Business in Ukraine

The Cabinet of Ministers of Ukraine has taken a decision to appropriate 1 billion of UAH to State enterprise Kyiv aviation plant “Aviant” for refinancing of debt and enlargement of the registered fund.

That information was said in the message of the Liaison department of secretariat of the Cabinet.

“The executive decision is approved in short terms to appropriate 1 billion of UAH to refinance the debt and enlarge the registered fund of State enterprise Kyiv aviation plant “Aviant”, - is said in the message with reference to Volodymyr Novitskiy, the Minister of Industrial Policy of Ukraine. [Read more →]

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The cloud of crisis that looms over the country has a silver lining: the authorities are not ignoring the people anymore and have to heed industrial managers, bankers, and experts. Ukrainian politicians are still unable to reckon with anything other than their personal interests and popularity ratings, so at most councils and consultations they focus on their image instead of looking for effective responses to the challenges that are confronting the national economy.

Yet, it is vitally necessary to find a cure for the crisis through an honest diagnosis. This was the subject of the interview with Ukrgazbank Board Chairman Vadym LYASHKO.

— Will you please answer the question which is put to all bankers these days: how painful is the crisis for our banking system and how much will the recovery cost?

— To answer this question we should see first why this crisis has taken on such a form and depth in this country. We shouldn’t put the blame on the global financial crisis alone. We should admit honestly that the degree of our vulnerability and the depth of our integration with the global financial system don’t quite correlate. [Read more →]

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Unlike the devastating flood in Western Ukraine, the surplus of grain did not catch the government unaware. The rich grain harvest had been announced beforehand, with forecasts varying between forty and fifty million tons. The government reassured farmers, saying it would employ the State Reserve, the Agrarian Fund, state holding Khlib Ukrainy, and regional food funds to cope with the amount and prevent a price dive.

So far, however, the government has not intervened, leaving grain traders to their own. This marketing year, they have already exported 1,500,000 tons of grain. The price of feed wheat has dropped to a bargain-basement UAH 700 – UAH 650 per ton [$1 = UAH 4.845 ].

As the harvesting campaign was getting into full swing, Khlib Ukrainy President Ivan Rishnyak assured the public that his holding would play a role on the grain market. He had good reason to say so: Khlib Ukrainy has the capacity to store 6,230,000 tons of grain and process about 4,700,000 tons into flour, cereals, mixed feed, etc. It has grain elevators in geographically advantageous places – at commercial ports in Odessa and Mykolaiv, with capacities of 1,500,000 tons and 600,000 tons, respectively. [Read more →]

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(AP) - Ukraine’s central bank (NBU) will let the official exchange rate for its currency move closer to the market’s exchange rate, fulfilling a key condition to receive an International Monetary Fund loan, officials said Friday.

Serhiy Kruglyk, head of the foreign relations department at the central bank, told The Associated Press that the bank will next month begin to set the daily exchange rate based on the average rate at the foreign currency exchange recorded during the previous day of trading.

Currently, the central bank exchange rates differ significantly from market rates. The official rate is set based on the market rate and other economic factors. The central bank does not publicize the exact formula. [Read more →]

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Against the backdrop of the global financial crisis, little heed was paid to the news released on 5 November by the Association of Ukrainian banks (AUB) about a meeting the AUB Board members and CEOs of the AUB member banks had a day before with NBU Governor Volodymyr Stelmakh and his First Deputy Anatoliy Shapovalov.

According to the AUB report, while discussing the current refinancing procedure, the Association Board members insisted on providing all banks (irrespective of their authorized capital) with equal access to operative re-financing facilities stipulated by NBU Resolution #328. It was also mentioned in passing that “the discussion of the AUB proposals was fairly emotional; the parties wanted to hear each other, yet not always succeeded in achieving this goal.” [Read more →]

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If at the end of summer, it was possible to buy one dollar for 4.7 hryvnia, then on October 8^th, the exchange rate surged up to 6.0 hryvnia for one dollar in some exchanges. This shows that hryvnia has lost more than 20% of its value over the past incomplete one and a half months.

After its extraordinary meeting on Tuesday, the Board of the National Bank of Ukraine (NBU) made an announcement concerning expanding its forecasted corridor for hryvnia’s exchange rate fluctuations – from 4.85 hryvnia for one dollar (plus/minus 4%) to 4.95 hryvnia for one dollar (plus/minus 8%). When commenting on this decision, the head of the Board of the National Bank, Petro Poroshenko, tried to insure Ukrainians that there are no reasons for hryvnia’s devaluation and no problems with the liquidity of banks.

However, how can we believe in this if the same night, the Board of the NBU extended a five billion credit line to PromInvestBank, one of the largest operators of the Ukrainian financial market, and decided to establish a temporary administration in the bank as well as announce a moratorium on savings withdrawal? Some mass media assumed that bankruptcy of PromInvestBank might threaten other financial institutions…

The entire banking system of our country, which until recently displayed a surprising immunity to global financial crisis, virtually turned out to be under threat of replication of the 2004 scenario. After a series of multi-billion interventions, the NBU actually managed to lower the exchange rate of the hryvnia. Friday’s trading at the interbank foreign currency exchange closed with a quite comfortable rate of 5.2 hryvnia for one dollar. First deputy chairman of the NBU Anatoliy SHAPAVALOV gave ZN his comments on the recent events in the country’s financial market.

— Anatoliy Vasyliovych, what caused the recent surge of the dollar’s exchange rate in commercial banks’ exchanges? [Read more →]

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 Much ado has been made recently over Ukraine’s prospects of EU accession. Any subtle hint of the possible expansion of cooperation with the European Union is interpreted by Ukrainian officials as a major breakthrough toward full EU membership.

However, high ranking officials of the European Commission and representatives of the old EU msember states (“old Europe”) have their own interpretation of the situation. They immediately refute such statements and insist that, in the next ten years or even longer, Ukraine’s EU integration is impossible.

As a matter of fact, there is little point in speculating about Europe’s true attitude toward Ukraine. It is better to review actual examples of Ukraine-EU relations. Maybe it is time to put forward arguments that would enable us at least to minimize our losses, — or even more, lead to a dialogue with Europe as equals…

Common truths

While breaking lances over Ukraine’s joining or not joining the EU, Ukrainian experts and officials only roughly outline its major goal. This goal is positive economic effect, which could be appreciated by every Ukrainian. I am not referring to immediate increase in minimal wages up to a certain virtual quantity which governments, say in Great Britain or France, allegedly force employers to pay to their workers.

In pragmatic terms, the positive economic effect of a higher degree of cooperation with the EU should be revealed through the achievement of two major goals. [Read more →]

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