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  • New South Korean, Norwegian Investments Swim Against the Tide
  • Inflation is 2.4%, Far Below Ze’s 10% Target
  • IFIs Talk of $700 Million in Soft Loans
  • Ukraine Re-Opens: 58 Flights Out of Kyiv Today

South Korea’s Caris has signed a 3-year, $850 million deal with Dnipro’s Yuzhmash to produce 5,000 electric buses and 7,800 charging stations, the Ukrainian machine building plant reports on Facebook. The two companies agreed to localize production in Dnipro, to exchange licensing agreements, and to jointly promote exports of Dnipro-made equipment to the EU. Noting that Caris already is building plastic highway guardrails in Ukraine, Caris Chairman Yu Chhol said of the new venture: “We are very happy to continue cooperation with Ukraine.”

Norway’s NBT continues planning for a €1.2 billion project in Zaporizhia Oblast that could be Europe’s largest onshore wind farm. Designed to generate 792MW, the Zophia farm would place 160 turbines along a 39 km line from Kyryliv to Yakymiv, to catch winds blowing north from the Sea of Azov. With financing arranged by JPMorgan and contracting by China’s SET, NBT hopes to start construction this fall. Many renewable projects have stalled pending Rada adoption of new electricity tariffs. Vitaliy Bogovin, head of the Zaporizhia Regional State Administration, met Wednesday with NBT executives in Zaporizhia, reports the region’s press service.

Reversing five years of modest foreign direct investment inflows, Ukraine recorded a net outflow of $1.5 billion in foreign investment during the first five months of this year. Last year, Ukraine attracted $1.9 billion in foreign direct investment, reports the State Statistics Service. About one quarter of the 2019 ‘foreign’ investment came from Cyprus, presumably Ukrainian and Russian money.

The Economy Ministry estimates that Ukraine’s GDP contracted by 5.9% from January to May, the height of the Covid lockdown period. With the economy starting to recover, estimates of the year end GDP performance range from -4 to -8%. In June, the National Bank of Ukraine’s index of business activity expectations hit 45.5 points, up from 29.9 points in April. Below 50 indicates a rather pessimism.

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Eurozone GDP will decline by 8.7% this year, then grow by 6.1% in 2021, according to a forecast of the European Commission. Among the major economies: Germany -6.3% in 2020, then +5.3% in 2021; France –10.6%, then +7.6%; Italy –11.2%, then +6.1%; and Spain -10.9%, then +7.1%.

Ukraine’s electricity consumption fell during the first half of this year by 5% compared to the first half of last year, reports Ukrenergo, the state-owned electricity transmission system operator. Household consumption was down only 2.9%. But industrial consumption was down 6.2%. Of this, transport was down 16.4% and machine building was down 20%.

During the second quarter, Ukrainian banks permanently closed 304 bank branches, or 4% of the Q1 total of 7,884, reports the central bank. State-owned Oschadbank closed 8% of its branches, ending June with 2,097, the largest number in the country.

Annual inflation in June was 2.4%, slightly higher than 1.7% in May. Last year, inflation was 4.1%, less than half the 9.8% recorded in 2018. President Zelenskiy told former central bank governor Yakiv Smoliy that he wants inflation this year to go up to 9-10%. Zelenskiy believes that by printing money, the government can cover the budget deficit and produce signs of economic growth by the Oct. 25 local elections.

The European Investment Bank may issue a €340 million low interest loan to Ukraine for restoring public buildings – schools, hospitals, roads and water systems – in eastern Ukraine, largely government-controlled Donetsk and Luhansk. The goal is to improve infrastructure in areas coping with large numbers of people displaced by the war with Russia.

Presidential chief of staff Andriy Yermak discussed with the World Bank’s new vice president for Europe and Central Asia Anna Bjerde a $350 million loan to Ukraine. The money would go to building government institutions to support a private farm land market and to improving corporate governance.

In a big setback for corporate governance, ‘temporary’ Covid-era salary cuts may be permanent for independent supervisory boards set up during the Poroshenko era for state companies — Naftogaz, Privatbank, Ukreximbank, and Ukrzaliznytsia. Timothy Ash writes: “Cynics would argue that the supporters of state capture are driving the salary cap, to force out independent supervisory boards, and lay out state companies for further exploitation by oligarchic and corrupt interests.”

Concorde Capital’s Alexander Paraschiy writes on Zelenskiy’s stated desire to weaken the hryvnia, print more money and to hike annual inflation from 2% to 10%: In the mid-term, such a review of targets could lead to large imbalances, including high inflation and currency shocks. At minimum, such risks make Ukraine’s local currency bonds unattractive to investors right now.”

Paraschiy writes on the State Security Service’s request that ‘former officials’ refrain from commenting on the nation’s finances: The SBU’s comments on [Valeria] Gontareva might look funny to international observers, but they are yet the latest source of concern for us. For instance, the SBU could draw its attention to this very news analysis (provided somebody translates it into Ukrainian or Russian) and “warn” us that our comment on local bonds, in the previous paragraph, threatens Ukraine’s financial stability. Such “warnings” by a law enforcement body, overstepping its bounds in a democratic society, weren’t made in Ukraine even under the Yanukovych administration, known for its autocracy.”

Quote of the Day: Yakiv Smoliy, former governor of the National Bank of Ukraine, told LB.ua about TV commentators urging Ukraine to go it alone without low interests loans and aid from the IMF, EU, EBRD, World Bank, etc: “You can say what you want, but without external funding, Ukraine cannot exist today.”

Halloween in July? Coffins and funeral wreaths were left Wednesday night at the entrance to the gated residence of Smoliy. Defiant, the National Bank of Ukraine press service called this kind of harassment a new KPI, or key performance indicator: “We do our job – and they bring coffins and wreaths to our houses.”

Bureaucratic rule changes highlight a booming business: the monthly import of 10,000 lightly damaged cars from the US and EU for repair and use in Ukraine. Columb, a major vehicle broker, says repairs of these ‘salvaged cars’ generally cost $2,500 to 3,000. At this volume, salvaged cars would account for almost half of the 139,400 used cars imported into Ukraine in the first half of this year. According to Columb Trade co-founder Volodymyr Kovel, proposed Interior Ministry rule changes on documentation would add $3,000 to the cost of each car.

Air traffic out of Kyiv is growing gradually, with today’s scheduled flight departures totaling 44 from Kyiv Boryspil and 14 from Kyiv Sikorskiy. The two airports expect to handle a total of 200,000 passengers this month, about 20% of last July’s level.

Ukrainian tourists no longer have to take Covid tests to enter Montenegro, reports that Adriatic nation’s Public Health Institute. SkyUp and Windrose fly from Kyiv Boryspil to Tivat, Montenegro’s largest airport.

 

  • Ze Backs 11% Hryvnia Devaluation
  • SBU to Financial Critics: Shut Up
  • Critics: Unlikely IMF Deal Can be Saved
  • IMF Money Boosted Reserves to 8-Year High
  • With EU Off Limits, Black Sea Tourism Booms

Fresh from purging the leadership of the central bank, President Zelenskiy told business leaders that Ukraine’s exchange rate should match the rate in the national budget – 30 hryvnia to the dollar. That would represent a 11% devaluation from today’s National Bank of Ukraine rate – 26.95 hryvnia to the dollar. Last December, the hryvnia strengthened to a recent peak of 23.22 to the dollar. Today’s rate is half of one percent weaker than one year ago, July 8, 2019.

“Companies lost millions and closed because of this rate – this is true,” he told business leaders in Chernivtsi, reports Interfax-Ukraine. “We have been fighting this since the very beginning of my term, since [last] summer…We told everyone: how can we live, if our budget is calculated at the rate of Hr 30 per $1, and you see what hryvnia we have? We were told that these are market conditions, the bank is independent, etc.”

Zelenskiy took aim at Valeria Gontareva, former head of central bank. From self-exile in London, she urged the IMF to ask for their money back if Ukraine’s president dilutes the independence of the central bank. The president retorted: There are enough people who ‘help’ Ukraine from abroad. But we know how many Ukrainian enterprises that just closed because of this exchange rate.”

The State Security Service, or SBU, took a more censorial tack, posting on Facebook that it “considers it inadmissible to declare statements that could harm the national security of the state, in particular in the financial and economic sphere, and adversely affect the situation in the country. We urge any expatriates to refrain from making any such ambiguous comments and to take care of Ukraine’s national interests and not to sow panic among the population and shake the economic stability of the state.”

Tim Ash writes from London: SBU in effect telling Gontareva, Smoliy and Churiy to shut up as Zelenskiy and crew take over the NBU… Clear Zelenskiy wants a team at the NBU who will do his bidding, cutting policy rates and weakening the UAH to boost growth.”

Ukraine’s foreign reserves hit $28.5 billion on July 1, the highest level in eight years, reports the National Bank of Ukraine. Boosting reserves 12% over the June 1 level, the IMF deposited its first tranche – for $2.1 billion – on June 12. This deposit triggered hundreds of millions of dollars in additional deposits by the EU and the World Bank.

“There likely won’t be any more [IMF] tranches distributed to Ukraine, unless the new NBU Governor is acceptable to the IMF and its conditions are met,” Robert Homans writes in a bne IntelliNews article headlined: “Smoliy’s Resignation and the soft coup underway in Ukraine.”  “The definition of a “soft coup” is a forcible change of government control but without the use of physical force,” he writes. Listing ‘Euromaidan Reformers’ who have been purged from the government in the last 90 days, he concludes: “These developments potentially increase the flow of graft in Ukraine, for the likely benefit of the coup plotters, a flow that was staunched by many of those who have been removed from their posts.”

Turkey hopes 100,000 Ukrainians will visit Antalya this month, down from 145,000 in July 2019, Interfax-Ukraine reports from Antalya Airport. Ukrainian groups go to Turkish hotels that follow Covid containment practices, says Nurkhan Kaplan, deputy director of local partner of Coral Travel. The online arrival board of Antalya Airport showed flights arriving from Germany, Kazakhstan, Serbia, and Switzerland. There were nine flights from Germany and nine flights from Ukraine – from Kyiv, Kharkiv, Lviv and Odesa. Tourists planning to fly to Turkey need health insurance to cover Covid treatment.

Ukraine’s Foreign Ministry is asking airlines and travel agencies to stop selling tickets to countries that don’t allow Ukrainian tourists to enter. With Ukraine’s Covid infection rate well above the EU cutoff of 25 per 100,000 people, it is unlikely that normal travel will resume to the EU this summer. Ukrainians who first spend two weeks in a country rated ‘Green’ by the EU are allowed to enter the EU for tourism. Last weekend, 13 Ukrainian tourists were detained at Athens airport and later returned to Kyiv.

Five Balkan nations, Albania, Croatia, Montenegro, North Macedonia, and Serbia – welcome Ukrainian tourists. Visitors planning to fly to Croatia should fill out this Croatian Tourism Ministry form.

Betting that air travel will normalize next year, Ryanair next summer will add five new routes between Lviv and five Italian cities: Bari, Naples, Palermo, Turin and Treviso (Venice). Last Monday, Ryanair flew its first Ukraine-Italy flight since March – from Kyiv Boryspil to Milan Bergamo. The discount airliner says it will fly 11 Ukraine-Italy routes this summer, with a frequency of 28 a week. The flights target Ukrainian women who work as caregivers in northern Italy.

Ukraine’s beach resorts – on the Black Sea and Azov Sea – are booming this summer, Vodaphone Ukraine reports citing movements of 4G users. “Judging by the increase in Internet traffic and the number of 4G users, in general, domestic tourism in Ukrainian sea resorts in Odesa, Mykolaiv and Kherson regions has grown by 30% compared to the same weekend last year,” Vodaphone says, referring to Constitution Day weekend. In Donetsk region, tourism booms in three Azov beach towns in the 50 km stretch from the frontline city of Mariupol to Zaporizhia oblast. From west to east, Vodaphone reports 4G users are up: 101% in Urzuf; 124% in Yalta (Donetsk); and 117% in Bilosaraiska Kosa.

Shut off from the EU after three years of visa-free access, Ukrainians will discover that Ukrainian hotels and amenities modernized while they were away, Peter Dickinson writes in an Atlantic Council UkraineAlert blog. “The post-Soviet stereotype of moribund Ukrainian holiday resorts is now out of step with the upgraded reality of the country’s increasingly competitive tourism industry. With record numbers of Ukrainians set to discover this for themselves as they spend their 2020 vacations in Ukraine, the country’s hospitality sector could emerge as one of the few Ukrainian industries to benefit from the coronavirus crisis.”

To answer foreigners’ questions about entering Ukraine, the government launched this week Visit Ukraine Today, an internet site that provides information on entry and exit requirements for foreign travelers who plan to visit Ukraine. The website contains information about self-isolation, and medical insurance. It also shows how to take a COVID-19 PCR test and submit results through the “Dii vdoma” app to exit self-isolation.

Ecolines resumes bus service from Kyiv to Moscow and from Kyiv to St. Petersburg. Rail service was suspended in late March due to the coronavirus epidemic. There have been no commercial air flights between the two countries since Oct. 2015.

 

  • Ze Wanted Central Bank Chief Out
  • Smoliy: IMF Deal Can be Saved If Successor is Independent
  • Gontareva: If Ze Waffles on Bank Independence, IMF Should Get its Money Back
  • Air France Re-Starts Flights from Paris
  • List: Who Gets into the EU

Yakiv Smoliy’s resignation as head of Ukraine’s central bank came after nine months of pressure from President Zelenskiy to cut interest rates and to print more money. I realized I had to ask the president if I should resign – he said yes,” Smoliy tells LB.ua of his June 30 meeting with Zelenskiy. “We are all adults. I just realized I had to go….I understood from the context that I had to resign.”

Asked about timing – now or in the fall – Zelenskiy, responded ‘now,’ Smoliy said in a 6,800-word interview conducted Saturday at the National Bank of Ukraine office he occupied for two years. The President wanted to give the Rada the time to accept the resignation and to approve a successor before the parliament goes on recess July 17 for six weeks.

The timing ruined the Finance Ministry’s placement of $1.75 billion in Eurobonds. Before the offering was yanked Thursday, the bonds were four times oversubscribed and yields had dropped 50 basis points, to 7.3%. “The Ministry of Finance reacted very correctly,” Smoliy said. “If the money had gone before investors learned of the resignation of the NBU chairman, there would have been an even bigger scandal. It would be perceived by investors as a deception, saying that the Ministry of Finance knew about the resignation, but investors did not.”

A theme running through the interview is that Zelenskiy wants his own appointee as central bank governor, an official who will respond favorably to telephone calls from the president’s office. “How many people have called me from the President’s Office with questions about when we will reduce the discount rate?” he recalls. To gin up economic growth, the President’s team wants a weaker exchange rate, higher inflation and lower interest rates.

To keep on track with the IMF and Western lenders, Smoliy said the central bank remain independent from pressure from the President and the Rada. Neither the IMF, nor the World Bank, nor any corporation work with individuals, they work with the institution,” said Smoliy who has a background in the private sector. “Everyone will be waiting for a message from the newly appointed Governor. What will he do? If he does not change the policy of the National Bank, he will immediately declare that he will try to be independent, maintain the independence of the institution, maintain a floating exchange rate, continue inflation targeting, will not finance the budget, will not print hryvnia – this will be a clear signal.”

Smoliy also complained of pressure from Ihor Kolomoisky who seeks to regain control of PrivatBank. There were noisy, paid rallies outside the central bank building and outside his residential compound.  “Horses, people, orchestras, funeral marches. My wife and I were forced to move to an apartment whose address they did not know.”

Concorde Capital’s Alexander Paraschiy writes of Smoliy’s interview: “Given (1) recent statements from Western institutions concerned about the NBU’s independence, (2) the removal of Smoliy and Oleh Churiy to the satisfaction of Zelenskiy’s entourage, (3) Smoliy’s accusations of political pressure and (4) what NBU Council member Vitaliy Shapran confirmed about Ukraine’s de facto “traditions,” it’s apparent that the President is about to take control of the NBU monetary policy. Western institutions have a right to be concerned about the threat to the bank’s independence, which had been among the top achievements of the Poroshenko administration.”

The IMF should suspend payments to Ukraine if the country’s government does not appoint an independent central bank governor, Valeria Gontareva, former governor of the National Bank of Ukraine, tells Central Banking news site. Noting that Smoliy, her successor, was pushed out as governor only three weeks after Ukraine received $2.1 billion in IMF aid, Gontareva says from self-exile in London that Zelenskiy’s team “fooled the IMF. They waited until they had the first tranche of IMF aid and then they put more pressure on Smoliy.”

If President Zelenskiy does not appoint a central bank governor willing to stand up to Ihor Kolomoisky, the IMF should ask for its money back, she adds. “Those tranches were paid under the agreement that there would be central bank independence and economic reform,” she says. “If those conditions are no longer effective, the IMF should say Ukraine must pay its aid back.” The IMF has made no public statement since Smoliy quit last week.

The Finance Ministry sold $11.7 million worth of hryvnia government bonds weekly auction, the lowest amount since late May. The main seller yesterday – $10.8 million worth – was the 3-month bond. It sold with a 7.24% per annum rate. Since the start of this year, foreign ownership of government hryvnia bonds has declined by 11%, to $3.7 billion today.

Air France resumes regular flights between Paris Charles de Gaulle and Kyiv Boryspil. The flights will be twice a week through Aug. 24. After that the frequency becomes three times a week.

In June Boryspil handled 48,398 passengers, down 97% yoy from the June 2019 volume – 1,532,580. Scheduled air service only re-started on June 15.

The 23 countries accepting tourists from Ukraine include: Britain, US, South Korea, Albania, Croatia, Montenegro, North Macedonia, Serbia, Egypt, Turkey, Dubai, Iraq, Iran, Belarus and Ethiopia.  Several countries require visas and some require Covid-free certificates.

After 12 Ryanair passengers from Kyiv Boryspil were detained at Athens airport for three days, Ryanair now asks that all passengers flying out of Ukraine confirm that they have read Ryanair’s Flight and Passenger Restrictions page.

The EU allows entry of Ukrainians for study, business, work, health care, diplomacy, transit, and trucking, according to Dmytro Kuleba, Ukraine’s Foreign Minister Documented proof of need to enter is required. Border guards at different checkpoints may interpret rules differently.

On Ukraine’s northern border, Ukraine has opened six border checkpoints with Belarus. Two of these are open for cars as well as pedestrians and cars – Dolsk, Volyn Oblast and Polessy, Kyiv Oblast. To the east, Ukraine opened four pedestrian border crossings with Russia, reports Ukraine’s Border Service. Ukraine, Russia and Belarus also opened their unique 3-country crossing – at Senkovka, northern Chernihiv Oblast.

A summer travel survey of online users of Rozetka Travel finds: 45% plan to vacation in Ukraine, 24% plan a foreign vacation, and 17% plan to go to the dacha or visit relatives. Of the overseas group, 36% plan to go to Turkey and 40% to Egypt. Of domestic vacationers, half fear crowds and that quality will not match price. Top domestic destinations are: Odesa – 30%; and Zakarpattia – 30%. The survey of 1,200 users of the online travel service was conducted June 19-24, largely before the big floods in Zakarpattia.

 

  • One More Reformer Down at the Central Bank
  • GDP Down 10% in Q2
  • Nova Poshta Deliveries up 32%
  • Trains Arrive from China
  • Flights Resume to Dubai, Italy, and Montenegro

The IMF is postponing their July 14 ‘inspection’ visit to Ukraine, presumably waiting to see who President Zelenskiy will nominate as Governor for the National Bank of Ukraine. With parliament taking its summer break on July 17, it seems unlikely the Rada will approve in time three measures wanted by the IMF: a new, credible Governor for the central bank, a renewable energy tariff law, and judicial reform.

In the latest move against reformers at the central bank, the National Bank of Ukraine Council decided not to renew the contract of Deputy Governor Oleh Churiy. The announcement was made by Council Chair Bohdan Danylyshyn, who seeks to be nominated Governor.

Going out with a bang, National Bank Governor Yakiv Smoliy warned the full Rada, minutes before parliamentarians voted to accept his resignation: “During the last year, there have been paid rallies at the central bank’s office involving lawmakers that are sitting in this hall. My house and the houses of my deputies have been blocked by protesters for a month. It was a full year of systematic pressure…In the last year, there were meetings that included government officials and the president where we were urged to flood the economy with money, cancel the basic principles of the banking system, and set a hryvnia exchange rate that would be favorable for exporters…This is a protest, a signal, a warning, a red line. By my resignation, I seek to prevent further attempts to undermine the institutional basis of the central bank.”

Ukraine’s economy fell 10% yoy in the second quarter, according to the consensus forecast of Reuter’s monthly poll of analysts. This would be the biggest drop since the 14.5% drop recorded in the second quarter of 2015, the economic aftermath of Russia’s annexation of Crimea and the outbreak of war in the industrial east. For this year, the economists forecast GDP will shrink 5.5% yoy in the third quarter and 3% in the fourth quarter.

Nova Posta’s parcel deliveries increased by one third yoy during the first half of this year. During the period, which included the quarantine, deliveries grew by 32%, to hit 128 million parcels. International deliveries – largely from China – doubled, to 2.4 million. The company said much of the growth came from customers making cheaper purchases more often.

China’s second dedicated container train for Ukraine pulled into Kyiv Liski station last week. The train of 43-containers made the 9,500 km trip from Wuhan to Kyiv in 20 days. “We plan that trains from China will run weekly.” Ivan Yuryk, board chair of Ukrzaliznytsia, said at the arrival ceremony. “We are considering a number of new container train routes.”

Container traffic by rail almost doubled in the first five months of this year, hitting 109,440 containers. There are now 36 container trains running in Ukraine on a regular basis.

Cargo moving on the Dnipro river dropped in the first half of this year by 20% yoy, to 3.5 million tons. By contrast, last year Dnipro river traffic was up 19%, hitting 11.8 million for the shipping season.

Ryanair re-launched its flights between Ukraine and Italy. Ryanair is now flying between Milan Bergamo and Kharkiv, Kyiv Boryspil, Lviv and Odesa. It will also from Ukrainian airports to Bologna, Catania, and Rome.

Flydubai resumes flights between Kyiv Boryspil and Dubai. The flights will be three times a week.

Ukrainian flights returned to Montenegro Saturday. With charters expected to arrive almost daily this summer, Ukrainian tourists are to arrive with certificates of negative results from coronavirus tests taken 72 hours before flying.

Airplanes in Ukrainian air space were up 42% in June over May, but still down 87% from June of last year. Domestic flights in June were down 54% yoy, international flights were down 89.5%, and transit flights were down 91%, reports UkrSATSE, the government air traffic control agency.

The annual Yalta European Strategy conference will be postponed for one year due to the Covid-19 pandemic. Founded in 2004 by businessman Viktor Pinchuk, the YES evolved into the premier conference for showcasing Ukraine to international elites. In 2014, after Russia occupied Crimea, the mid-September conference moved from Yalta to Kyiv. Conference organizers announced Friday: “YES and the Viktor Pinchuk Foundation remain committed to the mission: to integrate Ukraine into the world and ensure its proper role on the international agenda.”

 

  • Outgoing Central Bankers Warn of Backsliding
  • IMF, EU Aid Could Depend on New Governor
  • Cargo Jumps at Ukraine’s Busiest Port
  • Retail Returns from Covid Low
  • For Summer Travelers: Turkey and Egypt Are Welcoming; Greece and Poland Are Snooty

The name of President Zelenskiy’s candidate for governor of Ukraine’s central bank will be submitted to the Rada next week, Iryna Vereshchuk, a member of parliament, tells Interfax-Ukraine.  The Rada voted by a wide majority – 286 of 424 members – to accept the resignation of Yakiv Smoliy, who held the post for the three years at the National Bank of Ukraine. Smoliy’s 7-year term was to expire in 2025, but he resigned, complaining of sustained political pressure. He warned the Rada of “systematic political pressure to make decisions that are not economically justified and may cost dear to the Ukrainian economy in the long term.”

Kateryna Rozhkova, now acting central bank governor, warned about “red lines,” especially the bank’s independence and “the right of the National Bank to make decisions regardless of political wishes, but only with the aim of maintaining macro-financial stability.” She told reporters: “It’s also inadmissible to turn on the printing press, inadmissible to return bankrupt banks to their former owners.

Under Smoliy, the central bank cut annual inflation to 2%, stabilized the currency and cut the prime interest rate from 18% to 6%. According to a new poll, Ukraine’s low inflation rate is acceptable to 94% of respondents and 88% oppose weakening the hryvnia. Almost 90% of the Gradus Research poll agreed with the statement that inflation and devaluation benefit oligarchs, not ordinary people. Some politicians argue that Ukraine’s economy will grow faster with 10% inflation and a 10% devaluation.

Last month, IMF Managing Director Kristalina Georgieva made non-interference in the independence of the central bank a condition for the $5 billion IMF deal. Prime Minister Shmyhal said on Savik Schuster’s Freedom of Speech program that the IMF reacted “tensely, but with restraint. We continue to cooperate.” On July 20, he said he expects to sign a memorandum on receiving €1.2 billion in EU macro-financial aid. Analysts speculate that this aid, and a second IMF tranche in September, may depend on the caliber of central bank governor proposed by Zelenskiy.

Timothy Ash writes: This is perhaps the most important hire that Zelenskiy will make during his presidency. There is no room for mistakes, as now appears to be the case with the cabinet reshuffle back in March.”

Cargo handled by Pivdennii, Ukraine’s busiest port, increased 61% during the first half of this year, to 10.6 million tons, compared to January-June last year. Figures released Saturday, during President Zelenskiy’s visit to the Odesa region port, show these yoy increases: exports up 62%, to 7.8 million tons; imports up 56%, to 1.5 million tons; transit up 36%, to 1.8 million tons. On some days, rail car handling topped 1,000 a day.

Mariupol, Ukraine’s main port on the Azov, appears to be reviving. In June, this Donetsk region port handled 528,100 tons of cargo – up 60% yoy. And June’s volume was up one quarter over May. Metals accounted for 78% of the June tonnage. For the last year, Russian Coast Guard vessels have tightened and eased their harassment of Ukraine-bound ships entering the Azov, a binational sea.

In the grain marketing year that ended June 30th, Ukraine exported a record 57 million tons of grain, 14% more than the 50 million tons exported last year, also a record. The Agriculture Ministry’s breakdown was: corn – 30 million tons, up 1%; wheat 20 million tons, up 31%; rye – 8 million tons, down 91%; and barley – 5 million tons, up 35%.

The government may cut wheat exports by 15% this year marketing year, to 17.2 million tons, Ukragroconsult reports, citing traders. Sensitive to bread prices, the government traditionally holds over traders the threat of restricting wheat exports, usually in the spring.

China, Ukraine’s largest trading partner, has authorized four Ukrainian producers of rapeseed meal to supply China’s market, reports Ukraine’s Food Safety agency. A byproduct from processing rapeseed into canola oil for cooking, the meal is a high-protein feed for cows, pigs and chickens.

New car sales in June jumped 24% over May, to 7,306 – 12% over June 2019, reports Ukravtoprom. Comments Alfa-Bank Ukraine: “This supports our view that consumer demand has not been damaged by Covid dramatically.”

Through May, Ukrainians spent $1.2 billion new car imports, reports the State Customs Service. The top three sources are: US – $268 million; Japan – $229 million; and Germany – $200 million.

Trade is recovering most rapidly,” reports ICU investment bank. Retail trade in May was down only 3.1% yoy. Wholesale trade in May was up 2.2% yoy, estimates ICU. Softening the impact of the coronavirus lockdown on trade were the growth of e-commerce and the fact that half of spending in Ukraine is on food. Supermarkets remained open during the three month lockdown.

Attendance at shopping malls was down 20% during the first three weeks of June, compared to the same last year. But sales were up 10-50%, depending on the category of goods, Evgenia Loktionova, director of UTG commercial real estate consultancy, tells Interfax-Ukraine. Depressing shopper numbers, movie theaters, food courts, and children’s play areas remain closed. Yoy sales growths were recorded in these sectors: electronics +50%; sporting goods +30%; clothes +20%; children’s goods +18%; cosmetics and perfumes +10%; and shoes +5%. Pet supplies were down 20%.

Turkey’s Pegasus Airlines has resumed flights between Istanbul’s Sabiha Gökçen Airport and three Ukrainian cities: Kharkiv, Lviv and Zaporizhia. In addition, the airline plans to fly from Kyiv Sikorsky to Ankara, Bodrum and Dalaman.

Flights from Ukraine are once again landing at Hurghada and Sharm el Sheikh, Egypt, reports Independent Egypt news site.

Poland re-imposed two week quarantine on passengers arriving from Ukraine.

Ukraine plans to open an embassy in Tirana, Albania this year, Ukraine’s foreign ministry reports. Albania, Croatia, Montenegro, Egypt and Turkey are five countries that opened their borders last week to Ukrainian tourists. SkyUp and UIA now fly between Kyiv Boryspil and Tirana.

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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