Monthly Economic Monitor Ukraine, 2004

Українська

No. 50
December, 2004

• Pervasive violations during the second round of the presidential elections resulted in a severe political crisis.

• Parliament passed a vote of no-confidence in the government.

• The real GDP growth slowed to 12.7% yoy for the first ten months of the year.

• Parliament extended the moratorium on agricultural land sales and purchases.

• The fiscal deficit reached UAH 6.4 bn despite the under-execution of expenditures.

• The NBU simplified the access to refinancing credits for banks reacting on a reduction of liquidity in the banking system.

• To preserve the stability of the banking system, the NBU issued a temporary regulation to reduce the commercial bank activity and to prohibit pre-term repayments of time deposits.

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No. 49
November, 2004

• According to the results of the first round of the presidential elections, Viktor Yuschenko was supported by 39.87% of the voters, while Prime-Minister Viktor Yanukovich received 39.32% of the votes.

• Household consumption and exports were the two driving forces for the high GDP growth.

• The merchandise surplus reached USD 3.0 bn between January and August due to high export growth.

• The central fiscal deficit for the period of January to September reached 1.4% of GDP.

• The NBU increased the discount rate by 0.5 p.p. to 8.0% p.a.

• Demand for cash foreign currency is high due to pre-election uncertainly and inflationary expectations.

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No. 48
October, 2004

• The pro-government parliamentary majority in the Verkhovna Rada collapsed after several parties seceded.

• The real GDP increased by 13.6% yoy between January and August, due to high growth rates in manufacturing, agriculture, and trade.

• Ukraine started to use the Odessa-Brody pipeline in the reverse direction.

• The current account surplus reached USD 4.0 bn, or 15.5% of GDP, during the first half of 2004.

• The Cabinet of Ministers submitted the Draft Budget Law for 2005 to Parliament.

• The minimum monthly pension payment was increased from UAH 132 to UAH 284; the addition represents social aid.

• US dollars got more expensive at cash exchange points (kiosks).

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No. 47
September, 2004

• Ukraine and Russia signed several agreements on gas and oil cooperation.

• The real GDP grew by 13.5% yoy between January and July, partially due to a recovery in the agricultural sector.

• This year Ukraine has already harvested nearly 35 m tons of grain, that is 75% more than the total harvest in 2003.

• Despite protests by ecological groups of the EU, Ukraine opened the Danube-Black Sea deep-water navigation canal.

• Within the framework of the WTO negotiations, Ukraine signed a protocol with Argentina for accession to markets for goods and services.

• Fiscal expenditures were executed at 90% of the budgeted level despite an accumulation of UAH 10.6 bn in the state accounts.

• Continuing its policy of suppressing monetary expansion, the NBU changed the reserves requirement ratios for commercial banks.

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No. 46
August, 2004

• The Ukrainian presidential election campaign has started.

• According to the revised quarterly information, the real GDP increased by 12.3% yoy during the first quarter of 2004.

• Ukraine privatised a large coal-mining company Pavlogradvuhillya and part of ore extracting and enriching holding UkrRudProm.

• The balance of trade in goods reached a surplus of USD 2.1 bn or 10.1% GDP bn after the first five months of the year.

• The central fiscal balance switched from a surplus to a deficit of UAH 223 m.

• The NBU undertook further steps to reduce the rapidly growing bank liquidity.

• Ukraine successfully issued USD 500 m of eurobonds with a floating yield.

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No. 45
July, 2004

• Parliament approved a new draft law on constitutional changes in the first reading.

• The real GDP grew by 11.3% yoy between January and May, while industrial output increased by 16.9% yoy.

• Kryvorizhstal, the largest metallurgical enterprise in Ukraine, was privatised.

• The Energy Company of Ukraine was established.

• The current account balance reached USD 1.7 bn (14.3% of GDP) during the first quarter of 2004.

• The 2004 State budget was revised by the Parliament, increasing budget revenues by UAH 4.5 bn and expenditures by UAH 8 bn.

• To alleviate inflationary pressures on the economy, the NBU undertook steps to reduce monetary growth.

• The NBU turns towards slight appreciation of national currency.

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No. 44
June, 2004

• The European Commission denied granting Ukraine Market Economy Status.

• The real GDP grew by 11.5% yoy between January and April, while industrial output increased by 17.7% yoy.

• Oil product prices grew sharply at the end of May.

• The State Property Fund announced a privatisation tender for Kryvorizhstal, the largest metallurgical enterprise in Ukraine.

• The balance of trade in goods remained positive at USD 857 m in the first quarter of the year.

• A 2005 budget resolution was submitted to Parliament in May.

• The NBU introduced a new regulation that will help to improve control over bank liquidity.

• The banking sector continues to expand rapidly.

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No. 43
May, 2004

• The Ukrainian Parliament ratified the treaty establishing a Common Economic Space between Ukraine, Russia, Kazakhstan, and Belarus.

• Parliament failed to pass the Constitutional Reform legislation.

• The real GDP grew by 10.8% yoy in the first quarter of 2004.

• Privatisation of the holding company Ukrrudprom will be regulated by a special law.

• In January and February the balance of trade in goods reached a surplus of USD 611 m.

• The introduction of special VAT accounts was postponed till July.

• Development of the monetary sector follows last years' trends.

• The maximum amount of deposit coverage in case of a bank bankruptcy was increased from UAH 2000 to UAH 3000.

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No. 42
April, 2004

• The Verkhovna Rada adopted a law that introduces a proportional party-list approach for parliamentary elections.

• The IMF approved a USD 605 m stand-by arrangement for Ukraine.

• Agricultural producers, who export themselves, are eligible for VAT refunds.

• The net inflow of FDI doubled, reaching USD 1.4 bn in 2003.

• Special VAT accounts are to be introduced in May.

• The NBU takes steps to enhance its control over bank liquidity.

• The bank's regulative capital adequacy requirement ratio was raised from 8% to 10%.

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No. 41
March, 2004

• The FATF removed Ukraine from the blacklist of non-cooperating countries.

• The Government decided to use the Odessa-Brody oil pipeline in the westward direction.

• The Verkhovna Rada dropped the requirement to elect the President by Parliament from the constitutional reform draft law.

• The privatisation revenues collected in January and February constitute one third of this year's target.

• The trade surplus for goods decreased significantly in 2003, while the balance of services maintained its high surplus.

• Central fiscal revenues were executed at 100.7% of plan in January, while expenditures were at 65% of the targeted level.

• Ukraine issued USD 600 m worth of eurobonds with a seven-year maturity and a 6.9% yield.

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No. 40
February, 2004

• In January the President appointed new Ministers of Economy and European Integration, of Agrarian Policy, and of Industrial Policy.

• The Council of Europe threatens to expel Ukraine.

• Preliminary estimates show that the GDP increased by 8.5% in real terms in 2003.

• The Government decided to reimburse VAT to exporters of agricultural and food products despite the provisions of the 2004 Budget.

• The growth rate of goods imports continues to exceed that of exports, but the balance of trade in goods remains positive.

• The year 2003 ended with a central government fiscal deficit of nearly UAH 1 bn, or 0.4% of GDP.

• The NBU reacted to inflation by increasing its overnight rate from 8.0% p.a. to 8.5% p.a.

• The cash foreign exchange market regulation was tightened.

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No. 39
January, 2004

• Changes to the Constitution intended to change the balance of power in Ukraine were adopted in first reading.

• The Constitutional Court ruled that Leonid Kuchma has the right to be a candidate in the 2004 presidential elections.

• The real GDP grew by 7.7% yoy between January and November.

• The State Property Fund reached its annual privatisation revenue target of UAH 2.15 bn in 2003.

• Ukraine signed protocols on access to goods and services markets within the framework of the WTO accession negotiations with Brazil, Poland, Estonia and Thailand.

• The Government approved the issuance conditions for VAT refund debt bonds.

• Inflation reached by 8.2% yoy in 2003.

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