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  • Shevchenko is Ukraine’s New Central Bank Chief
  • Choice is Probably Palatable to IMF
  • With Green Energy Tariff Fight Unresolved, Rada Extends Session To Tuesday
  • Consumers and Business Leaders Gloomy
  • Cyber Cops Block Hackers

Markets and investors largely welcomed the Rada’s approval Thursday morning of a new head of the central bank. In rapid fire sequence, Kyrylo Shevchenko, head of state-owned Ukrgasbank, first won approval of the Finance Committee, and then the full parliament – all before lunch. Shevchenko won the approval with 332 votes, far above the needed 226. Most Voice and European Solidarity deputies abstained.

At the Rada podium, Shevchenko projected the image of a centrist. He defended inflation targeting of his predecessors, but signaled that he supports lower interest rates to support “further economic growth,” reports The Financial Times. “Ukraine’s economy is beginning to recover from quarantine restrictions, but it continues to stagnate.”

Ukraine’s mountain of nonperforming loans should be cut, said Shevchenko, a veteran of work at state-owned banks, first at Oschadbank, then at Ukragasbank. Addressing the Rada, he broke down the shares of NPLs as follows: in state banks – 49% of all loans; in banks with foreign investment – 32.5%; and in privately owned banks – 20%.

Citibank’s Ukraine Economics Flash writes: “Market participants should draw a deep sigh of relief given that some of the more controversial candidates have been avoided… A sudden stop with the newly minted IMF Program has thus been successfully avoided.”

Concorde Capital’s Alexander Paraschiy writes: “It’s not clear whether Shevchenko will be able to withstand expected pressure from the cabinet and the president to radically ease monetary policy, or even weaken the national currency…we believe his candidacy will barely satisfy the IMF, which is encouraging for Ukraine’s short-term financial stability. Based on this expectation, it looks likely that Ukraine will be able to return soon to the international debt markets. Time will tell whether Shevchenko’s monetary policy will prove to be independent.”


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To calm investors and markets, the new central bank governor should quickly state his policy on inflation and foreign exchange, former Economy Minister Timofey Milovanov tells Interfax-Ukraine. “it is important to get a clear position from the newly appointed chairman right now,” said Milovanov, who is also honorary president of Kiev School of Economics. “What will be the policy of the National Bank in the future: what will change and what will remain unchanged?”

The American Chamber of Commerce in Ukraine says:The business community hopes that the new head of the National Bank will preserve the independence of the NBU and continue its current course, in particular monetary policy, support for macroeconomic stability and inflation targeting, as well as ensure cooperation with the IMF to accelerate economic growth… the National Bank must remain independent in order to be effective and ensure the confidence of investors in Ukraine.”

The European Business Association posts a 5-point wish list. It includes: continuing currency liberalization, inflation targeting, “the ongoing course of macroeconomic stability and sustainable economic growth,” and “support [of] the independence of the NBU, without interfering in its policy of the regulator and without rolling back the reforms initiated in the financial sector.”

With the ‘green tariff’ for solar and wind farms unresolved, the Rada extended its session through today in hopes of finding a solution. Wind and solar producers have largely gone unpaid by Ukrenergo since April. Payment arrears approach $625 million, investment is frozen, much of the industry faces default this fall, and several companies plan to resort to international arbitration.

In the Rada, deputies loyal to Ihor Kolomoisky, a major electricity consumer, propose tariff cuts deeper than the compromise memorandum accepted by most producers last month. In face of this looming crisis, the EBRD, a major funder of renewable projects, appealed yesterday afternoon: “We urge the administration and legislators to continue their dialogue with investors in order to reach a consensual solution which is supported by the sector as a whole.”

The Rada also voted to promote Olga Pishchanska to chair of the Antimonopoly Committee. She had been the first deputy head of the Committee until two weeks ago, when Zelenskiy dismissed Yuri Terentyev, a veteran of five years in the job. Pishchanska told the Rada: “The main priorities of competition policy for the near future are to combat the abuse of existing monopolies and cartels, use tools to lower barriers to entry, end anti-competitive actions of the authorities, strengthen the institutional capacity of the committee and reform the public procurement body.”

Two surveys conducted before the July 1 central bank crisis indicate worsening consumer and business outlooks.

The consumer sentiment index fell by 11 points in June, to 65 points on a 200-point scale. Info Sapiens, which carries out this monthly survey, reports these drops: economic expectations, down 19 points, to 72 points; personal finance expectations, down 18 points, to 74 points; and development of Ukraine’s economy over the next year, down 18 points, to 56 points.

Business expectations fell to their lowest level in five years, according to the National Bank’s latest quarterly survey of company executives. The second quarter level was 91%, a sharp drop from the Q1 level of 110.5%. Business leaders expected inflation to deteriorate to 7% by the end of this year and the hryvnia exchange rate to hit UAH 28.28 / $1. “For the first time since the first quarter of 2016, enterprises expect a reduction in the production of goods and services in Ukraine,” the central bank reports. “Almost half of enterprises expect the worst dynamics, and only every seventh company – production growth.”

Ukraine’s cyber police blocked 947 cyber attacks on state entities last week. Of the attacks, 48% were ‘Brute Force’ attacks – hacking of a password by enumerating all possible key options; and 39% were ‘Harvest’ attacks – spamming to hack email accounts. There were also five denial of service attacks, largely aimed at President Zelenskiy’s official website.

In one ‘brute force’ attack, a hacker was arrested last week and charged with breaking into 50 government data bases and trying to sell the information, reports Cointelegraph, citing Ukraine’s cyber police. Photos publicizing the arrest show a screen shot of a Skype conversation where he was apparently trying to sell personal information to a Russian buyer for 6.5 Rubles, or 9 US cents, for one entry.

 

Travel Notes:

By the end of this year, Ukraine’s air travel will reach half the level of 2019, Infrastructure Minister Vladyslav Krykliy writes in NV.

LOT Polish Airlines resumed flights Wednesday from Warsaw to Lviv and to Odesa. For now, Ukrainians can only fly to Poland if they have valid work or study contracts, residence in the EU, or are in transit.

Ukrainians can enter Bulgaria without Covid tests and without self-isolation.

 

  • Zelenskiy Nominates Ukrgasbank’s Shevchenko to Head Central Bank
  • State-owned Dnipro Hotel Sells for 14 Times the Starting Auction Bid
  • Forget About That European Vacation This Summer

The Rada will debate President Zelenskiy’s nomination of Kyrylo Shevchenko, to be the next governor of National Bank of Ukraine. A lifelong banker in Kyiv, Shevchenko, aged 47, has run state-owned Ukrgasbank since 2014. At the bank, Shevchenko specialized in ‘green’ loans to solar and wind projects. Six months ago, the bank took a €30 million loan from the World Bank’s International Finance Corporation, a step seen as preparing the bank for privatization during the Zelenskiy presidency.

UNIAN news agency describes Shevchenko as a state banker who would pursue two goals of President Zelenskiy – an expansionary monetary policy and closer relations with the President. Last fall, Shevchenko, criticized the central bank’s monetary policy as too hawkish. Zelenskiy recently praised Ukrgasbank as the first bank to issue cheaper loans to small businesses under a government coronavirus remediation program.

The Rada is expected to approve Shevchenko. But it is unclear if he will have the character to stand up to oligarchs who want their bankrupt banks back. In face of pressure that included death threats, the last two governors resigned halfway through their 7-year terms. On Tuesday, Zelenskiy promised IMF Managing Director Kristalina Georgieva in a telephone conversation that he would appoint “an independent technocrat” to the central bank post. Georgieva made clear that central bank independence is a major condition for continuation of the $5 billion IMF agreement with Ukraine. Bloomberg headlined a story: “IMF Billions in Peril as Ukraine’s Leader Boxes Himself In.”

Kyiv’s state-owned Dnipro Hotel was sold by online auction last Wednesday to a real estate company for $41 million – 14 times the starting bid of $3 million. With 29 investors participating in the ProZorro auction, interest in the 186-room hotel may have grown after the Rada approved Tuesday a law allowing casinos in hotels with 150 rooms or more. Inga Ioanno, spokesperson for the State Property Fund, told the Kyiv Post: “As of today, it is the best location and the hotel meets all the criteria of this law for opening a gambling hall.”

Under state ownership, the Soviet-built hotel charged as little as $23 a night last year and recorded a $11,000 profit for 2019. “The hotel will get a second life – the hotel will function,” predicted Dmitry Sennichenko, head of the State Property Fund, which is managing the privatization. Under the privatization rules, the auction winner, a little-known real estate real estate company called Smartland, has one month to prove that it will pay for the hotel with legitimate, non-Russian money. After the deal is finalized, in September, the new owner is to keep the name Dnipro, raise the quality to four stars, and retain the staff.

Zelenskiy and other government officials hailed the sale of the 12-story Dnipro as the start of Ukraine’s “big” privatization – state companies worth over $10 million. “Big privatization has started!” Zelenskiy wrote on Facebook. “Privatization is a great way to attract investment in our country.” He said that over the last year, 8,000 ‘small’ privatization auctions has taken place, netting the treasury $100 million.  Prime Minister  Shmygal tweeted: “Ukraine has made first truly successful privatization agreement in many years.”

The Hotel Ukraina, overlooking the Maidan, is to be the next state-owned hotel to go up for sale. First, government lawyers have to break several legal “poison pills” that make the property unattractive to outside investors. Sennichenko, of the state property fund, said that last year Ukraine’s 3,000 state enterprises caused the government losses of $6.3 billion.

During the first half of this year, a period that includes the height of the coronavirus lockdown, Ukraine’s exports of goods were down 6% yoy, and imports were down 12% yoy. The trade deficit shriveled to $305 million – 87% below last year’s first half deficit of $3.5 billion. China fully eclipsed Russia as Ukraine’s largest trading partner. Ukraine’s top three export destinations were: China – 13%; Poland – 6%; and Russia – 6%. Ukraine’s top three sources of imports were: China – 15%; Germany – 9%; and Russia – 9%.

The 26 nations of Europe’s Schengen Area will remain closed to Ukrainians for “the nearest future,” Ukraine’s Foreign Minister Dmytro Kuleba tells segodnya.ua news site. The reason: Ukraine’s new corona infection rate of 62 per 100,000 people is almost four times the EU average of 16.3 per 100,000. Wednesday, Hungary closed its borders to most Ukrainians. In advance, crowds of unmasked people formed Tuesday at land border crossings with Ukraine.

Ukraine will extend its COVID-19 quarantine at least until September, Health Minister Maksym Stepanov tells RBK-Ukraine. In Kyiv, measures could be kept in place until the end of next year, Oleh Ruban, head of the State Food and Beverage Service in Kyiv, tells RBK-Ukraine in a separate interview. He said three more seasons are needed for 80% of the population to be exposed to the virus, creating a collective immunity. On average, 62 people per 100,000 contract COVID-19 every day in Ukraine.

Due to high coronavirus levels in Israel and Ukraine, Ukraine will not permit the annual pilgrimage of 30,000 Hasidic Jews to Uman, Cherkasy. Normally, the pilgrimage would take place two months from now, in the days before the Sept. 18-20 Jewish New Year holiday. “In Uman, the [coronavirus] situation is under control,” Uman Mayor Oleksander Tsebriy writes on Facebook. “But the arrival of a large number of foreigners from different countries could cause a coronavirus outbreak in our town.”

Ukrzaliznytsia has resumed half of its pre-quarantine passenger train service, reports Ivan Yurik, acting chairman of the state railroad. Currently, UZ runs 65 long-distance trains and 700 suburban trains.

UIA currently uses eight of its 35 aircraft, Sergey Fomenko, UIA commercial director, tells the Center for Transportation Strategies. Of the fleet, six Boeings are in long term storage, the rest are based at Kyiv Boryspil. Sixteen are ready for immediate use, he said.

 

  • IMF Ties Future Aid to Central Bank Independence
  • After a Decade in the Basement, Gambling Goes Legit in Ukraine
  • Radisson to Build High End Hotel in Kyiv’s Pechersk
  • Rail Cargo Dropped Only 9% in H1
  • UIA Could Let Go One Third of Staff

IMF Managing Director Kristalina Georgieva spoke by telephone with President Zelenkiy and warned him: “It is in the interest of Ukraine to preserve the independence of [the central bank] and it is also a requirement under the current IMF-supported program.” In a statement posted, Kristalina Georgieva, said of the National Bank of Ukraine: “The reform of the NBU and its performance over the past five years is a clear success story for Ukraine…The successful clean-up of the financial sector – which was ravaged by fraud – is also credit to the supervisory work of the NBU.”

Central bank governor, Yakiv Smoliy, resigned July 1, complaining of “systematic” political pressure from the President’s office. His abrupt resignation forced the Finance Ministry to abort what was shaping up to be a successful $1.75 billion eurobond sale. Since then, financial analysts warn that the nomination of a credible successor to Smoliy is key to Ukraine receiving in September a second tranche of its $5 billion IMF aid package.

With investors newly wary of the hryvnia, the Finance Ministry managed to sell at auction only $393,000 worth of hryvnia bonds at Tuesday’s auction. By contrast, investors bought $306 million in dollar-denominated 1-year bonds, with a yield of 3.5%. This was the first auction since Zelenskiy called for a 10% or more devaluation of the hryvnia.

Breaking a decade-old ban, the Rada passed a bill to legalize gambling. Voted 248-95, on the second reading, the bill is expected to overcome final hurdles and go to Zelenskiy for his signature. Advocates say it will draw gambling out of the shadows, generating $150 million in revenue for the government annually.

 

Highlights

  • In Kyiv, casinos can be in 5-star hotels with more than 150 rooms; in other cities, 4- and 5-star hotels with more than 100 rooms.
  • Licenses will be as high as $10 million for five years, plus $30,000 a year for each game table and $2,000 for each slot machine.
  • Nationwide, the number of slot machines will be capped at 40,000; the machines are to be in 3-, 4-, and 5-star hotels.
  • Bookmakers will work at horse tracks and 3-,4-, and 5-star hotels with at least 50 rooms in Kyiv and 25 in other cities. A 5-year bookmaker’s license will cost $5 million.
  •  For a street front gambling hall, the 5-year license will be $1.3 million; for online poker $870,000.
  • Internet gambling will be registered, monitored and taxed.
  • The minimum age to gamble rises from 18 to 21.
  • Foreigners – except for Russians – may own gambling operations.

 

Ukraine’s opening up to legalized gambling has drawn the attention of the international trade press, with articles in I gaming business.com, and in Europeangaming.

Gambling could create “Klondikes” in depressed regions of Ukraine, Mikheil Saakashvili, chairman of the National Reform Council, predicts on his Facebook page. A decade ago, as President of Georgia, Saakashvili brought gambling to Batumi, transforming a backwater Black Sea city into an international tourism destination. “We can identify certain depressed regions or territories and literally turn them into Klondikes,” he writes. “The main thing in this is not to invent new corruption troughs. Not to create any useless commissions, regulatory bodies and other schemes whose sole purpose is to knock taxes out of business.”

Radisson Hotel Group announced yesterday it plans to open in two years the Radisson Hotel Pechersk Park Kiev, a 167-room high hotel now under construction on a site with views of the Lavra and the Motherland Monument. Noting that by the summer of 2022 the Radisson Group will have seven hotels, with 1,355 rooms in Ukraine, David Jenkins, vice president of business development, said: “Radisson Hotel Group is the first and leading international hotel chain in Ukraine.” No mention was made of applying for a casino license.

Ukraine’s coronavirus quarantine may be extended to last for one more month, to mid-August, a Health Ministry official tells Segodnya newspaper. During the four months of the pandemic in Ukraine in Ukraine, 1,412 people are known to have died of the coronavirus-related causes, 125 of them in Kyiv.

In a nationwide telephone poll completed Sunday, 34% of the 1,000 respondents said they believe government coronavirus numbers to be overestimated and 35% said they have not changed their work habits during the quarantine. Another 20% said the official numbers are underestimated, according to the polling companies, Active Group and Expert Club.

The state railroad carried 9% less cargo during the first half of this year, compared to the same January-June period last year. Ukrzaliznytsia reports:  exports were down 5.4%; imports were down 19.4%; transit was down 10%; and domestic by 8%. Overall, the railroad moved 143 million tons during the first half of this year.

UIA reports that it carried half the air cargo during the first half of this year, compared to the same January- June last year. Despite special flights carrying Covid protection gear from China this spring, Ukraine International Airlines carried only 5,323 tons during the first half of this year, Sergey Fomenko, UIA commercial director, tells the Center for Transportation Strategies.

Without a rebound in air travel, UIA may be forced to let go 900 employees, about one third of the current staff, Fomenko says in the same interview. He predicts that next year the airline, Ukraine’s national flag carrier, will have 26-28 planes flying, about 75% of last year’s level.

Austria is extending to July 30 its ban on air travel from 18 countries, including Ukraine. Tracking the evolution of the pandemic, Ukraine is adding Albania, Bulgaria and the Czech Republic to its list of ‘red zone’ states. Travelers from these countries must be tested on arrival in Ukraine or go into self-isolation for two weeks.

Setting an example:  Horizon Capital CEO Lenna Koszarny has been recognized by Emerging-Europe.com as ‘Emerging Europe’s No. 2 Female Business Leader’ for this year. Elena Hristova Marinova, president of Musala Soft, a software services company, came in first in the annual awards sponsored by the London-based online publication.

 

  • France: €1.5 billion in Ukraine Projects
  • Rada to Vote on Key Green Energy Bill
  • Central Bank: 10% Home Mortgages This Fall
  • Monster Trucks Arrive from Belarus
  • Wizz Air Restores Ukraine-Abu Dhabi Flights

France is implementing projects in Ukraine that total €1.5 billion, French Ambassador Etienne de Poncins told reporters in a tradition press conference. Most projects come with supplier credits and other kinds of ‘soft’ loans prepared by France’s Finance Ministry.

 

Highlights:

  • The signing this week of an agreement to supply 20 patrol boats to Ukraine. Five boats are to be built in Ukraine.
  •  The ongoing project to supply 55 Airbus helicopters to Ukraine’s Internal Affairs ministry, notably the National Police, National Guard, Border Guard, and Emergency Service.
  •  €64 million loan to Mariupol to upgrade drinking water
  •  €24 million for a planned project with the Health Ministry for early breast cancer detection.
  •  Negotiations with the Infrastructure Ministry to provide railway and rail signaling equipment for Luhansk and eastern Ukraine
  • Alstom S.A.’s planned participation in a Ukrzaliznytsia tender to supply electric locomotives through the 2020s.

 

Heard on the street: Erik Prince, the American defense industry entrepreneur, was close to signing last month on a partial buyout of Motor Sich, the jet engine maker coveted by China. With storm clouds gathering over Ukraine’s political direction, he decided to ‘wait until November,’ a business acquaintance says. Local elections are to be Sunday Oct. 25. If the ruling Servant of the People party fractures at the start of the Rada’s 6-week recess, President Zelenskiy could add parliamentary elections to the October local election.

The Rada is scheduled to vote the Green Energy bill on the second reading. Failure could carry a high price tag, one North American investor warns the UBN. If the government fails to pay $625 million owed for energy from solar and wind producers, 70% of foreign projects in renewables face default this fall, and the government will face a mountain of offshore arbitration claims. With the Erdogan family investing $90 million in solar power plants in southern Ukraine, forget out the Turkey-Ukraine free trade pact. With $65 million invested by a Canadian company in Ukrainian solar plants, forget about visa-free entry to Canada. Foreign investors represent most OECD countries. If they feel burned, they will be ‘super spreaders’ of negative views on Ukraine’s investment climate.

The current central bank team will resist President Zelenskiy’s demand to print more money to create an artificial economic boomlet, Kateryna Rozhkova, acting governor of the National Bank of Ukraine, tells Interfax-Ukraine in a 5,000-word interview.  She says: “For the NBU team, the launch of the ‘printing press’ is one of the ‘red lines’ we will never be ready to cross. It contradicts everything we have done for six years: not to expose [the people] to the inflation tax.” Noting that Ukraine is enjoying “record low interest rates,” she adds: “It is impossible to have high inflation and low rates. This will never happen.”

Home mortgages at 10% a year is the goal of a new “mass mortgage lending program” to be launched this fall by the National Bank of Ukraine, acting central bank head Roshkova tells Interfax-Ukraine. “In the fourth quarter, it will be possible to launch a mass mortgage lending program,” she said, stressing that “high quality borrowers” would get this low rate for economic reasons, not for fiat.

Edward Cowan, former Washington economics editor for The New York Times, writes the UBN of Zelenskiy’s call for an 11% devaluation of the hryvnia and the Liga.net interview with IMF representative Goesta Ljungman:  “This is classic inflationism – depreciate your way to faster growth. Another label is Beggar My Neighbor. The Swede speaks truth, as you note – textbook, mainstream economics. Here is the eventual problem: inflation ineluctably leads to higher interest rates, because lenders are no dumber than borrowers. High interest rates inhibit economic activity. If the central bank gets its act together, it reverts to monetary restraint. There is no good substitute for moderate monetary policy and moderate, sustainable growth.”

A law capping government salaries at $1,750 a month will continue through the summer. Adopted three months ago, in solidarity with the corona lockdown, the cap increasingly was seen as an invitation to corruption. However, on Monday, the government withdrew a bill to abolish the cap. In his interview with Liga.net, IMF representative Ljungman said: “Limiting the size of the maximum salary can lead to the loss of the greatest talents and the necessary experience. This would not be in the interests of Ukraine.”

Zelenskiy’s effort last week to talk down the hryvnia has had little short term impact. Currently, the exchange rate is 27.10 hryvnia to the dollar, down 12 kopecks from 26.98, the rate last Wednesday when Zelenskiy called for a rate of 30 to the dollar.  Last week, the National Bank of Ukraine purchased $92 million on the interbank foreign exchange market.

Monster trucks figure on Metinvest’s $30 million shopping list for new equipment this year at its Central Iron Ore Enrichment Works in Kryvyi Rih. The showpieces are BelAZ-75131 dump trucks. Considered the world’s largest, highest payload capacity haul trucks, these trucks can each carry 450 tons of ore bearing rock. With the driver perched in an air-conditioned cab eight meters above the ground, each truck has a five-camera video surveillance system to avoid driving over small objects, like cars.

On Oct. 1, Wizz Air plans to resume direct flights between Ukraine and the United Arab Emirates, an air link it suspended several years ago. The low-cost carrier will fly twice a week between Odesa and Abu Dhabi. Two weeks ago, the Budapest-based carrier opened a base at Lviv airport.

Hungary bars entry from Ukraine and Romania, two neighbors classified as ‘red zone’s for coronavirus infections. Two weeks ago, Hungary and Ukraine opened four land border crossings. However, the corona infection rate has remained stubbornly high in western Ukraine. On Friday, Croatia decided to demand negative corona test results from Ukrainian tourists. Tests have to be performed 48 hours before arrival.

Laboratories are to open at the airports of Kyiv and Lviv to test arriving passengers. Results are to be linked to the Diy Vdoma app, allowing visitors to cut short the 2-week self-isolation period.

 

  • IMF Warns on Central Bank Independence
  • The West is Watching
  • Cheaper Credit is Coming
  • Deputy: VW to Build Electric Cars in Zakarpattia
  • Flying Over Gibraltar, Ukraine Hopes to Enter EU’s Open Skies

Ukraine must preserve the independence of the central bank under the next governor as part of the $5 billion IMF deal, the IMF’s country representative said in the first public comments since National Bank of Ukraine Governor Yakiv Smoliy quit July 1, complaining of “systematic political pressure.” The IMF’s Goesta Ljungman told Liga.net: “The fact that the management of the NBU openly says that it is subject to political pressure should be of concern to all.”

The interview echoed last weekend through the western press, including the Financial Times, The New York Times, and The Washington Post. The Post version headlined: “Ukraine’s bank chief quit and received a coffin as a warning. It’s a scandal that threatens the country’s economic health.”

The day after President Zelenskiy called for an 11% devaluation of the hryvnia, the IMF representative said: The current Stand-By Arrangement is premised on…a continuation of the economic policies of inflation targeting, a floating exchange rate, accumulation of foreign reserve and strengthening of the financial sector.”

As nervous investors pushed down the price of Ukraine’s government Eurobonds, Ljungman, a Swedish economist with a decade of IMF work, gave a primer in classical economics: “We know that prudent monetary, monetary and financial policies have an extremely positive impact on long-term economic development. But we also know that sometimes good policies are unpopular, and some politicians seek to stimulate rapid growth.”

“However, irresponsible central bank policies ultimately lead to high inflation, exchange rate volatility, financial sector problems, low economic growth, and high unemployment, as we have seen during past crises in Ukraine,” he continued. “Recognizing the temptation of excessive short-term stimulus, most developing and developed countries have an independent central bank with clear powers to do what is right for the economy in the long run.”

With Smoliy and his deputy, Oleh Churiy, out, the 7-member central bank board now risks losing its free market majority. The Zelenskiy “administration’s plan [is] to remove all current members of the NBU’s management board,” the Kyiv Post reported, citing a “banking” official.

As part of Zelenskiy’s push to drive down interest rates, the new state program “Affordable Loans 5-7-9%” has received applications from entrepreneurs for loans totaling $300 million. Zelenskiy said that home mortgages have started to fall below 10%. With annual inflation around 2%, Oleksiy Blinov, head of research for Alfa-Bank Ukraine, writes: “This leaves some room for further (limited) interest rate cuts for the NBU, and we think a 5-5.5% decision is likely on July 23 (current prime rate is 6%).”

Public opinion polls show majorities of Ukrainians are skeptical or hostile to IMF programs. Anti-IMF feeling is whipped up by pro-Russian TV stations – about half of Ukraine’s media market. Ihor Kolomoisky, Zelenskiy’s media backer last year and vocal opponent of the IMF, is bidding to manage the assets of another local media company, reports the Kyiv Post. Kolomoisky, owner of seven television channels and a group of Internet sites, vying for UMH Holding, the leading media company in Ukraine during the presidency of Viktor Yanukovych.

No cash please, we’re Ukrainian. Non-cash payments during the quarantine jumped to 87% in May, from 82% in January, National Bank of Ukraine reports on its Facebook page. In terms of volumes of money, non-cash grew to 55%, from 50%.

As the Rada prepares to debate this week two bills offering tax breaks for the production of electric cars, Robert Horvat, a deputy representing the Zakarpattia district with Eurocar, says the plant plans to produce electric Volkswagens. Eurocar, Ukraine’s sole functioning car plant, makes cars for the Volkswagen Group, largely Skodas.

Four months after the corona quarantine started, Ukrzaliznytsia is running only one third of its suburban and long distance trains, Ivan Yurik, acting CEO of the state railroad says. If the corona pandemic eases, he hope to restore full train service next month. Last Thursday and Friday, Ukraine recorded about 800 new corona cases each day.

UIA restarts its North America flights this Sunday with a weekly B767-300(ER) flight between Kyiv Boryspil and Toronto Pearson. UIA has not announced plans to restart service between Kyiv and New York JFK.

The EBRD is extending a €25 million loan to UkSATSE to help the air traffic control agency survive the collapse in air traffic. The agency earns its money by guiding planes through Ukraine’s air space. In June, domestic flights were down 54% yoy, international flights were down 89.5%, and overflights were down 91%. EBRD said the ‘solidarity’ loan will help cover “liquidity and working capital needs of the company to maintain the uninterrupted provision of vital operations despite a significant reduction in air travel following the worldwide lockdown triggered by the coronavirus pandemic and public health measures to contain its spread.” 

Some of the money is to help Ukraine enter the EU open skies agreement. Ukraine hopes to finally sign the common aviation area agreement on Oct.1, at the upcoming EU-Ukraine summit. Ukraine’s admission was initialed in 2013, but admission was held up over Spain’s dispute with Britain over Gibraltar International Airport. With Brexit, that issue is now moot.

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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