Monthly Economic Monitor Ukraine, 2003

Українська

No. 38
December, 2003

• Hennady Vasylyev, the former vice-speaker of Parliament and Prosecutor of the Donetsk region, became the new Prosecutor General.

• Ukraine signed a bilateral agreement with Poland on the extension of the Odesa-Brody pipeline to Plock.

• The real GDP grew by 7.2% yoy between January and October due to growth in manufacturing, trade and transport.

• The EBRD launched a project to develop private crediting against warehouse grain receipts in Ukraine.

• Ukraine signed a bilateral protocol with Israel on accession to the goods and services market within the framework of the WTO negotiation process.

• The Verkhovna Rada approved the State Budget for 2004 with revenues of UAH 60.7 bn and expenditures of UAH 64.2 bn.

• Banks experienced a temporary lack of liquidity in November.

• The NBU eased the regulations concerning trading of Ukrainian eurobonds by residents.

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No. 37
November, 2003

• The border conflict between Ukraine and Russia over Tuzla Island threatens the relationship between the two countries and endangers the ratification of the Single Economic Space agreement.

• The real GDP growth for the first half of the year was revised upwards from 7.5% yoy to 8.6% yoy.

• Private traders intensified grain imports after the government stepped out of the market.

• The government launched a registration of state-owned stakes in Ukrainian enterprises.

• A favourable world conjuncture and expanding internal investment promote the growth of foreign trade.

• Parliament approved the draft of Budget-2004 in first reading with revenues and expenditures at UAH 61.0 bn and UAH 63.6 bn respectively.

• The demand for foreign cash increased driving the cash exchange rate upwards.

• The NBU exchange rate policy will remain unchanged despite calls by the IMF to allow wider fluctuations of the hryvnia.

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No. 36
October, 2003

• The presidents of Ukraine, Russia, Belarus and Kazakhstan signed a treaty to establish a Common Economic Space.

• Despite the decline in agriculture, the real GDP continued its growth at 5.3% yoy from January to August.

• A price increase of petroleum products provoked administrative interventions in the market.

• The government continues with administrative price controls on the grain and sugar markets.

• Ukraine and Cuba signed a protocol on accession for goods and services within the framework of the WTO negotiations.

• The foreign direct investment inflow increased considerably.

• The NBU Council approved the main guidelines for the 2004 monetary policy. They do not envisage substantial policy changes.

• The deposit insurance coverage was increased by one third from UAH 1500 to UAH 2000.

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No. 35
September, 2003

• A new proposal on constitutional reform foresees the election of the president of Ukraine by the Verkhovna Rada.

• Six parties of the parliamentary majority are going to put forward a single presidential candidate.

• The value added in agriculture decreased significantly because of the poor and late grain harvest, slowing real GDP growth.

• The State Property Fund of Ukraine is compiling a list of enterprises to be privatised in 2004, for which it projects privatisation revenues of UAH 2.15 bn.

• Between January and June exports of goods grew by 27% and imports of goods increased by 29% yoy.

• The President vetoed amendments to the law on VAT, which envisaged a reduction of the VAT rate from 20% to 17%. He also vetoed the recently adopted law "On Telecommunications".

• The NBU, the Cabinet of Ministers and the World Bank are undertaking a joint effort to reform Oschadbank.

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No. 34
August, 2003

• A Group of high-ranking officials from Russia, Belarus, Ukraine, and Kazakhstan has agreed on the principles for establishing a Common Economic Area.

• Two constitutional reform proposals were submitted to the Constitutional Court.

• The real GDP grew by 7.5% yoy in first half of 2003.

• Parliament adopted the law "On Telecommunications", which should solve some major legal problems in the sector.

• Administrative pressure aimed at reducing bread prices continues.

• Ukraine takes more steps toward the WTO.

• The three-pillar pension system was adopted by Parliament.

• In July the consumer prices grew by 7.4% yoy.

• The President signed two laws concerning mortgages.

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No. 33
July, 2003

• Yevhen Marchuk, the former Secretary of the Security and National Defence Council, was appointed Minister of Defence.

• Investments in fixed capital grew by 23.1% yoy from January to March 2003.

• The government tries to curb panic on the food market by sales from state reserves and by higher grain imports.

• FDI inflow increased 145% yoy during the first quarter of 2003.

• The Verkhovna Rada passed amendments to the VAT law, reducing the tax rate from 20% to 17% starting January 1, 2004.

• The consumer price index grew by 5.9% yoy mainly due to panic on the food market.

• The NBU intents to refinance purchases of corporate bonds by commercial banks.

• Parliament adopted the law "On mortgage".

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No. 32
June, 2003

• The President abolished the institution of State Secretaries, restoring the positions of Deputy Minister.

• By the end May more than 40% of the total planned privatisation receipts for the year was transferred to the state coffers.

• Exports and imports of goods grew by almost 28% yoy with imports leading slightly.

• Parliament adopted a law on a flat personal income tax rate at the level of 13% starting 2004.

• The Verkhovna Rada passed amendments to Budget 2003 providing for sources to finance wage increases.

• Corporate bonds were accepted as a collateral for NBU refinancing loans for the first time.

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No. 31
May, 2003

• The Verkhovna Rada adopted the Program of the Government, thereby ensuring its continuance for one more year.

• The real GDP grew by 7% yoy during the first quarter of 2003 against a background of higher investment demand.

• Myhaylo Chechetov, the former first Deputy Head of the State Property Fund, became the new Head of the organisation.

• The positive trade balance was maintained, although the import of goods grew faster than exports.

• Execution of central fiscal revenues continued to exceed 100%, while the expenditures continued below budgeted levels.

• Higher than expected inflation dynamics caused the NBU to introduce inflation restraining measures.

• The Ministry of Finance chose lead managers for Ukraine's new eurobond issue scheduled for later this year.

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Monthly Economic Monitor Ukraine
No. 30
April, 2003

• The President urged the nation to pursue his constitutional reform proposals for redistributing political power.

• Dezhkomstat revised the figure of the real GDP growth in 2002 upward from 4.1% to 4.6%.

• The increase in grain prices caused the President to ask for an investigation, which resulted in the filing of numerous criminal cases, including the arrest of former Vice Prime Minister Leonid Kozachenko.

• The payments discipline in the gas sector deteriorated.

• The current account balance reached USD 3.1 bn in 2002.

• Parliament adopted a new personal income tax law in second reading, which foresees a flat tax rate of 15%.

• Ukraine successfully met its first peak eurobond obligation in 2003.

• The banking system experienced a temporary liquidity shortage.

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Monthly Economic Monitor Ukraine
No. 29
March, 2003

• The FATF recommended to abolish counter-measures against Ukraine, but did not remove Ukraine from its blacklist.

• Ukraine, Russia, Belarus, and Kazakhstan plan to establish a Common Economic Area.

• The management of all state corporate rights was transferred to the State Property Fund.

• Ukraine and Hungary signed an agreement on goods and service markets access within the framework of WTO accession.

• The Cabinet of Ministers introduced new procedures concerning local fiscal borrowing.

• The NBU made refinancing loans more attractive for banks.

• Ukrainian commercial banks were given the right to trade in Ukrainian Eurobonds.

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Monthly Economic Monitor Ukraine
No. 28
February, 2003

• Several FATF member-countries announced the application of counter-measures to Ukraine.

• During the informal summit of CIS leaders, President Leonid Kuchma of Ukraine was elected Head of the Council of the CIS.

• According to preliminary estimates, the real GDP grew by 4.1% in 2002 due to increases in manufacturing and trade.

• The government introduced price regulation on milk and meat products aimed at supporting farmers' profits.

• Despite a fiscal surplus, the consolidated fiscal expenditures remained under-executed in 2002.

• The NBU adopted measures to soften foreign exchange market regulations.

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Monthly Economic Monitor Ukraine
No. 27
January, 2003

• In an atmosphere of political crisis, the new head of the NBU was approved by Parliament.

• The FATF decided to recommend to its members to impose counter-measures on Ukraine.

• The introduction of import quotas on grain by the EU induced Ukraine to search for new markets.

• The 2003 Budget was approved in December with a UAH 2 bn deficit.

• The Government issued UAH 1.3 bn of long-term domestic state bonds with a current yield of 9%.

• The Ministry of Finance set a negative interest rate on POVDPs, mainly held by the NBU.

• The NBU reduced the discount rate from 8% to 7%.

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