- Will Not Return PrivatBank to Kolomoisky, says Zelenskiy
- Top Ministers Go to U.S. Next Week
- Inflation Slows
- 60 SoEs for Privatization, including ‘Corrupt and Criminal’ Ukrspirit
- 5 million Ukrainians Went Abroad
- Big Tobacco Burned by Fines
- Kyiv Bridge Costs Balloon
- New Airport for Rocket City
Zelenskiy promises not to return PrivatBank to its former owners. In a televised press marathon on Thursday, the president vowed to defend the nation’s interests. Oligarch Ihor Kolomoisky is trying to wrestle back control of PrivatBank through a lawsuit filed in the Kyiv Commercial Court. The bank was nationalized in Dec. 2016, after its ownership group, led by Kolomoisky, put the bank $5.5 billion in the red. PrivatBank, the country’s biggest bank, posted a record $1.1 billion profit in the first nine months of 2019.
Top ministers head to the US this week to meet with the IMF and World Bank officials for training, Prime Minister Honcharuk writes on Facebook. He emphasized that “cooperation with international partners and donors” is important for Ukraine. Last month, IMF officials left Ukraine without announcing a finalized draft memorandum for a new program, agreeing only to continue talks.
Year-on-year consumer inflation slows to 7.5% in September, compared to 8.8% in August, the National bank said in a press report. This figure rate was below the government’s official 7.7% forecast.
Naftogaz contributed 15% of the entire state budget, or $3.4 billion, in the first three quarters of 2019, the company reports. In 2018, the company paid $5.62 billion to the state budget or about 5% of Ukraine’s entire GDP.
More than 60 state companies, including Hotel Ukraine on Maidan are to be privatized, said President Zelenskiy during Thursday’s press marathon. Some entities such as the residence of the Head of State will continue to be managed by the Directorate.
Ukrspirt, one of Ukraine’s largest alcohol producers, is to be privatized, writes Minister of Economy, Trade, and Agriculture Timofey Milovanov on Facebook. He characterized the state-owned enterprise as “corrupt and criminal” and said Ukraine loses over $200 million each year from such companies.
This year, 1.5 million Ukrainians have left the country for long-term stays abroad, Dmytro Dubilet, head of Ukraine’s Cabinet of Ministers, writes on Telegram. “Since the beginning of the year, the number of Ukrainians who have left and did not return within 21 days is 1.5 million.”
New tax forms start in January 2020, the State Tax Service announces. “From Jan. 1, 2020, taxpayers will file a declaration of wealth and income in a new form.”
The Antimonopoly Committee issues $265 million fine for several big tobacco companies and distribution company TEDIS. Committee Chairman Yuriy Terentyev said the penalty was for “collaborating to create and maintain artificial barriers for other companies” in Ukraine’s cigarette market. Phillip Morris, JT International, British American Tobacco and Imperial Tobacco were among the companies hit. Some foreign tobacco companies have alleged they are being unfairly targeted by the new administration and have threatened pulling investments.
ArcelorMittal will allocate $16.5 million for the construction of an oncology center in Kryvyi Rih, reports Interfax Ukraine. Earlier this year, criminal charges for “ecocide” were brought against the metals company, which was searched by Ukraine’s SBU security service. President Zelenskiy, who is from Kryvyi Rih, has criticized ArcelorMittal for failing to curb pollution and called for targeted financial relief for those who victims of the company’s emissions.
Construction costs expected to nearly double for Kyiv’s Shuliavsky Bridge, according to Mayor Vitaliy Klitschko, reports the Center for Transportation Strategies. The initial figure of $24.5 million will increase to $42.8 million because “additional work must be performed in the adjacent areas.” In a radio interview, Klitschko said: “The cost of building the bridge is the same, but we did not expect that we would have to work on the heating network located near the bridge.” The mayor assured construction costs would be transparent, and additional work will be financed from the city budget.
A new international airport will be built in the city of Dnipro next year, Zelenskiy assured during Thursday’s press marathon. Dnipro, formerly known as Dnipropetrovsk, the Soviet Union’s “rocket city,” is Ukraine’s 4th largest city and a major industrial center. The new runway will be built according to international standards and its main runway will have a length of at least 2,900 meters. Construction will cost approximately $118 million and is to take two years.
Kyiv’s Boryspil airport receives six new Hungarian-made Jetbroom 9600 snowblowers purchased at a tender in 2018, the Center for Transportation Strategies Reports. “We are fully prepared for winter. We plan to use 18 snow blowers, including the six new ones, to clean runways and lanes, and two snow blowers to clean other roads and platforms.” The airport is also scheduled to launch 32 parking spaces for electric vehicles which will be equipped with charging stations.
- PrivatBank Profits Big
- Ukrzaliznytsia Digitizes
- National Economic Competitiveness Falls
- Big Tobacco Feels Burn
- Consumer Prices Rise
- Winter is Coming, Ukrtransgaz Prepared
- Khmelnytskyy Business Center Boom
- SkyUp to Salzburg
PrivatBank posts a record profit of $1.11 billion in the first nine months of 2019, according to Board Chairman Petr Krumhanzl. Commissions netted the bank $539 million in revenue while interest income generated $596 million. PrivatBank was nationalized in Dec. 2016, after the previous ownership group, led by Ihor Kolomoisky, put the bank $5.5 billion in the red.
Ukrzaliznytsia and the State Fiscal Service introduce an electronic document system to streamline procedures. This will replace paper documents with digital ones when transporting import, export and transit goods, according to the Center for Transportation Strategies. The new system is designed to cut train processing times at transfer stations and simplify the delivery procedures at final destinations. “This will be done in electronic form, which will reduce the number of unreasonable delays during inspections, reduce corruption and unnecessary expenses for the business. Everything can be tracked online,” announced the Cabinet of Ministers.
Two more state-owned enterprises go to State Property Fund for privatization. Kharkiv-based machine factory Zavod Elektrotyazhmash and Kyiv-based holding company United Mining and Chemical Company will go up for sale, Timofei Milovanov, Minister of Economic Development, Trade, and Agriculture, writes on Facebook.
Ukraine backslides two places in the World Economic Forum’s 2019 Global Competitiveness Index, ranking 85th among 141 countries. Healthcare and macroeconomic stability metrics worsened, while the country improved in business dynamism and labor market metrics.
Big tobacco companies including Phillip Morris and British American Tobacco claim a new law targeting profit margins could cause a pullout. In a press conference, BAT General Director Simon Wellford said: “Adoption of this law will have serious consequences for the industry. We have an absence of a transition period and implementation mechanisms. In the near future, this will expose our business to risks. We will be forced to consider the issue of production of our products in other factories.”
The Cabinet of Ministers dismissed Alexandr Dotsenko, acting director of the State Enterprise for Air Traffic Services, UkSATSE. Prime Minister Honcharuk tells reporters: “We made staffing decisions and fired the acting director of UkSATSE.” A state-owned enterprise, UKSATE provides air traffic control, management of airspace, and radio communications. Earlier in August, NABU agents searched UkSATSE over possible corruption after $16 million was sent to the company’s account at PJSC Platinum Bank, a bank later declared insolvent.
Consumer prices rose by 0.7% in September, after falling in August by 0.3% and July by 0.6%, according to the State Statistics Service. Since January 2019, prices have increased by 3.4%.
Zelenskiy signs law protecting geographic branding, according to an official press release. The law applies to products tied to geographical areas such as champagne, cognac, Roquefort cheese, parmesan and others. The statement said: “The implementation of this law will facilitate the adaptation of national legislation to European Union law, as well as the fulfillment of the commitments made by Ukraine under the Association Agreement with the European Union.”
Ukraine’s state gas transit system is fully prepared for winter with 20.8 billion cubic meters in storage, reports Ukrtransgaz. “Ukrtransgaz has completed 100% repair work and modernized the gas transit system of Ukraine within the framework of the plan of preparation for work in the autumn-winter period 2019/2020,” the company reported.
The Cabinet of Ministers approves the European Investment Bank plan to loan €20 million to small and medium-sized enterprises, according to an official press release. The Cabinet emphasized that the implementation of the plan will be carried out within the framework of the Agreement between Ukraine and the European Investment Bank.
Ukraine’s National Bank launches a commemorative 2 UAH coin featuring artist Ivan Trush, who reports the bank’s press service. Trush was a prominent 19th and 20th century ethnic Ukrainian impressionist painter born in Austria-Hungary.
Eight business centers are to open in Khmelnytskyy, a region in western Ukraine, reports Interfax Ukraine citing UTG Consulting. The office vacancy rate in the region was 6.7% in August 2019. The new stock will bring the total supply of office space to 24.1 thousand square meters.
Cabinet of Ministers approves funding for 707 investment programs and regional development projects implemented through the State Regional Development Fund (ERDF), Ukrinform reports, citing Prime Minister Honcharuk. “We have decided to take a closer look at what investment projects can be financed in the regional development program at the expense of this ERDF in the near future. The Ministry of Community Development is responsible here.”
Ukrainian budget airline SkyUp will launch winter flights from Kyiv to Salzburg, Austria, starting December 28, the company reports. The flights will start on December 28, 2019, and end on February 1, 2020. Only round-trip tickets will be sold starting from €238.
- Kolomoisky v PrivatBank Postponed
- Poll: Ukrainians Oppose Land Market
- EBRD Loans
- Sovereign Bond Rates Dip Slightly
- UAH 78 Billion Budget Hole
- Debt Payments Mounting
- Metals Face Headwinds
- Juicy Outlook for Juices
- 2020 Defense Spending to be 5.4% of GDP
Kyiv’s Commercial Court has postponed until Oct. 17 a ruling on returning PrivatBank to its former owners, principally Ihor Kolomoisky. With an IMF program hanging in the balance, a National Bank spokesman said: “We hope that the court will objectively evaluate the case and make a decision based on law.” In February, the court unexpectedly accepted the lawsuit filed by oligarch Kolomoisky. In April, a Kyiv District Administrative Court ruled the Dec. 2016 nationalization of PrivatBank to be illegal. The Finance Ministry immediately appealed the decision.
A farm land market is opposed by 73% of Ukrainians polled by the Rating Sociological Group. Only 19% support allowing Ukrainians to sell their farmland. An even higher group – 81% oppose selling land to foreigners. A national referendum on the issue is backed by 81% of respondents interviewed from Sept. 28 to Oct. 1.
The EBRD plans to loan Ukrzaliznytsia $100 million to modernize Ukraine’s portion of the Trans-European Transport Network, or TEN-T, Yevhen Kravtsov, the state railroad CEO, writes on Facebook. Stressing the tender will follow EBRD rules, he writes: “70% of the $100 million will go to modernize infrastructure..30% will go to updating of [electronic systems].”
The EU and EBRD sign a €70 million loan agreement with Raiffeisen Bank Aval, ProCredit Bank, and OTP Bank, under the EU4Business Local Small Business Financing Facility SME (Small & Medium Enterprise) program. The EBRD said: “These funds will be provided for investment, and as working capital of SMEs, which are the engine of the local economy and have created almost 80% of jobs in the country.”
For overnight train travelers, Ukrzaliznytsia will buy 35,000 bedding sets from a Rivne-based textile manufacturer, according to ProZorro, Ukraine’s public procurement platform, Interfax reports. The state-owned rail company is paying about $12 a set.
Interest rates fell slightly as the Finance Ministry auctioned Tuesday 2.15 billion UAH worth of bonds, the equivalent of $88 million. Yields were: 6-month bonds – 15.65%, a decrease of 25 basis point; 3-year bonds at 15.42%, a decrease of 20 basis points.
The state budget is underfunded by $3.2 billion, according to the Accounting Chamber. UNIAN reports the government failed to collect $1.5 billion, or 5.4% of the entire budget, from VAT on imported goods, taxes on manufactured tobacco, and parts of profits and dividends from state-owned companies.
Ukraine expects to pay $3.3 billion worth of debt (UAH 80.3 billion) in the last quarter of 2019, according to the Finance Ministry, UNIAN reports. The figure is about 3% of Ukraine’s 2018 GDP.
Ukraine’s ferrous metals exports dropped 10.3% in the first 9 months of 2019, compared to the same period last year, which saw $7.74 billion in revenue, reports Interfax Ukraine. Ferrous metals can make up 20% of Ukraine’s overall exports. Producers are vulnerable to a global economic slowdown and sluggish world demand for metals.
Ukraine’s juice exports generated 60% more revenue in the first eight months of 2019 than in the same period last year, reports the Agrarian Business Club. Juice export revenues hit $63 million. Main exports are apple and tomato juices. Main buyers include the United States, Austria, and Canada.
5.4% of GDP will be spent on defense and security in 2020, according to Finance Minister Oksana Markarova. 136 billion UAH, or 3% of GDP, will be disbursed to the Ministry of defense while 723 million UAH will go to housing for active personnel and veterans. Ukraine is among the world’s top defense spenders by a percentage of GDP.
- DTEK Under Fire
- Ukrainians Use Less Gas, But Import More
- Drought Hits Farmlands
- E-commerce Tax Trouble
- Debt Servicing Cuts Into Reserves
- New Defense Industry Leadership
- Ze to Legalize Crypto Mining
Ukraine’s Antimonopoly Committee has opened an anti-trust probe of Zakhidenegro, a subsidiary of energy conglomerate DTEK, owned by oligarch Rinat Akhmetov, Interfax Ukraine reports. The committee alleges “abusive economic practices” by the company’s Burshtyn TES coal-fired power plant located in Ivano-Frankivsk. DTEK denounced the investigation as “an artificial administrative intervention in market competition.”
Ukrainians used 7% less natural gas in the first nine months of this year, according to Ukrtransgaz, the company operating Ukraine’s state gas transit system. Between January and September 2019, Ukrtransgaz delivered 17.9 billion cubic meters of gas via its pipelines to customers, down 7% from the same period last year.
…. But imported much more. Ukraine imported 11.6 billion cubic meters of gas between January and September 2019, which is 44% more than the same period last year, reports Ukrinform. The gas was imported from EU suppliers.
Drought conditions hit half of Ukraine’s arable land, reports UkrAgroConsult. After enduring a chillier-than-usual September, Ukrainian crops face “difficult” conditions, says the agriculture consulting firm.
Rozetka, the e-commerce platform aspiring to be Ukraine’s Amazon, faces a tax headaches. The State Tax Service alleges Rozetka failed to properly report online transaction information in a timely matter to authorities, reports Interfax Ukraine. Natalya Kalenichenko, Director of the Department of Taxpayer Services and Information Technologies, says that critical information from Rozetka did not reach her agency on October 4, the due date, and requested the National Bank to assist. Rozetka founder Vladislav Chechotkin shifted the blame on the tax agency saying: “Rozetka has been communicating with the tax department, the NBU and a number of government organizations to find out why [transaction records] are in our databases but missing in external ones.
Government burns reserves to pay down debt Ukraine’s international reserves fell from $22 billion in September to $21.44 billion this month, or a 2.6 percent decrease, due to significant expenditures on state debt, reports the National Bank. Last month, the Government and the National Bank paid nearly $2 billion to meet its obligations: $1.22 billion to service Eurobonds, $560.9 million to the IMF. Some of this was offset by the successful placement of $546.9 million worth of bonds.
Zelenskiy appoints Assistant Andriy Yermak and Ukrposhta CEO Ihor Smelyansky for Ukroboronprom’s supervisory board. Yermak is a longtime Zelenskiy ally who also worked in the film industry. Smelyansky is a US-educated executive. They are to work with Aivaras Abromavičius, a corporate governance specialist, who seeks to bring corruption under control in the defense manufacturing conglomerate.
Cryptocurrency mining will be legalized by 2022, according to a Facebook post of the Digital Transformation Ministry. Cryptocurrencies such as Bitcoin and Ethereum are not regulated in most countries and have a ‘gray zone’ status in Ukraine. The government is studying ways to tax cryptocurrencies. By 2020, it hopes to adopt international recommendations to fight money laundering via cryptocurrency.
Drawing on Estonia’s experience, Ukraine’s government is drawing up a draft law to establish “Electronic Residency” in Ukraine, says Mikhail Fedorov, Ukraine’s Minister for Digital Transformation. “We want it to be convenient to open a company in Ukraine, to conveniently open a bank account in Ukraine without coming to our country – to receive an ID card at the embassy, and to have the opportunity to conduct business here,” he told a tech conference in Lviv last week. In the five years since Estonia started its e-Residency program, Ukrainians account for the third-largest nationality.
- Sanctions-Busting Belarus Becomes Ukraine’s 5th Largest Trading Partner
- With Jan. 1 Countdown Starting, Gas Transit Talks Resume Oct. 28
- Ukraine’s E-Residency Prepared
- In a $450 million Buy, Interior Ministry Orders 14 Antonovs
Belarus and Ukraine hope to expand bilateral trade this year by 20%, matching last year’s rate, the two countries’ presidents said at the Second Forum of the Regions of Ukraine and Belarus. Held in Zhytomyr, 150 km south of Belarus, the forum witnessed the signing of $543 million in contracts – 10 times more than last year’s forum, held in Gomel. About 300 business representatives participated in the forum.
With Belarus transshipping many Ukrainian products to Russia, Belarus now is Ukraine’s fifth-largest trading partner, after China, Russia, Germany, and Poland. “The trade turnover between our countries exceeded $5 billion last year,” President Zelenskiy. With Belarus President Lukashenko standing next to him, Zelenskiy said: “I agree with Alexander Grigorovich – we can and should overcome the mark of $6-8 billion.”
Negotiators from Russia, the EU, and Ukraine meet on Monday, Oct. 28 to resume talks on Gazprom’s gas transit contract with Naftogaz. The talks will come six weeks after the last meeting, and two months before the 10-year transit expires on Jan. 1. Last week, Naftogaz submitted for EU certification the documents of the new company required by EU law, the Operator of the Gas Transportation System of Ukraine.
If Gazprom and Naftogaz do not agree on a transit contract, Europe will see an “unambiguous” gas price jump this winter, Mario Meren, chairman of Wintershall DEA, Germany’s largest oil and gas producer, warns in an interview with Russia 24 TV channel.
Prime Minister Honcharuk promises to give the nation updates every Friday on the government’s 5-year, 40% growth for Ukraine’s economy. “I would like to emphasize again: the economy is growing by 40% it’s our common purpose. It’s real,” he writes on Facebook. His highlights for last week; computerizing customs clearance paperwork; decision to sell property of debtors on Prozorro; the development of a unified cadaster by State Geocadaster; signing a memorandum of cooperation between the Government and the National Bank of Ukraine; abolition of the list of state companies exempt from privatization; and adoption by the Rada of concession law for public-private partnerships.
Cases of alleged judicial and administrative abuse of Western companies were related to Prime Minister Honcharuk by Andrew Hunder, president of the American Chamber of Commerce. At a meeting of foreign business executives Friday, Hunder cited problems encountered by Philip Morris International, Jabil Circuit, Shell, Unilever and McDonald’s. “McDonald’s has been unable to open a restaurant at Boryspil Airport for many years,” said Hunder. “Boryspil is the gateway to Ukraine. I hope that with you in the next few months we will be able to open a McDonald’s restaurant.”
As part of the new government’s ‘human-centric’ policy, control points under construction at road crossings with Crimea are designed to promote travel and integration of Crimea residents with Kyiv-controlled Ukraine. To help residents update their Ukrainian documents, the Kalanchak and Chonhar checkpoints are to have Ukrainian government administrative centers. In addition, workers are building at the checkpoints regional bus stations and restaurants for drivers writes Prime Minister Honcharuk. Regional authorities encourage Crimea residents to use Kherson International airport, and Melitopol train station, historically a rail hub for travel to and from Crimea.
Breathing new life into Antonov’s Kyiv region assembly lines, the Interior Ministry plans to buy 14 new model Antonovs, in a purchase estimated at half a billion dollars. Minister Arsen Avakov tweets the ministry will buy 13 An-178s – a short-range military airlift jet. The Ministry will also by an An-32P firefighting turboprop.
The original English version is from our partner UBN – Ukraine Business News. For more information and news archive, go to: www.ubn.news.