all ‘pros’ and ‘cons’ and has a strategically sound goal.”
Looking ahead, analysts polled by Reuters forecast the central bank will cut the key lending rate next Thursday, the sixth cut in a row. Lower-than-expected inflation and a slowing economy will prompt the National Bank of Ukraine to cut from the current level of 11%, although not as steep as the 2.5 percentage point cut of late January. At next week’s rate setting meeting, nine out of 16 analysts forecast a rate cut to 10%. Three see a reduction to 10.5%. One person sees a cut to 9.5%. The other three see no change.
Economic highlights of President Zelenskiy’s speech to the Rada Wednesday afternoon:
Accomplishments: “This government has accomplishments. The decrease in inflation, reduction of the National Bank of Ukraine’s base rate, fight against the shadow markets, including gambling and illegal gas stations. The beginning of the privatization of state-owned enterprises that have been looted all these years. The loans to small and medium businesses. The reduction of the role of the state in the economy. But the truth is that it is not enough for Ukrainians today.”
Need for doers: “We need new brains and new hearts. This government knows what to do. But to know is not enough – it is necessary to work a lot, it is necessary to do. And we must not fear the truth, we must admit mistakes. Because on the day we dive into the warm bath of illusions, the whole country will sink.”
Industrial downturn: “We have constantly heard about the economic leap, but there is an impression that the economy has been gaining pace, stumbled and now risks to fall flat on its face… Unfortunately, the government has not provided tools stimulating domestic production and new production capacity. The industrial glory of Ukraine is gradually becoming a matter of the past. We risk that speaking about our industrial potential people will soon say: “That was a long time ago, and wasn’t even true.”
High priced foreigners on supervisory boards: “There are questions about the salaries and bonuses of many supervisory board members. We understand that there are laws of the market. We do not suggest paying a “minimum” wage in a populist manner. But, excuse me, when over 10 million people live on the poverty line, there can be no such payments to people who, being members of supervisory boards, come to Ukraine two or three times a year. Today, it has actually become more profitable to “supervise” than to work in Ukraine. And with all due respect to international partners, with all gratitude for their help, today our citizens in the supervisory boards of our enterprises feel like a national minority.”
Walking back plan by his (now former) Energy Minister to close most of Ukraine’s coal mines by 2030: “Closing a mine does not mean closing the issue. Therefore, first – training and retraining of people, creating new jobs, providing at least a similar salary, and only then can we raise the issue of closing an unprofitable mine. Only in such order.”
- Zelenskiy Fires 2/3 of Cabinet
- New Cabinet Charged With Sparking Economic Growth
- New PM Shmygal Vows to Push for ‘Strategic Reforms’
- Reviews Are Negative
- Ukrposhta to Increase Investments 20-Fold This Year
- Wizz Air and Windrose Gladiate Over Ukraine’s Future Domestic Air Travel Market
After six months of on the job, Prime Minister Honcharuk was sacked by President Zelenskiy in a cabinet shake up that cost two thirds of the 17 cabinet ministers their jobs. Valuing experience over youth, Zelenskiy and his Servant of the People party chose little known names. Foreign investors, diplomats and the IMF lose three well known interlocutors: Prime Minister Honcharuk, Finance Minister Markarova and Economy Minister Milovanov. Today, the Rada is to vote to let go Prosecutor General Ruslan Riaboshapka for failing to authorize a notice of suspicion to ex-President Petro Poroshenko.
New faces are:
Prime Minister: Denys Shmygal, a 44-year-old former DTEK executive, who served in the Zelenskiy government as governor of Ivano-Frankivsk Oblast and, for the last month, as a deputy prime minister and minister for Development of Local Communities. According to an Interfax-Ukraine biography Shmygal has held 11 jobs in the last 16 years.
Finance Minister: Ihor Umansky, a former executive at state-owned Ukrgasbank who first held government post in 1998. In 2008, he was first deputy finance minister, then acting finance minister under Prime Minister Yulia Tymoshenko. In 2014-15, he was a deputy finance minister under Natalie Jaresko.
Illia Yemets becomes Health Minister, Andriy Taran becomes Defense Minister, and Oleg Nemchynov becomes Minister of the Cabinet of Ministers.
Economy Minister and Agriculture Minister: Open. Zelenskiy decided to split the two ministries, after merging them in September. Milovanov declined to stay on as Agriculture Minister. The leading candidate for Economy Minister is Roman Zhukovsky, aged 41, reports Interfax-Ukraine. He held economic posts in the Yuschenko and Yanukovych governments, and was also a member of the Naftogaz Supervisory Board.
Also vacant are: Energy Minister, Education Minister, and Culture Minister.
Addressing the Rada, Zelenskiy said the new Cabinet will be charged with revving up the economy and reversing industrial decline. He complained: “The industrial glory of Ukraine is gradually becoming a memory.” Industrial production in January was down 5% y-o-y, partly due to the mild winter and decrease in gas and coal. In a swipe at Honcharuk, aged 35, Zelenskiy said: “This is a government of new faces, but faces are not enough,” Zelenskiy said. “New brains and new hearts are needed.”
Zelenskiy harshly criticized the new Customs Service, saying it has not ended smuggling and has not raised customs revenue since it opened last fall. He said: “This needs to be changed: Customs should not collect likes on Facebook, but funds to the state budget, and we must start working.” In a swipe at foreigners on the supervisory boards of state-run companies, the president complained that Ukrainians feel like a minority on the boards.
In his debut address to the Rada, Prime Minister Shmygal promised to “revise the state budget for 2020 in terms of increasing payments and pensions for ordinary Ukrainians.” He promised to cut salaries of high government officials and to make the economy grow by implementing “strategic reforms for the next several years.” The Rada is halfway through reviewing 4,000 amendments to a modest farm land market bill. The government has yet to win approval of a bill to ban the return of nationalized banks to their former owners – a key demand by the IMF for a deal.
Reviews of the Cabinet purge are largely negative.
Andy Hunder, president of the American Chamber of Commerce in Ukraine, tweets: “The timing couldn’t have come at a worse moment for Ukraine, with the coronavirus outbreak, a global market downturn, no IMF deal, secondary market bondholders becoming itchy, and significant sovereign debt repayments due.”
Melinda Haring, deputy director of the Eurasia Center at the Atlantic Council, tweets from Washington: “Time to sound the alarm in Kyiv. Things look bloody awful.” She shared a link to her new essay “Ze end?” “Ukraine has capable, proven ministers. Why change them now?,” she asks. “Roman Zhukovskyy is set to take over the Ministry of Economy, which bodes ill. His mother is the financial manager to the notorious oligarch Dmytro Firtash. Ihor Umansky, [new] head of the Ministry of Finance, fiercely opposes working with the International Monetary Fund.”
Timothy Ash writes from London: “[It is] likely that reform agenda will now be watered down…For bondholders, the worry now will be what Umansky thinks of foreign portfolio investors who pumped $5 billion into Ukraine under Markarova. This was criticized for strengthening the hryvnia and hurting oligarchic interests. If bondholders hit the exits, it could get ugly very quickly with a large number of investors trying to get through a very small door in an over positioned trade.”
Kateryna Glazkova, executive director of the Union of Ukrainian Entrepreneurs, tells Interfax Ukraine: “Unpredictability, a change in the government’s strategy, is something that the business would definitely not want. It is important for our business community that the renewal of the Cabinet of Ministers does not affect the implementation of systemic changes, and the course of reforms does not change.”
Ukrposhta plans to double its revenue this year, to $650 million, and to increase its investments 20-fold, to $65 million, Igor Smelyansky, director general of the state postal service, writes on Facebook. Through the purchase of 500 mobile post offices, Ukrposhta plans to extend internet postal banking and postal services to 25,000 settlements. This year, Ukrposhta will open 40 mini post offices in shopping centers and build its first new sorting center since 1980. The goal is to build eight automated sorting centers. “Starting this year, we no longer survive — we build a new, successful company,” says Smelyansky. He predicts that the government-regulated services in the company’s revenue stream will shift from 50% to 9%.
Fresh from announcing Wizz Air Abu Dhabi, József Váradi, Wizz Air’s CEO, met in Kyiv Tuesday with Infrastructure Minister Vladislav Krikliy to discuss starting domestic flights and expanding international flights beyond the 30 EU cities already served from Ukraine. “The Ukrainian airline market is strategically important for the company and Wizz Air is working on plans to expand its presence,” said Váradi, a co-founder of the low cost airline. Krikliy said the government’s goal this year is to increase the low cost share of Ukraine’s aviation market to 45%. On Monday, Wizz Air starts a 3-month suspension of flights from Odesa to its six EU destinations due to runway and apron work.
On Tuesday, Windrose Airlines started a daily flight between Kyiv Boryspil and Odesa. In May, the airline will fly this 80-minute three times a day. Next month, Windrose starts flights from Kyiv to four more Ukrainian cities: Dnipro, Kharkiv, Lviv, and Mykolaiv. In the fall, Ivano-Frankivsk and Kriviy Rih will be added to this Boryspil hub and spoke network. Aiming to carry 250,000 domestic passengers this year, Windrose is negotiating with Boryspil a domestic transfer area that would allow passengers to switch planes without repeating security checks. With eight ATR-72 commuter turboprops to join the Windrose fleet over the next year, the airline plans to increase passengers by 25%, to 1.8 million, Vladimir Kamenchuk, Windrose CEO tells the Center for Transportation Strategies.
- Coronavirus Comes to Ukraine
- Min Fin Sells €201 million in Bonds
- Investor Visas in 2021
- Almost 1,000 State Cos. Now in Privatization Pipeline
- Reporters Out ‘the Wolf of Kiev’ – Atop Mandarin Plaza
Ukraine has its first confirmed coronavirus case, a man from Chernivtsi who vacationed for a week with his wife in Italy, Deputy Health Minister Viktor Lyashko told the Cabinet of Ministers. The man was hospitalized Saturday night. His wife, who shows no symptoms, is living in isolation in their apartment in Chernivtsi, western Ukraine.
Due to the high number of coronavirus cases in northern Italy, about 2,000, Ukraine’s SkyUp airlines is suspending its flight from Kyiv Boryspil to Turin, northern Italy. SkyUp, which received its 11th Boeing 737 over the weekend, did not comment about its ambitious plans to expand flights to Italy. Without counting Turin, SkyUp’s reservation system calls for the low cost airline to more than double its Italy destinations — from three today to eight at the end of March. After the January collapse of Ernest Airlines, SkyUp moved to take over the Ukraine-Italy market, which is half tourism and half migrant workers, largely to northern Italy.
Due to the spread of coronavirus, Ryanair, Europe’s largest discount air carrier, will cut its flights to and from Italy in two weeks by 25% starting. In a press release, the company cites low passenger demand and no shows for flights. Ryanair does not fly from Ukraine to Italy. Over the last two months, Ryanair shares have fallen by 21% on the London Stock Exchange.
Ukrainian Week in the European Parliament has been postponed indefinitely due to concerns over coronavirus. Ukrainian organizers cite “European Parliament restrictions on mass events because of the coronavirus outbreak.”
In the changing economy of coronavirus, dropping oil prices may cancel out dropping metal prices to minimize the impact on Ukraine’s trade balance, Alexander Martynenko, head analyst for ICU, tells UNIAN. But, the main impact could be on the price of capital as investors choose safety over emerging markets. “For Ukraine the cost of external borrowing may increase or access to international markets may be completely closed for another loan,” he said. “If at the same time there is a delay with help from the IMF, then the pressure on the hryvnia will increase, and this will entail an acceleration of inflation.”
By offering euro denominated bonds, the Finance Ministry sold at auction Tuesday four times the hryvnia equivalent of the previous week. The auction netted UAH 6.6 billion, the equivalent of $268 million. The big seller was the 9-month euro bond – €201 million were sold at 2.2%. For the 6-month hryvnia bond, the government sold $42 million worth at 9.9%. “Despite turbulence in the capital markets due to changes in investor sentiment, the Ministry of Finance continues to successfully execute the state budget financing plan,” the Ministry reports on Facebook.
Fast track visas for foreigners who invest more than $100,000 in Ukraine would start next year, under a Cabinet of Ministers resolution approved Tuesday. The Ministry of Economic Development, Trade and Agriculture is to submit proposals to the Interior Ministry’s State Migration Service, which would draw up regulations.
A downtown Kyiv city block of government offices will be transferred to the State Property Fund for privatization, Minister Dmytro Dubilet, writes on Facebook. Without giving the address, he says the 4-5 buildings are an eyesore in central Kyiv and will be “privatized at transparent auctions.”
Pushing privatization, the Cabinet of Ministers transferred Tuesday 435 state-owned companies and properties to the State Property Fund for sale through auction. With this number, “the government has delivered 961 objects in six months, which is 10 times more than 10 years before,” Prime Minister Honcharuk reports.
Four new big companies – valued over $10 million – are included: the Bolshevik plant (First Kiev Machine-Building Plant); Khlib Ukrainy, or Bread of Ukraine; State-Food Grain Corporation; and Artemsil, the salt mine. Located in Soledar, Donetsk Oblast, Artemsil is the largest producer of table salt in Eastern Europe. Founded in 1881, Artemsil exports to 16 countries, and can produce 7 million tons of salt a year. To prepare Artemsil for sale, the government stripped it of its legal monopoly.
The largest company of the new group is Kyiv-based State Food and Grain Corporation, with 47 elevators and 227 weighing complexes. “It is the largest corporation – a grain exporter in Ukraine – and the largest flour producer in the country,” Prime Minister Honcharuk says. “On paper, for some reason, it is unprofitable and inefficient. Through privatization, the company will be able to modernize its facilities, create new jobs and pay more taxes to the state budget.” To prepare for privatization, the government appointed in December Simon Cherniavsky as board chair. Previously Cherniavsky turned around the Mriya agricultural holding after its 2015 collapse.
A Kyiv court ruled Friday to prohibit the State Property Fund, owner of 78.3% of shares of power generator Centrenergo (CEEN UK), from dismissing any member of its management board, including acting CEO Volodymyr Potapenko. Ihor Kolomoisky, a major buyer of power from Centrenergo has praised Potapenko as an “understandable” person.
Concorde Capital’s Alexander Paraschiy writes: “We did not expect that Zelenskiy will resist the cabinet’s initiative to replace the Kolomoisky-controlled management…we are sticking with our negative view on Centrenergo’s fundamentals and its near-term privatization prospects.”
Directed by a self-styled ‘Wolf of Kiev,” hundreds of multilingual sales men and women working in a call center atop Mandarin Plaza have been operating “industrial-scale fraud,” stealing millions of dollars from elderly victims, largely in Scandinavia, the Organized Crime and Corruption Reporting Project reports in a 5,000-word story headlined: “Trail of Broken Lives Lead to Kyiv Call Center.” Armed with a whistleblower’s insider dossier, 21 reporters interviewed 180 victims around the world for stories that ran Sunday in Stockholm’s Dagens Hyheter and in Britain’s Guardian newspaper.
The news reports indicate that the ringleaders of the “Milton Group” are David Todua, a Georgian-Israeli, and Jacob Keselman, a Ukrainian-Israeli who styles himself as ‘the Wolf of Kiev’ on his Instagram account. On Monday, Sweden’s Foreign Minister Ann Linde met with ‘high level officials’ in Kyiv and demanded action, reports the Crime and Corruption Reporting Project.
- Solar, Wind Investors Revolt
- Honcharuk Hangs on as PM, Touting Low Gas Prices, Road Funding
- Coronavirus: MIPIM Postponed 3 Months
- Windrose Buys 8 Commuter Planes to Develop Domestic Flights
Foreign investors in wind and solar warn that Ukraine risks international arbitration and a souring of foreign investors on Ukraine if the government retroactively slashes ‘green tariffs,’ makes plant commissioning dependent on government hookup to the grid, and imposes half year long blackout periods on purchases of power from renewable plants. “Ukraine Unveils Plans for Retroactive FIT Cuts,” headlines an article in PV Magazine about cuts to feed-in tariffs.
One Western solar investor tells the UBN the government’s proposed 25% cut in solar feed-in tariff coupled with the 200-day black out period could cut his revenues by 40%. “Ukraine is about to do something which will be perceived very negatively by the investment community, and is very dangerous for its efforts to attract FDI to boost its economy,” he emails from London. “The situation is very serious, and despite all the efforts of the industry, the government is not willing to find a compromise, and on the contrary is making its position harsher with each iteration.”
Foreign investor pushback was clear to the Energy Ministry’s proposed tariff cuts at last week’s Adam Smith Energy Conference in Kyiv. proposed to cut wind rates by 10% and solar by 15 to 25%, depending on plant size. “I just am amazed at the optimism that currently exists with the Ministry of Energy, Ukrenergo and others,” exclaimed Narek Harutyunyan founder and CEO of Rengy Development, a developer of solar in Armenia, Kazakhstan and Ukraine. “They say that now we will create the conditions for investment and investors will come to us. When the same investors, who have now entered the working system, do not know what will happen to them in 6 months?”
Concord Capital’s Alexander Paraschiy warns of a collision: “While the initiative to decrease feed-in tariffs does not look friendly for investors into green energy, it looks like a forced move by the government, taking into account that green rates are too high in Ukraine. The high rates bring distortions to the wholesale market, so it is likely that the ministry’s initiative will be supported by law makers. Also, we see that this will be not the last attempt to decrease green rates in Ukraine.”
With EU gas prices at their lowest levels in four years, Ukrainian households will receive gas bills for February that are almost 40% below the levels of one year ago, Prime Minister Honcharuk said Monday. Europe’s gas glut is seen as a result of a mild winter, new LNG plants coming on stream and the coronavirus threat cutting Chinese consumption. Honcharuk said: “This happened thanks to the wonderful weather.”
Capping five years of work, Ukraine launches this week virtual natural gas reverse flow with Slovakia, the main hub for gas exiting Ukraine for the EU. Under this system, Russian gas is shipped to users in eastern and central Ukraine, then Ukraine’s pipeline operator makes up the difference with gas pumped from storage reservoirs in Western Ukraine. This cost saving system became possible two months ago with the signing of the new EU-compliant gas contract with Gazprom, says Serhiy Makogon, CEO of Gas Transmission System Operator of Ukraine, the new spinoff from Naftogaz. Virtual reverse flow started one month ago with Poland. The system is to be established with Hungary this spring, Makogon writes on Facebook.
Due to lower domestic interest rates, this year’s massive $4.6 billion road building program is getting more funding from state bank loans, Prime Minister Honcharuk said Monday after meeting with the Ministers of Finance and Economy and the leadership of the central bank. “An additional 19.3 billion UAH ($785 million) at a lower interest rate is more quality roads in Ukraine this year – mostly from state banks,” he said. In addition to the loans, Ukravtodor, the state highway agency, is expected to place at least $200 million in Eurobonds.
Ukraine’s government starts broadcasting this week a bilingual Ukrainian/Russian TV channel to Crimea and the Russia-controlled sections of the Donbas. Called ‘Dom’, or ‘Home’ in Russian, the channel hews to the theme: ‘Ukraine is our home.’ Yulia Ostrovska, interim director of the new channel, told reporters in Kyiv Monday that about half of residents in the Russia-controlled areas do not have access to Ukrainian TV. Four leading Ukrainian media groups — 1+1, StarLightMedia, Ukraina, and Inter — are providing their “most premium entertainment content.”
The launching comes after these media groups agreed on Friday to offer their broadcasts to the occupied areas in unencoded formats. The new initiatives to break Moscow’s media grip comes after USAID helped pay for the erection last year of 13 broadcasting towers along the two lines of control. In the Soviet era, Moscow jailed people for listening to Voice of America. With varying degrees of success, the Soviets electronically jammed broadcasts from the West.
MIPIM, often considered the world’s largest international real estate exhibition, is being postponed due to coronavirus fears. Expected to draw 20,000 participants, the Cannes event is moving from March 10 to June 2-5. About 100 Ukrainian exhibitors, realtors and government officials were planning to participate. For the same reason, the Swiss Ukraine Forum, scheduled to start the same day in Bern, Switzerland, has been postponed to Sept. 22.
The coronavirus could cost Chinese airlines $15 billion through May, according to Chinese media estimates, cited by Interfax-Ukraine. Hong Kong’s Cathay Pacific is asking 80% of its 32,000 employees to take turns at taking three weeks of unpaid leave. With Chinese tourists grounded, coronavirus costs Europe’s tourism industry €1 billion a month, EU industry chief Thierry Breton tells France’s BFM TV.
So far, Ukraine travel seems unscathed. At Lviv airport, passenger flows for January and February hit 303,200, up 29% over the first two months of last year.
UIA is not planning to cut flights to Italy. It has seen only a handful of passengers asking for refunds or travel postponements, reports the airline’s Facebook page. Northern Italy is Europe’s coronavirus hotspot, with 1,835 cases and 52 deaths. Wizz Air is reducing its flights to Italy from March 11 to April 2.
Kyiv should get flights to Abu Dhabi, capital of the United Arab Emirates, with the creation this fall of Wizz Air Abu Dhabi. Flying Airbus A321neo jets, the new discount airline will be based at Abu Dhabi International Airport. There currently are flights between Kyiv Boryspil and two airports in the Emirates – Dubai and Sharjah. Budapest-based Wizz Air flies from Kyiv Sikorsky to 30 EU cities.
Determined to position itself as Ukraine’s leading domestic carrier, Windrose Airlines is buying eight ATR72-600 turboprops over the next 18 months. Seating 72 passengers, the commuter planes will be used to fly from Kyiv Boryspil to eight cities: Dnipro, Ivano-Frankivsk, Kharkiv, Kriviy Rih, Lviv, Mykolaiv, Odesa and Zaporizhia. In addition, Windrose will use fly to these EU cities: Berlin, Bucharest, Burgas, Ljubljana, Sofia and Zagreb. In addition, Windrose plans to add two A320/321 jets to its fleet, Vladimir Kamenchuk, the company CEO, tells the Center for Transportation Strategies. Believed to be controlled by Ihor Kolomoisky, the airline flies charters to Egypt, Greece, Italy and Turkey.
- Bracing for Coronavirus: Ukraine Prepares Hospitals, Train Stations, ‘Ebola Helicopter’, and Temperature Checks on All International Arrivals
- For Boryspil: New Business Lounge, Duty Free
- Russia Travel: Ukrainians Need Passports
- Casinos Planned for Kyiv Hilton
With five Ukrainians hospitalized overseas with coronavirus – four in Japan and one in Italy – Ukraine’s government is investing heavily in detecting and, ideally, minimizing any outbreak here. In each of the 24 regional capitals, two hospitals have been designated as future infectious disease treatment centers. Kyiv has seven.
A State Emergencies Services Mi-8 ambulance helicopter, staffed with Ukrainian doctors who worked on West Africa’s Ebola epidemic, is on duty, prepared to shuttle patients nationwide to specialized care facilities. Across Ukraine, hospitals are ready to admit and isolate 2,500 coronavirus patients, says Viktor Lyashko, the deputy health minister in charge of the effort.
All inbound international road, rail and air passengers are now checked for elevated temperatures. Ukrzaliznytsia has created diagnosis and temporary isolation rooms in the 19 busiest rail stations. Kyivpastrans, the municipal transport company, is disinfecting nightly the interiors of metro cars, trams, buses, and the funicular, focusing on handrails and door handles.
In one upside, Dnipro’s Biosphere Corporation reports a surge in EU orders for their Smile Antibacterial wipes. Alexander Lavrov, a company executive, tells Interfax Ukraine: “The increase in demand for antibacterial wipes is understandable: it’s easier to protect yourself from any virus than to cure.” He says demand is up in recent days: Estonia, two times; Lithuania three times, Poland seven times and Bulgaria 10 times.
Last week’s collapse of world markets pulled down Ukrainian government securities. Ukraine’s GDP-warrants fell by 8.5%, to 99.1% of the nominal value. Yield on Eurobonds grew on average by one percentage point. Interfax-Ukraine reports that Ukrainian Eurobonds with maturity in 2021 were quoted Friday evening at a rates of 4%; in 2023, about 5%; in 2026, at 6%; and the longest, with maturity in 2032, at 6.5%.
Faced with dwindling foreign investor interest in Ukrainian government hryvnia bonds, the Finance Ministry will offer at its auction 9-month government bonds denominated in euros. The last time bonds in euros were offered at auction, on Dec. 17, Finance Ministry sold €198 million worth of 6-month securities at a weighted average rate of 2.22% per annum.
The IMF staff team visiting Ukraine last week “made very good progress in discussions on legislation to support growth and ensure stability,” Goesta Ljungman, the lender’s resident representative in Ukraine, said. Full approval of last December’s staff-level agreement for a 3-year, $5.5 loan program are delayed by two bills: creating a private farm land market and restricting the return of nationalized banks to former owners. The Rada is working through 4,000 amendments to the farm land bill, a process expected to last all month.
Since last week, Ukrainians IT companies can hire up to a total of 5,000 foreign IT specialists per year under a fast track visa and work permit system, according to Oleksandr Bornyakov, deputy minister for Digital Transformation. In one of the hottest sectors of Ukraine’s economy, IT companies create 40,000 new IT jobs a year, but local universities only graduate 17,000 specialists each year. The foreigner quota will be geographically dispersed: Kyiv: 2,500; Kharkiv: 700; and Dnipro, Odesa and Lviv: 600 each.
One step short of adopting open skies between Turkey and Ukraine, both countries last week doubled quotas on most flights. Limits on Odesa-Istanbul were abolished. The limit on Kyiv-Istanbul was raised to 24 a week. Adana, a regional capital near the Mediterranean, becomes the seven Turkish city open to direct flights from Ukraine. With 11 Ukrainian cities offering direct flights to Turkey, 1.5 million Ukrainians – about 4% of the national population – vacationed in Turkey last year. In return, 217,000 Turks visited Ukraine.
A new 800 square meter business lounge opened last weekend in the international departures area of Boryspil’s Terminal D. Called Atmosfera Fly, the two-story lounge has seating for 150, a dining area, and an airplane viewing terrace.
At the same time, the first duty free shop opened in Boryspil’s Terminal F. One year ago, this terminal re-opened for passengers on low cost carriers. BF Group won the public tender to operate 191 square meter store, agreeing to pay a monthly rent of $1,000 per square meter.
Starting last week, Ukrainians need an international passport to travel to Russia. Previously, they could travel to Russia with a domestic passport booklet or the new plastic ID card, introduced in 2016. Under the relevant Ukrainian Cabinet of Ministers’ decree of Dec. 18, Ukrainians now in Russia can come home using their domestic passports of ID cards. About 40% of Ukrainians have international passports. Obtaining one involves traveling to a regional capital, paying up to $50 and waiting up to one month.
With no direct flights between Russia and Ukraine, Ukrzaliznytsia reports that four of its five most profitable train last year were between Ukraine and Moscow or St. Petersburg. On the most profitable line, Kyiv-Moscow, UZ sold 75% of the 339,414 seats, making a profit of $5.5 million. The next four moneymaking lines were: Kriviy Rih-Moscow, 82% full, netting $3.7 million; Odesa-Moscow, 83% full, netting $2.1 million; Odesa-Przemysl, Poland, 75% full, netting $850,000; and Kyiv-St. Petersburg, 58% full, netting $615,000.
With the Rada expected to legalize casino gambling this spring, Boris Fuchsman, a co-owner of Hilton Kyiv says he plans to invest up to $30 million to create two casinos in the 26-floor building on Taras Shevchenko Boulevard. There would be a 1,000 square meter casino on an upper floor of the central tower and a 2,000 square meter casino below ground, Fuchsman tells The Page news site. Under one version of the gambling bill, casinos could be opened in Kyiv in hotels with more than 200 rooms, and, outside of Kyiv in hotels with at least 120 rooms. The Hilton has 262 rooms. Nearby, the long-shuttered Renaissance Leipzig hotel has 173 rooms
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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