- Purge Spreads to Customs and Tax Service
- Saakashvili Wants to Deal With IMF
- Naftogaz Wants to Create Duty Free Storage for Oil Traders
- Ukraine Grounds Charters Flights of Migrant Farm Workers
- Sunshine Kills Corona: Restauranteurs Want to Open Summer Verandas
Finance Minister Serhiy Marchenko fired on Friday the heads of the new State Customs Service and of the State Tax service and their top deputies. “They lost the trust of people and must leave,” said Marchenko, who on March 30 became Ukraine’s third finance minister in one month. Both officials had about eight months on the job.
Max Nefyodov, the fired head of Customs, is an internationally respected anti-corruption fighter. He worked for five years at Dragon Capital, then for five years as a deputy Economy Minister, where he directed the creation of the ProZorro online government procurement platform. Serhii Verlanov, the ousted head of the tax service, is a familiar face to foreign investors, giving online briefings in recent weeks to the American Chamber of Commerce and the European Business Association.
UNIAN cites ‘experts’ who link the firings to Wednesday’s appointment of Ihor Umansky as customs and tax advisor to Andriy Yermak, head of the President’s Office. As Finance Minister for 26 days in March, Umansky tried unsuccessfully to purge tax and customs. Yermak came under a cloud last month, when a ruling party Rada member posted online videos from last fall that appeared to show Denys Yermak, brother of Andriy, trying to sell posts in the new government.
Hours after the dismissals, Verlanov went on Savik Shuster’s ‘Freedom of Speech’ program to belittle the firings as ‘political’ and possibly linked to the new collection of taxes on vodka. Nefyodov took a different tack, posting on Facebook a relaxed photo of himself wearing a T-shirt printed: “Dobby is a Free Elf.” In Harry Potter, Dobby was the house elf who escaped bondage to the evil Malfoys.
Mikheil Saakashvili, President Zelenskiy’s nominee to be Ukraine’s ‘deputy prime minister for reform’ tells the The Financial Times: “The president wants me to be in charge of talks with the IMF . . . I have experience.” The former Georgian president also said the IMF should ‘at least double’ its planned aid to Ukraine. In a blitz of press interviews, he repeated similar views to AFP and DeutscheWelle. Zelenskiy’s ruling party is split on the Saakashvili appointment. With a confirmation voted expected later this week, the government may need votes of pro-European opposition parties.
“Idiotic comments by Saakashvili,” Tim Ash writes from London. “Ukraine does not need more IMF money – it needs to just deliver on reforms promised already…Ukraine would have had market access if Zelenskiy had: a) Not sacked the previous PM, finance minister and economy minister before putting the IMF deal to bed; b) not wasted time figuring out where he stood on the Kolomoisky issue.”
Banking on international aid in the second half of this year, Finance Minister Marchenko tells Reuters the government has no plans to tap the Eurobond market this year. Last January, before the coronavirus crisis hit, Ukraine placed €1.25 worth of 10-year Eurobonds with an annual interest rate of 4.375%. Today’s interest rates would be double that level. Instead, the government hopes to win an IMF deal in May that would unlock $10 billion in soft loans.
The EBRD has approved a $60 million long-term loan to the Fozzy Group to expand and modernize their Silpo and Fora supermarkets. The goal is to increase energy efficiency and to open supermarkets in towns with only traditional food markets. Silpo has 259 stores, including four Le Silpo gourmet markets. Fora has 250 stores in 70 towns.
With the world awash in cheap oil, Naftogaz wants to create a duty free oil storage system for Ukraine, Andriy Kobolyev, CEO of the state energy company, tells Ukraine 24 TV. Three years ago, Naftogaz launched a duty free gas storage system, opening up 10 underground reservoirs in western Ukraine. Increasingly popular with European gas traders, this ‘customs warehouse’ allows companies to store gas paying a rental fee, but no import duties or taxes. With international oil companies desperately seeking storage, Kobolyev believes Naftogaz could earn $1 to 3 million a month by renting out unused storage tanks, largely near idle refineries.
Ukraine is not allowing charter flights to carry seasonal farm workers to Finland, reports Finland’s Maaseudun Tulevaisuus, or Future of the Countryside. “The interruption of seasonal labor flights in Ukraine is causing problems for hundreds of farms across Finland,” reports the agricultural news site. “At the moment you can’t get to Finland across the Russian border, you can’t get from the Baltics by ship and now the last information came that Ukraine can’t come.” Short of 16,000 seasonal workers, planting may be cut at hundreds of farms.
Last month, when the coronavirus problem started, the Zelenskiy government urged Ukrainians to come home. Now Prime Minister Shmygal says he wants these labor migrants, as many as 1 million, to stay here. They should either work on public works projects this summer or take low interest loans to start small businesses. Ukraine’s airports are closed. Land border crossings have been sharply reduced.
German labor recruiters flew 14,700 Romanians to Germany during a 2-week period in April, Politico reports in a story about looming labor shortages in German agriculture. With normal labor flows disrupted, Germany has said it will take in 40,000 farm workers in April and 40,000 more in May.
Documented cases of coronavirus continue to inch up, with laboratories confirming 209 deaths and 8,617 positive cases. It is unclear how many of the positive cases are hospitalized. Of the 29 new positive cases reported Sunday in Kyiv, seven – or one quarter – were hospitalized. One third of Kyiv’s new positives were health workers, higher than the national average of 20%.
Restauranteurs are asking officials for permission to open summer sidewalk and courtyard verandas. Savva Libkin, co-owner of the Tarantino Family network, offers a series of measures: waiters wearing facemasks and gloves, cooks wearing protective gear, temperature checks for patrons and staff, spacing tables more than 1.5 meters apart, and regular disinfection of kitchens with quartz lights. Noting the 840,000 people work in restaurants in Ukraine, he appeals: “I ask the authorities to consider this opportunity and give business a chance to survive.” Ultraviolet light from sunlight kills viruses, The New York Times reported Friday, citing longstanding and new research.
AirBaltic plans to resume flights between Riga and Kyiv Boryspil in June and between Riga and Odesa in August, reports Avianews. Latvia’s state-owned flag carrier does not have permission from Ukraine to renew flights. In contrast, Infrastructure Minister Vladyslav Krikliy predicts air travel will start again in Ukraine at the end of the summer. But, with airlines facing bankruptcy or massive subsidies, he is expected to come under heavy pressure to reopen air travel earlier, under new public health rules.
- Central Bank Slashes Prime by 200 bps
- Despite GDP Drop, Inflation and Interest Rates Are On Target
- Government Wants to Cut Labor Migration
- IT Draws $510 million Investment
- Port Cargo up 11%
Ukraine’s central bank unexpectedly cut the prime rate by two percentage points, to 8% – the lowest level in six years. “Our goal is for banks to be able to help the Ukrainian economy get back on its feet as soon as possible after the quarantine is over,” Yakiv Smoliy, governor of the National Bank of Ukraine, told reporters yesterday. This is the seventh cut in the row since the central bank started cutting last spring, from 18%. With today’s cut, the central bank is within striking range of its year end goal of 7%.
“Pretty seismic move by the NBU, with the market only expecting 100 bps,” Timothy Ash writes from London. He said the move probably reflects: urgency to help the economy, low inflation, optimism that the Rada will pass legislation needed for an IMF deal and confidence that the hryvnia will not heavily devalue. The central bank predicts that Ukraine’s economy will shrink by 5% this year, a big swing from its pre-coronavirus forecast of 3.5% growth.
Prime Minister Shmygal welcomed the interest rate cut, writing on Telegram: “Such actions of the regulator will allow to support the economy in the conditions of a coronary crisis…Cheap, long term loans for Ukrainian business is one of the priorities of our government.”
The central bank predicts that Ukraine will end this year with inflation at 6%, within the target range of 5%. Inflation in March was 2.3%. Pulling inflation down are low energy prices and a collapse in consumer spending during the two-month quarantine. However, by summer, massive government spending is expected to bolster consumer demand, says the National Bank of Ukraine.
Pulling down inflation, household gas bills in April are to be 14% below the level of March. Compared to January, households will pay 38% below January levels. Naftogaz CEO Andriy Kobolyev said: “I hope that the burden on budgets of Ukrainian households will decrease, reducing effects of quarantine measures.” Prices could have been even lower, but Naftogaz made a major wrong way bet at the end of December on the direction of gas prices in the winter. European gas prices are at 20-year lows.
Fitch Ratings has affirmed Ukraine’s long-term issuer default rating of ‘B,’ downgrading its outlook from “positive” to “stable.” The effect of the world recession caused by coronavirus curbs will be mitigated by Ukraine’s low dependence on incoming tourism, a good mix of commodity exports and low oil prices. After a 6.5% fall in GDP this year, Fitch predicts Ukraine will grow by 3.2% in 2021.
Ukraine is the largest recipient of wage remittances in Europe, receiving $15.8 billion last year, the World Bank reports. One third higher than the National Bank of Ukraine estimate, this figure makes remittances 10% of Ukraine’s GDP and makes labor Ukraine’s second largest export, after food. The World Bank predicts that remittances will drop this year by 28% in the Europe/Central Asia region.
Prepared to forego half of annual labor remittances, the government wants most of the 2 million Ukrainians who came home this spring to stay in Ukraine, Prime Minister Shmygal tells RBK Ukraina. “These are people who would probably be very useful for the development of the economy within the state,” he says. “Therefore, obviously, we must keep them.” In additional to creating public works jobs, the government will launch this week ‘New Money,’ a low interest loan program designed to help returnees start small businesses. “We want to try to keep people in Ukraine, and we will do our best for this,” Shmygal says. “We are not negotiating to take people to work somewhere.”
Industrial production in Ukraine decreased by 5.5% during the first quarter, dragged down by a year over year drop of 7.7% in March. In March, the mild temperatures lead to a 10% drop in supply of electricity and gas. In March, processing was down 8.5% and mining down by 4.3%, reports the State Statistics Service.
Electricity usage in Ukraine will drop by 10% during the quarantine period and by 7% over the entire year, Olha Buslavets, acting Energy Minister predicted in an online meeting with the European Business Association.
Ukrainian IT companies drew $510 million in new investment last year, 1.5 times the level of 2018, according to the new annual report by the Ukrainian Venture Capital and Private Equity Association. A total of 115 transactions were concluded with the average value increasing to $5.7 million. The top deals were: GitLab – $268 million; Grammarly – $90 million; People.ai – $60 million; and JiJi.ng – $21 million.
Cargo moving through Ukraine’s seaports increased 11% during the first quarter, compared to the same January-March period last year. Exports accounted for 77% of the 41 million tons. The top three sectors were: grain – up 1.7% to 13.7 million tons; ore – up 32% to 10.3 million tons; and containers – up 19% to 265,500.
Joining the air cargo boom, Azur Air Ukraine is reconfiguring several of its long-haul Boeing 767-300 passenger jets to carry cargo. UIA is carrying cargo with three of its Boeings to carry cargo and SkyUp is reconfiguring nine of its Boeings to carry cargo. Responding to the extension of the quarantine to May 11, UIA and SkyUp announced yesterday that they will not fly scheduled passenger flights until that date.
Ryanair, Europe’s largest airline, hopes to resume 40% of its flights in July, but it will not fly with middle seats blocked to reduce virus contagion. “Either the government pays for the middle seat, or we won’t fly,” Ryanair CEO Michael O’Leary tells The Financial Times. “We can’t make money on 66 per cent load factors. Even if you do that, the middle seat doesn’t deliver any social distancing. So it’s kind of an idiotic idea that doesn’t achieve anything.”
- EU Promises $2 billion in Aid to Ukraine
- Saakashvili is Back!
- Quarantine Stretches to May 12
- Plan Your May Holidays for August
- Two Years Behind the Mask?
- For a World Nervous About Food, Ukraine Exports 20% More Grain
The EU will allocate €1.2 billion to help cover the budget deficit caused by the fight against the coronavirus, the European Commission announced yesterday. President Zelenskiy welcomed this one year ‘soft’ loan, saying: “When tough times come, you know who your true friends really are.” The first tranche is to flow in mid-May, in parallel with Zelenskiy’s timetable for reaching a deal with the IMF. The second tranche is to be disbursed on the condition of Ukraine keeping on track with the IMF program.
Separately, Ukraine is to receive a €500 million loan from a package approved by the EU in September 2018, conditioned on an IMF deal. Finally, the European Commission agreed two weeks ago to allocate €190 million in coronavirus medical, social and economic aid to Ukraine. Reviewing these three pots of money – totaling nearly €1.9 billion in EU aid, President Zelenskiy said. “This is a testimony that Ukraine made no mistake by choosing its European path.”
To give new impetus to Ukraine’s free market changes, President Zelenskiy is proposing to create new post for former Georgian President Mikheil Saakashvili: Vice Prime Minister for Reforms. Saakashvili, a Ukrainian citizen, has discussed the job offer with Prime Minister Shmygal. “We need to be bold in our decisions and reforms now,” Saakashvili writes on Facebook. Tomorrow afternoon, the Rada is to vote on the nomination.
During a decade as President of Georgia, from 2004 to 2013, Saakashvili turned a corrupt and chaotic country into a high growth, free market success story and a magnet for international tourism. Later, in Ukraine, he served for 18 months as governor of Odesa Oblast. He resigned in frustration after clashing with President Poroshenko and Odesa Mayor Gennadiy Turkhanov. While seen as erratic by some in Ukraine, Saakashvili has many admirers in Washington.
Prime Minister Denys Shmygal has extended the coronavirus quarantine through Monday, May 11. This will make a full two months that much of Ukraine’s economy – non-food retail, restaurants, travel and schools – will be locked down. During these months, mass transit is shut down, public gatherings over two people are banned, and masks must be worn in public.
Shmygal minimize the lockdown’s impact on Ukraine’s economy. “Our main export-oriented industries continue to operate at full capacity,” he said yesterday at a Cabinet meeting, referring to farming, metals and IT. “Currently, only six industries operate with restrictions. These are transport, final consumption, bars, restaurants, mass cultural events.”
Concorde Capital’s Zenon Zawada writes: “Shmygal’s comments so far indicate it’s not worth expecting any notable economic recovery in May. Not only will many economic sectors remain closed, but many Ukrainians won’t be able to work without public transit functioning. The situation with the border in May is especially critical.”
Looking ahead, Shmygal predicts Ukrainians will have to wear masks for at least two years. “We all must adhere to the ‘mask regime,’ obey certain disinfection rules, we all must follow social distancing, certain rules of conduct in transport, in public places, in shops, etc.” he said in a lengthy interview with RBK Ukraina. “The way we brush our teeth every day, we must learn to live with it. According to the World Health Organization, [this will be] for at least the next two years.”
With Ukraine’s travel industry dead in the water, Ukrainians should forget about May holiday travel and make vacation plans for the second half of the summer, Infrastructure Minister Vladyslav Krikliy tells BBC Ukraine. Trains will not run and planes will not fly for the May holidays. In June, mass transit – buses, trams and metro – will probably resume, with passengers obliged to wear masks, he predicted.
The UN warns the world may face multiple famines of “biblical proportions” as COVID-19 quarantines spread, disrupting logistics and depriving people of incomes and access to cheap food. “In a worst-case scenario, we could be looking at famine in about three dozen countries,” David Beasley, executive director of the World Food Program, told reporters yesterday. He predicted that 265 million people could be pushed to the brink of starvation by the end of this year.
With coronavirus nervousness provoking ‘food nationalism,’ at least 10 nations, including Ukraine, have moved in the last month to restrict exports of grain or rice, reports Bloomberg in a story headlined: “What Happens When Bread Is Scarce and Grain Exporters Speak Up.” Ukraine’s APK-Inform consultancy reports that Ukraine’s wheat exports jumped nearly 50 percent in the week ending April 17. This jump came after Ukraine’s bakers and millers to limit wheat exports.
Ukraine’s grain exports are up 20% y-o-y through Wednesday. Since the marketing year began last July 1, Ukraine has exported 49 million tons of grains and legumes, reports Interfax-Ukraine.
Ukraine’s food sales netted 6% more during the first quarter of this year compared to the same January-March period last year. Sales hit $5.7 billion, reports the Ukrainian Agribusiness Club. The Covid-19 restrictions had little impact on movement of grain to the ports, reports the farmer association.
Due to a drier than normal winter and spring, this year’s grain crop is expected to be 3-6% lower than last year’s bumper crop of 75 million tons, estimates UkrAgroConsult. As of two weeks ago, soil moisture at the one meter level was generally 25 to 45% below normal across Ukraine. Despite this problem, 90% of winter wheat crops are rated ‘good’ and ‘satisfactory’ the consultancy reports.
President Zelenskiy would like to create “a state-owned modern airline – at the level of Turkish Airlines or Singapore Airlines.” This airline would fly Ukrainian-made Antonovs, he says in a film aired on Ukraine 24 to mark one year since his first electoral victory one year ago. At present, Antonov passenger planes – the An-148 and An-158 regional jets – are not certified to fly in the EU. They are limited to flying domestically and to Belarus and Moldova. The proposal for a state airline comes as Ukraine’s two main international airlines – SkyUp and UIA – are asking the government for compensation for what could be three months without scheduled passenger service.
- Germany, Britain, France, and China Do Deals in Ukraine
- Naftogaz to EU: Park Your Oil and Gas in Ukraine
- UZ Gives Green Light to Private Locomotives on State Tracks
Germany’s Kostal Group is to invest €39 million to build an auto electronics plant in Dudarkiv, 15 km north of Kyiv Boryspil airport. Construction starts in May. The plant is to employ 900 people, reports the district administration. Undertaking the project is Kostal Ukraine LLC which opened a plant five years ago in Pereiaslav, about one hour south of Boryspil. Employing 1,000 workers, the Pereiaslav plant makes parts for Audi, BMW, Ford, Mercedes, Renault, SKODA, SEAT and Volkswagen.
Germany’s Bader GmbH is resuming production in Lviv of leather seats for high end German cars – Audi, BMW, Mercedes, and Skoda. Work stopped March 23, partly due to Ukraine’s quarantine and partly due to falling orders from Germany. By May 4, all workshops should be back in production, Kristina Gorishna, deputy director of Bader Ukraine, tells Interfax-Ukraine.
British Steel is in talks with Ukrzaliznytsia to supply rails to Ukraine, Infrastructure Minister Vladyslav Krikliy tells the state railroad’s news site, Magistral. Taken over last month by China’s Jingye Group, British Steel includes a French rail unit, Sogerail, located in the Lorraine region. Minister Krikliy has met twice in the last two months with French Ambassador Etienne de Poncins to discuss France’s offer to finance €100 million worth of rail modernization in Ukraine, largely in government-controlled Luhansk.
The French government has selected Ernst & Young Global Limited, or EY, to conduct a forensic audit of UkrOboronProm and to implement a corporate government system for the state arms making conglomerate. France made the choice because France is largely paying the bill.
French-owned Expert Petroleum has signed a 15-year contract with UkrGazVydobuvannia to increase gas production from depleted fields in western Ukraine. Billed as “the first ever full production Production Enhancement Contract in the history of Ukraine’s oil and gas industry,” Expert Petroleum commits to investing $30 million over five years to drill wells and develop infrastructure. The contract foresees the company producing at least 300 million cubic meters of gas for 13 small fields. “The agreement envisages the largest foreign investment in Ukraine’s gas production over the past five years,” says Otto Waterlander, the Dutch national recently appointed as executive director for Transformation at the state energy company. CMS advised Expert Petroleum, which is based in Bucharest.
China’s Cainiao, a logistics unit of Alibaba Group, has joined forces with Nova Poshta to ship Ukraine-bound cargo from China to Riga, Latvia. Once a week, Cianiao flies 20 tons of packages to Latvia. From there, the cargo shuttled down to Lviv in An-25 turboprop planes of Eleron, the Ukrainian air cargo company.
Austrian, Dutch, German, Lithuanian, Polish and Turkish companies have applied to participate in a tender to build a waste recycling complex in Lviv, Mayor Andriy Sadovyi writes on Facebook. Financed in part by the EBRD, the plant is be capable of sorting 240,000 tons of garbage a year, or about 50 truckloads a day.
With oil storage at a premium worldwide, Ukraine’s Naftogaz could profit by storing oil in its little used pipelines and refinery tank farms, Naftogaz Executive director Yuriy Vitrenko writes on Facebook. On Tuesday, lack of storage capacity and weak demand, pushed June prices for Brent down to $19.76/barrel and for West Texas Intermediate to $11.60. “Sellers are willing to pay extra to have their oil taken away,” the state energy company executive writes. “This can be explained by the fact that there is nowhere to store the oil, and it is impossible to stop production without significant losses.” Naftogaz offers EU companies 10 billion cubic meters of gas storage in its western Ukraine reservoirs.
For the fifth time in six weeks, the Finance Ministry did not hold its weekly government bond auction, traditionally on Tuesdays. With reserves of $25 billion, the government says it has enough money to meet foreign debt payments due in May. For now, it is waiting for international markets to calm down.
In a warning to Ukrainians who advocate trying to muddle through this year without an IMF deal, Argentina’s biggest bondholders have rejected the government’s offer to restructure $83 billion of foreign debt, raising the prospect of the country’s ninth sovereign debt default, reports The Financial Times. In what may be the first round of negotiations, three creditor groups rejected the government’s terms to restructure debt issued since 2016 and to re-restructure bonds issued in 2005 and 2010.
“Several dozen” companies are interested in participating in the pilot project to allow private locomotives to pull freight trains down Ukrzaliznytsia tracks, Minister Krikliy tells Interfax-Ukraine. “Basically, these are all members of the European Business Association and the American Chamber of Commerce,” he said, adding that participating companies will be chosen by May 10. Lemtrans argues that the test sections of track should go all the way to Black Sea ports. Krikliy plans to re-introduce a bill in the Rada to create an independent, tariff-setting regulator for transport. The goal is to reduce political influence on freight rates.
- Oil Prices Fall Through Floor
- Unemployment Doubles, Govt Unveils Small Business Relief
- Corona Now to Peak in Early May
- Ukraine’s $4 billion IT Industry Works from Home
May futures for West Texas Intermediate oil traded at negative 7 cents a barrel – far below the historic inflation adjusted low level $16.68 in Feb. 1946. See this chart. As WTI plummeted below zero, it dragged down other oil prices, spelling economic problems for such oil exporters as Venezuela and Russia. For Ukraine, an oil and gas importer, low prices pull down inflation and improve the balance of payments. Since the start of the year, the average price of A-95 + gasoline fell by 13% to UAH 25.68 /liter.
Ukraine increased its electricity exports by one third during the first quarter, to 2.2 billion kWh, the Energy Ministry tells Interfax-Ukraine. Exports from the Burshtyn energy island in Ivano-Frankivsk to Hungary, Slovakia, and Romania rose by 58%, to 1.6 billion kWh. During January-March period, Ukraine imported 1.5 billion kWh, largely from Slovakia and Hungary. In a move that provoked political opposition, Ukraine broke with recent history and imported electricity from Belarus – 150 million kWh – and from Russia – 53 million kWh. On April 8, Urkaine’s National Commission for the State Regulation of Energy and Utilities banned electricity imports from these two countries for the duration of the quarantine, plus 30 days.
Major foreign investors in wind and solar energy in Ukraine are consulting with lawyers to move the 9-month impasse over ‘green tariffs’ to international arbitration, the Ukraine executive of a major European renewable energy company tells the UBN. After six months of fruitless talks with a deputy minister of energy, foreign investors hope that the appointment of Olha Buslavets as acting Energy Minister will provide the political heft to unblock the logjam.
With the Rada to meet this week to advance a bill needed for an IMF deal, President Zelenskiy defended Ukraine’s need for $8 billion from the IMF “like blood for the human body.” “Can a person live without water for a week? Why?” he asked on Savik Shuster’s ‘Freedom of Speech’ TV show. “With the IMF, the situation is the same. Why should we take such a risk and why should we bring the situation to default? Why do we need all these trials?” Over the next 10 days, leaders of Zelenskiy’s Servant of the People party seek to out-maneuver parliamentarians allied with Ihor Kolomoisky to win passage of a bill that would bar Kolomoisky from ever winning back ownership of PrivatBank.
Ukraine may turn to “the printing presses” to cover about $4 billion – or 40% of the new budget’s deficit – Concorde Capital analyst Alexander Parashchiy told an online seminar of the Cbonds Emerging Markets Bond Conference. Foreign purchases of Ukrainian government bonds this year could fall to $1.2 billion, about one quarter of last year’s level. Ukraine’s return to the Eurobond market might only happen in the fall, he predicted. “Accordingly, that the NBU directly or indirectly prints about UAH 100 billion of money,” he said, referring to Ukraine’s central bank.
Separately, ICU says the government has accumulated $1.5 billion in its foreign currency account – enough to meet all interest and principal payments on Ukraine’s foreign currency debt through the end of May.
Calculating the impact of coronavirus, the Economy Ministry and UNICEF have issued a ‘Consensus Forecast.’ For 2020: 4.2% drop in GDP and year end inflation at 7%. For 2021: 2.4% GDP growth and year end inflation at 5.9%.
Due to the quarantine, the number of unemployed Ukrainians has roughly doubled in one month, to 2.5-2.8 million people, calculates the Ukrainian Chamber of Commerce and Industry. “The unemployment rate today is 13.7-15.4% – this is the highest rate in the last 15 years,” says chamber president Gennadiy Chizhikov. In a chamber survey, 26% of companies say they plan to cut staff. To get some relief, quarantined businesses should pay only utilities – not rent – during the quarantine.
The government is making $1.3 billion available to small businesses in its ‘5-7-9%’ loan program. Designed to preserve jobs, the maximum loan size is $110,000 and all loans are to be interest free until next March 31.
About 30% of retail stores in Ukraine may not reopen after quarantine, Colliers International predicts in a new report. “It is expected a significant decrease in rental rates after quarantine for at least six months to preserve tenant business,” the real estate consultancy wrote. “A number of large retail operators suggest that in the worst case scenario and the reluctance of some landlords to significantly revise the lease terms in favor of tenants, up to 30% of stores may not open after quarantine.”
Prime Minister Shmygal said he now expects the number of coronavirus cases to peak in early May – three weeks later than his earlier forecast. The Cabinet of Ministers is expected to extend the quarantine from Friday through the May holidays, tentatively easing Tuesday May 12. Elsewhere, Germany, the Czech Republic, Norway, Poland, and several US states start this week to ease some restrictions.
Ukraine’s key IT industry has overwhelmingly shifted from offices to home, according to IT executives interviewed by Ekonomichna Pravda. “The IT specialist is equally effective in both remote work and office mode – this means that our clients do not feel a difference in the workflow,” says Konstantin Vasyuk, director of IT Ukraine, an association representing more than 50 major companies. The EP survey found these teleworking levels: 98% of EPAM’s 7,550 technicians; 97% of SoftServe’s 7,000 technicians; 90% of GlobalLogic’s 4,305 technicians and 90% of Luxoft’s 3 597 technicians. Last year, IT exports totaled $4 billion, making the sector Ukraine’s fourth largest export after food, overseas labor, and metals.
With coronavirus restrictions pinching the flow of migrant farm workers, Germany has embarked on a program of charter flights to bring 80,000 workers in from Bulgaria, Romania and Ukraine through May. For the first two weeks, these workers will be required to live and work apart from farmhands already in Germany and wear protective gear, German Agriculture Minister Julia Kloeckner tells the Associated Press. It is not clear if Ukraine will allow such flights.
Also short of workers, Poland has extended all foreign work permits for 30 days after the end of the coronavirus emergency period. Pekao, Poland’s second largest bank, is extending to its 102,000 Ukrainian account holders free money transfer service from Poland to Ukraine.
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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