- From Highways to Sidewalks, Covid Quarantine Tightens
- GDP Drop Forecasts Range from 1% to 6%
- Early Numbers Also Mixed: Car Sales Down, Train Cargo Up
- Central Bank Buys $250 Million, As Rada Votes Bolster Hryvnia
All of Ukraine’s 24 regions, including Kyiv, are to set up highway checkpoints today to monitor the health of people arriving by car. If the coronavirus epidemic grows, police and health workers are to use these checkpoints to restrict movement among regions. On Friday, Chernivtsi authorities started using checkpoints to restrict entry into the region. Over the weekend, Chernivtsi region imposed a lock down regime, forbidding people from leaving their houses for 40 hours.
On the national level, only 21 border checkpoints are open, 9% of the 230 that Ukraine has with its seven neighbors. With the exception of truck drivers, train and ship crews, and people on official missions, anyone entering Ukraine must spend 14 days in self quarantine.
For pedestrians, tighter restrictions start across Ukraine today. Anyone on the street must wear a mask and carry an ID. People must walk singly or in pairs. Except for exercising pet, walking in parks and squares is forbidden. Family visits to hospitals are banned. Playgrounds are closed. Fines range from $600 to $1,800. With Catholic Easter coming this Sunday and Orthodox Easter the following Sunday, authorities encourage worshippers to stay at home and follow church services on television.
Ukraine’s number of officially confirmed Covid-19 cases hit 1,308 last night. There are 37 dead. As of Sunday afternoon, Kyiv City had 245 confirmed cases. About half are being treated in hospitals, about half at home. AFP reports that police “cordoned off a wealthy Kyiv suburb” where 30 cases have been recorded. Elsewhere, Ukraine’s top three regions for infections are: Chernivtsi — 220 cases; Ternopil — 160; and Ivano-Frankivsk –105.
Today’s harsh restrictions will slow and eventually halt the spread of the virus, allowing the government to ease restrictions in three weeks, Prime Minister Shmygal predicts. “In late April, we will be able to begin a gradual weakening of quarantine measures,” he said in a video address. “At first, people of working age will be able to go to work, while public transport will resume work. This will allow us to start the restart of the economy from the beginning of May…Ukraine cannot afford not to work for six months or even two to three months.”
Coronavirus restrictions are expected to push Ukraine’s economy into a recession, the first since 2014-2015, when Russia’s military attacks threw Ukraine’s economy off balance. On Friday, Ukraine’s Cabinet of Ministers released its new economic forecast for this year: a 4.8% drop in GDP and a loss 250,000 jobs. Inflation will hit 11.6% — double the pre-coronavirus forecast. The average inflation-adjusted wage will fall by 4.5%, compared to last year.
A 3% GDP drop is the consensus forecast of Reuters monthly poll of analysts, also released Friday. Separately, a 5.9% drop is forecast by Institute for Economic Research and Policy Consulting. All analysts worry that the EU and China will pull Ukraine down, particularly if steel prices keep falling.
Oleskiy Blinov of Alfa-Bank Ukraine is less pessimistic, writing: “In our view, this [government] forecast is still a very preliminary one…the Prime Minister has made several statements this week that he would like to see quarantine eased at end-April. If this happens and no strong external supply shock [is] evident, we think that Ukraine may end the year with real GDP decline around 1%.”
Similarly, early numbers are mixed:
Ukrzaliznytsia forecasts that it will handle 3-15% more rail cars at the Black Sea ports than last year. In 2019, the growth was 9% y-o-y. Last month, the state railroad handled twice the volume of one year ago, Andriy Kiman, director of the state railroad’s Odesa section tells Magistral news site.
Pulling down inflation, gasoline and diesel prices have fallen by 23-24% since the start of this year, reports Enkorr, the Kyiv-based Energy Correspondent news site. Last Thursday, A-95 gasoline averaged $0.89 a liter in Ukraine, $0.26 cheaper than on Jan. 3.
Used car sales were down 61% y-o-y in March, falling to 18,600. This was partly because numbers last spring were artificially high as owners raced to benefit from a tax amnesty. Also, when the quarantine was first imposed, car sales were banned and the government stopped registering cars. On Thursday, the government lifted the ban on car sales. New car sales were down only 10% in March y-o-y, indicating that the wealthiest slice of Ukrainians has not been greatly affected.
Short of 100,000 seasonal workers, Germany’s farmers are working with their government to fly in 40,000 workers from Eastern Europe, reports Deutsche Welle. Similarly, Poland’s farmer and construction associations are working out visa regimes and medical protocols to bring back many of the estimated 250,000 Ukrainian workers who went home before the borders closed one week ago. Wage remittances last year totaled $12 billion year, making labor Ukraine’s second largest export after food.
The central bank bought $248 million last week, helping to restrain a rally by the hryvnia. The turnaround came after key Rada votes seem to have cleared the way for an IMF deal, Oleh Churiy, deputy governor of the National Bank of Ukraine, said Friday in an online briefing with reporters. He said: “We see that demand [for dollars] has declined significantly and reached those average daily demand indicators that we had before the crisis unfolded.”
On Saturday, the IMF welcomed the Rada’s initial passage of the banking law and encouraged the parliament to pass a revised budget, taking into account “the tremendous challenges caused by Covid-19.” IMF envoy Goesta Ljungman also urged the Rada to work with the World Bank to create a larger farm land market than the approved one, which caps sales at 100 hectares.
On Thursday, the World Bank greeted approval of the market, then posted on Facebook a list of steps necessary to create a larger, more transparent market: “[Passage of] laws that will provide free access to cadastral data, strengthen land management, accelerate land transfer procedures, regulate the sale of state lands, including the use of compulsory electronic auctions, which will limit the free privatization of state lands, and open access to financing for small agricultural producers.”
With the Rada expected to start dealing this week with 4,000 amendments to the ‘anti-Kolomoisky’ banking law, PrivatBank filed a suit Friday in Cyprus seeking $5.5 billion in damages from the bank’s previous owners Ihor Kolomoisky and Gennadiy Bogolyubov. “This claim brings the combined amount claimed by PrivatBank against Kolomoisky and Bogolyubov in England, Cyprus, the US and Israel to a total of over $10 billion,” PrivatBank said in a statement, cited in a Financial Times article, “Ukraine’s PrivatBank seeks $5.5bn damages from oligarchs.”
- Government Quarantine Goal: From Couch Potatoes to Worker Bees
- Which is Worse: Quarantine or Coronavirus?
- Roadblocks: Chernivtsi Region Retreats Into Self-Isolation
- China Reaps Goodwill With Masks and Gloves
- Mystery: DTEK Energy’s Short Circuit
Ukraine cannot afford to “sit on the couch for two to three months,” Prime Minister Shmygal told the American Chamber of Commerce in Ukraine in a video conference. Joined by the new Economy Minister, Ihor Petrashko, Shmygal sketched out a program “to restore economic growth.”
Later in a similar video conference with the European Business Association, Shmygal said: “The government is working on a program to create ‘quick jobs’ in various industries. Hundreds of thousands of people, who have returned to Ukraine and have very high-quality skills, work experience and corporate culture, are a good resource to warm up the economy. Business should try to attract them.”
The meetings came after polls indicate people have deep doubts about the economy in April and May.
Which is worse: quarantine or coronavirus? 43% of participants in one poll chose ‘economic consequences of the quarantine.’ In the same Kyiv International Institute of Sociology poll released yesterday, 17% said the government is successful in preventing economic problems from the epidemic. Of the 1,500 poll respondents, 57% predicted the government would fail in this area.
Only half of businesses can survive one month of quarantine, according to a nationwide survey conducted by the Union of Ukrainian Entrepreneurs. Only 25% could make it through to June. Since the mid-March quarantine, one third – largely small businesses – report a 90-100% drop in income and a 50% cut in staff. Almost 60% of businesses – largely medium and large-sized – have stayed open. Almost half of business owners surveyed oppose the extension of the quarantine to April 24.
Kateryna Glazkova, executive director of the Union, says: “The results of our survey demonstrate the need for radical measures by the authorities to support the economy, such as temporary exemption from business taxes, which, under quarantine, continues to pay salaries to employees.”
Under legislation passed Monday by the Rada, the state will pay salaries of registered small business workers who are laid off during the quarantine period.
Before dawn this morning, Chernivtsi became the first region of Ukraine’s 24 to go into complete quarantine. Police checkpoints were set up on the five main roads going into the region, limiting traffic to food trucks, transit trucks, farm vehicles, emergency vehicles and cars of local residents. Chernivstsi has 143 cases of people who tested positive for Covid-19, including 10 doctors.
Nationwide, 897 people have tested positive for Covid-19. Of this group, about one half have been hospitalized, and 22 have died. The hot spots are: Kyiv and Kyiv Oblast – 224 cases; Chernivtsi Oblast – 143; Ternopil Oblast – 106; Ivano-Frankivsk Oblast – 74 cases. In Kyiv City, the number of confirmed coronavirus cases increased by 22%, to 161, says Mayor Klitschko. About 60% are interned at four specialized hospitals. One, a 70-year-old man, died.
Five Antonov Airlines An-124-100 ‘Ruslan’ cargo jets are flying an air bridge from China to the EU, carrying medical protection gear. The Gostomel-based cargo airline is using its fleet of An-124-100 strategic airlift jets to carry face masks, suits, gloves, glasses, disinfectants, medicines and reagents for laboratory tests.
Every other day, a cargo jet from China is landing at Boryspil with medical protection gear, Kirill Tymoshenko, deputy head of the President’s Office, writes on Facebook. Separately, Chinese Foreign Minister Wang Yi and Ukrainian Foreign Minister talked by telephone Wednesday and agreed to visit each other’s countries.
Boding well for the future of Chinese investment in Ukraine, China is cited in a new poll as the nation most likely to help Ukraine during the coronavirus crisis. Of people interviewed by the Kyiv International Institute of Sociology, the country or organization cited most helpful to Ukraine was: China – 34%; World Health Organization – 11%; EU 10%; US – 9%; and Russia 6%. Yesterday, Ukraine’s deputy Foreign Minister Yehor Bozhok wrote on Twitter: “For more than a week now Russia blocks transit through its territory of humanitarian convoys with medical goods directed to Ukraine for fighting Covid-19.”
The central bank swapped $241 million in dollar bills for non-cash currency at 11 banks yesterday. Last week, the National Bank of Ukraine traded $130 million in cash for non-cash at banks. Designed to bolster confidence, these operations overcome dollar bill shortages.
Ukraine’s electricity prices for industrial customers are twice as high as those in Eastern Europe, according to Ukraine’s electricity Market Operator. Rates per MWh are: Ukraine – €51.01; Poland €30.23; Romania – €25.69; Hungary – €25.78; and for Slovakia – €24.1. According to Nord Pool, the European power exchange, tariffs are even lower in Western Europe. Rate per MWh are: Benelux – €22.5; France – €21.86; and Germany- €19.95. To reduce the impact of coronavirus curbs, Denmark, Norway and Sweden have cut electricity rates to minimum levels: €4.58 per MWh.
Fitch downgrades the rating of DTEK Energy, Ukraine’s largest private power generator, to C, a level that “indicates that default is imminent.” DTEK Energy failed to pay interest on loans and bonds due Tuesday and Wednesday. DTEK’s 2024 bond currently trades at 50 points below par.
Concorde Capital’s Alexander Paraschiy writes: “The first quarter of 2020 was indeed challenging for DTEK Energy, as the average price of electricity at the wholesale market was rather weak (about UAH 1,360/MWh, which is 29% less yoy and about 4% less compared to a weak fourth quarter of 2019). This, as well as an expected decline in demand for power in Ukraine due to quarantine measures, are likely to have triggered DTEK’s decision to initiate debt restructuring talks…DTEK’s future sustainability is under question.”
Referring to Energoatom, the state-owned nuclear power producer, source of half of Ukraine’s electricity, Paraschiy adds: “The new electricity market in Ukraine indicates that the market is too shallow and its prices depend primarily on the behavior of Energoatom. Such dependence on a state-controlled power generator is a big operating risk for DTEK.”
The closing of Ukraine to international air travel will cost UIA $60 million, “according to the most optimistic scenario,” company president Yevhen Dykhne, tells Ukrainska Pravda. For a company that used to operate 1,000 flights a week, UIA now is grounded for at least one month, running off savings and paying employees 2/3 salary. In the last two weeks of March, the government’s stop-go-stop orders on air travel unnecessarily cost the company millions, he said. On charges that UIA conducted price gouging in the final days, Dykhne said ‘artificial intelligence’ set prices to match market demand.
- Ukraine Assets Rally On Rada Votes
- German, EU, IMF Aid in the Pipeline
- Gov’t Plans to Tighten Corona Curbs, Launch Public Works Program to Ease Unemployment
- Forbes Ukraine to Return to Newsstands – Once Kiosks Reopen
Ukraine’s Eurobonds and GDP warrants rallied sharply on news of Rada approvals of bills seen as clearing the way to an IMF deal. GDP warrants jumped 11.6% Tuesday, to 74.8% of face value. Yields on Eurobonds of varying maturities fell an average of 120 basis points, to a new range of 8.5% to 9.9%, reports Interfax-Ukraine.
By giving final approval to the ‘anti-Kolomoisky’ bill, the Rada will unlock a first $4 billion tranche of IMF money this month, Danylo Hetmantsev, head of the Rada finance committee, tells Radio NV. Hetmantsev predicts final Rada approval by April 10. Linked to the $8 IMF Extended Fund Facility would be $1 billion in World Bank Funding, a €500 million tranche from the EU, and bilateral aid from Canada and Japan. Separately, Reuters reports Ukraine is in talks with the World Bank for a $150 million loan for social payments related to the coronavirus curbs.
“If we get this funding, we can calmly go through the crisis that has swept the whole world today,” Yakiv Smoliy, Governor of the National Bank of Ukraine, predicted in an online conference with the European Business Association.
Concorde Capital’s Alexander Paraschiy writes: “If the IMF indeed provides $4 billion in the first EFF tranche…Ukraine’s budget will accumulate enough funds to smoothly repay all its external debt – $3.9 billion in principal due by the end of 2020…[Coupled with EU and World Bank money] This would fully resolve Ukraine’s liquidity issue for this year.”
German Chancellor Angela Merkel and President Zelenskiy have agreed on a €150 million loan from Germany to help Ukraine fight Covid-19. These funds would be in addition to two other new sources of money to fight the epidemic: €40 million from the European Investment Bank, and €80 million from the European Commission.
With the IMF moving toward approving aid in April, The New York Times posts: “Desperate for Aid, Ukraine First Has to Fight Corruption.” The article contains comments by former Prime Minister Honcharuk on his March 4 firing. “Our dismissal I connect, most of all, with our systematic fight against corruption,” he said. Apparently alluding to Ihor Kolomoisky, candidate Zelenskiy’s main media backer one year ago, he said: “We interfered with a lot of people’s ongoing corruption schemes…not everybody was happy with that.” Referring to his effort to change managers and board members of Ukraine’s large state companies, Honcharuk warned: “Every one of these objects is a little breeding ground, a little hot spot, of corruption.”
Facing rising unemployment, the government is developing a public works program. Prime Minister Shmygal said Wednesday: “We plan to create many jobs in a few weeks. In particular, we need people to repair roads, pave sidewalks, clean up territories. Many different jobs.”
Determined to go ahead with this year’s massive road building and repair program, the Cabinet of Ministers authorized Ukravtodor, the state highways agency, Wednesday to issue almost $700 million in state-backed hryvnia bonds. With maturities ranging from 1 to 5 years, the bonds are to have yields of 12.5% per annum.
Managing a gradual 13% devaluation of the hryvnia in March, the central bank sold $2.5 billion and bought $264 million. In the first quarter, the National Bank of Ukraine sold twice as much foreign exchange as it bought – $2.7 billion versus $1.3 billion.
Ukraine has 794 officially confirmed Covid-19 cases – a 10-fold jump in 10 days. This increase may be partly explained by expanded testing. About half of infected people are believed to be recovering at home under doctors supervision. So far, there has been 20 deaths. Deputy Interior Minister Anton Gerashchenko predicts on Facebook that coronavirus will peak in Ukraine between April 15 and 25. He writes: “That is why quarantine in Ukraine can be continued until May 15.”
As spring weather arrives, the national government plans to tighten Ukraine’s coronavirus lockdown, reports the government press service. Wearing masks in public will be mandatory. Banned will be: visits to parks, playgrounds and beaches, and walking in groups of more than two. President Zelenskiy said in a video address last night: “We ask you to stay home. No one will steal the beaches and no one will take out the sand. The parks will not disappear anywhere. Strolls can wait.”
The closing of Kyiv’s metro has radically slashed mass transit use in Ukraine’s business capital. Previously, Kyiv’s metro, city buses, tramways and trolleybuses carried about 1 million individuals every weekday. On Wednesday, Mayor Klitschko said 40,000 essential workers with special passes are using the remaining surface transport lines. Even if this 4% is augmented by car pooling, it is safe to say that 90% of the inhabitants of this city of 3.7 million are staying at home. With road traffic thin, the ciyty added yesterday raised speed limits on seven road sections to 80 kph (50 mph).
Ukrainians approve of the coronavirus quarantine, but worry about running out of money, according to a new nationwide telephone survey of 2,000 people, conducted by Ratings Group. Almost 60% of respondents have enough savings for one month, according to the poll completed Sunday. Only 16% have enough money for two months. The government plans to continue the lockdown for another six weeks.
With world steel prices low, Metinvest, Ukraine’s largest producer of iron ore and steel, is considering suspending slab production at its Azovstal plant, reports Interfax-Ukraine. The possible shutdown comes as Metinvest suspends work this week at its two rolling plants in Italy, Ferriera Valsider and Metinvest Trametal.
Andriy Favorov has resigned as director of gas sales and production at Naftogaz. The resignation comes as two newly hired Dutch executives seek to unravel what looks like a $1 billion loss for the state energy company. In December, Naftogaz bet the wrong way on European natural gas prices, which plummeted by almost two thirds in the first quarter of 2020, to the lowest level in a decade.
Forbes Ukraine relaunches in May, six years after it was taken over by allies of then-President Yanukovych. The new editor will be the old editor: Volodymyr Fedoryn. “I am excited to be back to business with Forbes,” said Fedoryn, who led a staff walkout after the Yanukovych-era takeover. The new owner of the monthly will be UYAVY! LLC, owned by Artur Grants. Grants also owns BF Group which won attention for winning a duty free concession at Boryspil airport and taking over the Sofiyskiy Fitness Group in 2017. The group reportedly is close to former Prime Minister Yatsenyuk. On Monday, alluding to coronavirus curbs which closed news kiosks, Grants said: “The stat of this project coincided with the toughest challenge in our lifetime, but I am sure that Ukraine and the world will overcome this with business doing its best to support the country and the people.”
- Two Month Quarantine Will Take Economic Toll
- After Rada Votes, Ze Wins Plaudits from Pundits
- Cooped Up at Home, Ukrainians Talk More on Phone, Eat Less Candy
- Startup SkyUp Comes of Age Flying Tourists Home
Ukraine’s coronavirus quarantine could last through May 12, the end of the May holidays, Interior Minister Arsen Avakov said in a video recording released Monday.
Within two weeks of the March 12 quarantine declaration, 60% of Ukrainians interviewed by Info Sapiens agency say they are suffering financial losses. About half of 809 people interviewed by telephone said they stopped going to work or school. Of interviewees who had jobs, only 46% say they will receive full salary for March. Of the group that lost jobs or income, 45% say they only have enough money for March. And 34% say they have money to get through March and April.
Ukraine’s GDP will drop by 4.8% this year, according to assumptions in the revised budget, Prime Minister Shmygal said Monday on the Freedom Speech TV show. Earlier in the day, the Economy Ministry forecast the drop at 3.9%, a turnaround from the 3.7% growth forecast made in February.
The budget deficit will increase five-fold this year, to 10% of GDP, predicts Maria Repko, Deputy Director of Kyiv’s Center for Economic Strategy. Spending on medical care will double, while revenues will drop along with the GDP, she said in an online conference. To win the IMF package, Ukraine committed last fall to a budget deficit of 2% of GDP. Given the world financial crisis, the IMF is expected to waive that requirement.
Favorable reviews greeted the Rada’s approvals on Monday/Tuesday of a farmland market and of the ‘anti-Kolomoisky bill,’ protecting PrivatBank from a return to its former owner.
“Zelenskiy pulled this one out of the bag, and breathed new life into his presidency,” Timothy Ash writes from London. “The land law is more restrictive than many had hoped, but after 30 years of obstruction to a land market from the Rada and Ukraine’s political elites, finally Ukraine has something of a market in land. This is a base to go forward.”
Referring to the law designed to block Ihor Kolomoisky from winning back control of PrivatBank, the nation’s largest bank, Ash wrote: “The fact that Ukraine will be back on an IMF program, is a huge defeat for Kolomoisky who will now have to contend with continued IMF oversight on Ukraine.”
Concorde Capital’s Alexander Paraschiy wrote that Ukraine’s chance of a default was 50-50. On Tuesday morning, he wrote: “With the approval of land reform and the first reading of the anti-Kolomoisky bill, Rada has demonstrated its dedication to implementing all the prior actions demanded by the IMF…These recent developments allow us to reduce the probability of Ukraine’s soon default from 50% to 10%.”
Directors of Ukrainian farming companies see the July 2021 start of a limited land market as a – small – step in the right direction. Noting that land sales are limited to 100 hectares to Ukrainian buyers, Alex Lissitsa, genera director of IMC hails the law for “crossing the line that could not be crossed for almost 30 years.” He writes on Facebook: “Until 2024, there will be essentially no transactions on the land market…business is not sure whether the start of this reform will be postponed again. This has happened in Ukraine many times under the guise of ‘not ready’ and ‘out of time..’”
Ukrzaliznytsia could lose up to $350 million through June 31, Željko Marček, acting Board Chairman, tells Magistral, the state railroad’s news organ. Starting in mid-March, UZ suspended international and inter-regional train service. Although the railroad loses money on regional trains, the end of passenger revenue means the deficit only grows larger.
With e-commerce booming and shopping centers closed, warehouses may emerge as winners, Bloomberg reports in a story: “The Hottest Trade in Commodities Is Finding Space to Store Them.” “The cost of storage is exploding,” says the story which ranges from oil tank farms to cold storage warehouses. In Kyiv, CBRE Ukraine releases a new warehouse report: “Acute Shortage of Available Space Nudges Prime Rent Upwards.” Last year “shortage of available warehouse premises reached a critical point, with vacancy falling to almost none,” reports the real estate consultancy. “In 2020 only new sizeable project is expected to be delivered with little influence on any market indicators.”
Confined to their apartments and houses, Ukrainians are talking more on the phone, report the three major mobile operators, Kyivstar, VF Ukraine and lifecell. “We see a real surge in voice traffic with the beginning of quarantine in Kyiv – they talk twice as much here,” Andriy Otroschchenko, Vodafone marketing director, tells UNIAN. Nationwide, Kyivstar’s voice traffic is up 17% since quarantine was imposed. Lifecell is up 12%.
Roshen, Ukraine’s largest candy maker, reports that sales fell 10% in the first two weeks of quarantine. “With the beginning of quarantine measures and the global economic crisis, we are witnessing a decline in purchasing power and, accordingly, demand for confectionery products,” the company tells Interfax Ukraine.
Belavia Airlines, a major air link for Ukrainians traveling to Russia, has suspended all flights to Ukraine until April 24 and all flights to Moscow until April 30.
SkyUp Airlines has made over 100 special flights to 30 countries bringing home almost 19,000 Ukrainians over the last nine days, Oleksandr Alba, co-owner of Ukraine’s low cost carrier, writes on Facebook. He writes: “Thousands of people were able to return home to their relatives, when the whole world is dead.”
- Taboo Falls: Rada Approves A Farmland Market
- Rada Votes to Block Kolomoisky from PrivatBank
- Gov’t Forecasts 3.9% GDP Drop This Year
- To Get Through Corona, Gov’t Plans to Double Borrowing
- Chinese Buy Into Odesa Container Port
Ukraine just made two big steps toward an IMF agreement
First, the Rada voted in the early hours of last Tuesday to create a farm land market. The law comes into effect in July 2021. It limits sales to 100 hectares and to Ukrainian buyers. In 2024, the limit rises to 10,000 hectares. Foreigners and companies with foreign capital are banned from the market. Analysts predict the IMF will accept this watered down version, valuing it for its symbolic value – ending a 19-year-old ban on farm land sales.
Second, the Rada approved a financial bill designed to block the return of PrivatBank to Ihor Kolomoisky and his business partners. Facing parliamentarians wearing face masks against coronavirus, President Zelenskiy made an emotional appeal to the Rada: “We get $10 billion or maybe more…this is blood for our economy.” With a 3-party coalition, he won the vote by a 41-seat margin. By mid-April, the Rada is to conduct a second vote, possibly voting remotely due to the quarantine.
On a second try, the Rada also approved Serhiy Marchenko, as Finance Minister. A former deputy minister under minister Oleksandr Danylyuk, he replaces Igor Umanskyi, who created too many enemies in the frenzy of budget cutting last week. Timothy Ash writes from London: “Three finance ministers in a month, at a time of global crisis, does not reflect particularly well on Zelenskiy.”
In a one-month flip, the Economy Ministry has changed its GDP forecast from 3.7% growth this year – to 3.9% decline. In its updated forecast, year-end inflation rises to 8.7%. The hryvnia devalues by another 5%, to UAH 29.5 to the dollar. Unemployment rises to 9.4%, from 8.1% today. The average monthly wage stagnates at the current level of 11,000 hryvnia – 14% below the earlier forecast for year end. On Telegram, Prime Minister Shmygal wrote: “We may not be happy with all the numbers, but we expect an improvement of the economic forecast in the second half of the year.”
Undermining one pillar of Ukraine’s economy in 2020, about 500,000 workers took up President Zelenskiy’s invitation to return to Ukraine to sit out the coronavirus quarantine. On Monday, the National Bank of Ukraine reported Monday that Ukrainian workers sent home $1 billion a month last year, through official and informal channels. The top five countries for wage remittances were: Poland – $3.7 billion; Russia – $1.2 billion; the Czech Republic – $1.1 billion; the United States – $984 million; and Britain – $601 million.
To ease the social impact of the coronavirus quarantine, the government plans to nearly double its borrowings this year, to $23 billion. In a statement to the Rada, the government proposed tripling the budget deficit to $10.6 billion and doubling foreign borrowing, to $9.4 billion. Budget revenues are forecast to drop by $4 billion. The government also radically slashed forecast income from privatization this year, to $18 million, from $220 million.
With foreign markets volatile over the impact of coronavirus curbs, the State Property Fund is suspending privatizations of ‘big’ state companies “until the stabilization of the financial markets,” Dmitry Sennichenko, head of the fund, announces on Facebook. He appeals to Ukrainian investors to look at the Fund’s inventory: “Thousands of small-scale privatization facilities: baths, garages, abandoned houses, non-working facilities, unfinished construction.”
In a policy reversal, the government may buy shares in private companies to save them, the Cabinet of Ministers says in the new budget bill. Shares would be paid with government bonds.
After consulting with bond dealers, the Finance Ministry cancelled the weekly government bond auction, normally held every Tuesday. The March 10 auction was also cancelled.
China Merchants Port Holdings is buying a minority stake in Odesa Port’s container terminal, Brooklyn – Kiev Port LLC. A unit of a Chinese state company, China Merchants is paying $1 billion to buy into the Odesa container terminal and nine other container terminals worldwide, reports the Center for Transportation Strategies. The seller, Rodolphe Saadé, CEO of the CMA CGM Group of Marseilles, says: “Given the high uncertainty caused by the coronavirus crisis, the closure of this transaction, as announced previously demonstrates the sustainability of the CMA CGM Group.”
With an eye to expanding rail container traffic from China, a new logistics company has signed a 10-year lease on an intermodal terminal in Dobrá, Slovakia, 10 km west of Ukraine’s border town of Chop. Last month, the new operator, Bulk Transshipment Slovakia handled 44 containers from Xi’an, in northwest China, reports Railfreight news site. Despite disruptions caused by the fight against coronavirus, the number of freight trains running between China and Europe in January and February was up 9% y-o-y.
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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