Ukraine’s GDP grew by 3.4% 2018 - Highest rate since 2011
Ukraine’s GDP grew by 3.4% last year, reports Stepan Kubiv, Minister of Economic Development and Trade. Ukraine’s GDP grew by 2.5% in 2017 and by 2.3% in 2016. The 2018 growth is the highest since 2011, when growth was 5.5%.
Retail Lending In Ukraine Could Grow by 40% in 2019
By James Brooke
December 4th 2018
As of Monday night, ships in the Azov were going overwhelmingly to Russian ports,
with only five going to the Ukrainian ports of Mariupol and Berdyansk, according to https://shiptracker.live/ The site tracks ships by using information from their GPS transmitters. According to fragmentary reports, few ships have docked at Ukraine’s two ports since Russian forces seized three Ukrainian Navy vessels on Nov. 25. From Nov. 25-27, the number of ships in and around the strait increased 2.5 times, from 167 to 421, according to Ukraine’s Ministry for Temporarily Occupied Territories.
German Chancellor Merkel asked President Putin to restore freedom of shipping to the Azov.
“The freedom of shipping traffic in the Sea of Azov...must be ensured,” she told reporters after meeting Putin on Saturday in Buenos Aires. “Russia must stick to this.” Concorde Capital’s Zenon Zawada writes: “It’s entirely realistic to view Russia as seeking control of the Azov Sea and preventing ships from traveling to Ukrainian ports, which has already been accomplished to a large extent.”
By blocking shipping in the Azov, President Putin seeks to damage Ukraine’s economy,
Iryna Gerashchenko, first deputy chair of the Rada, said in Kherson, the Black Sea region. Speaking to the Regional Development Council, she said: “One of the components of Putin's hybrid war against Ukraine is the economy. And the Azov blockade is an attempt by the Russian Federation to destroy yet another piece of the Ukrainian economy.”
Trains can replace ships to minimize the impact of a Russian blockade of the Kerch Strait,
Dmitry Sologub, deputy head of the National Bank of Ukraine, tells reporters Monday. He said the monthly “influence” is “on the scale of tens of millions of dollars.” By some estimates, 20% percent of Ukraine’s steel exports pass through the ports of Mariupol and Berdyansk. Steelmaker Metinvest tells Interfax-Ukraine that two ships carrying its steel passed through the Kerch early last week. Referring to rail, the spokesman said: “In case of delays during the passage of the Strait, the group has the opportunity to redirect logistic flows to the Black Sea ports.”
The EU and the US should consider banning from their ports Russian ships originating from the Sea of Azov,
Annegret Kramp-Karrenbauer, a top candidate to replace Chancellor Angela Merkel as leader of the Christian Democrats, tells Reuters. Reflecting a growing national security debate in Germany over the Nord Stream 2 pipeline, she says Berlin could reduce the amount of gas to flow through the pipeline.
Contributing to Germany’s debate, Prime Minister Groyman told newspaper Die Welt:
“Nord Stream 2 is a form of disguised war against Europe…we now are considering this project as Russia's geopolitical weapon.”
Groysman was in Berlin Thursday to open a German-Ukraine business forum, attended by 400 business and political
leaders from Germany and Ukraine. Trade between Ukraine and Germany, Ukraine’s largest EU trading partner, rose by 8% in the first eight months of this year, hitting EUR 4.7 billion.
Retail lending in Ukraine could grow by up to 40% next year,
according to five bankers interviewed by Interfax-Ukraine. Oleg Pakhomov, retail business director of Credit Dnepr Bank, says predicts up to 40% growth, saying: “In 2019, consumer loans will remain the main component and driver of growth in the loan portfolio of banks and the main direction of retail lending: they now form more than 80% of all retail loans in hryvnia.”
The volume of bank deposits in Ukraine has not changed appreciably since martial law was implemented one week ago,
Kateryna Rozhkova, first deputy head of the National Bank of Ukraine, briefed reporters on Monday. "There are no outflows in the banking system,” she said, citing figures through Thursday. “The volume of term deposits did not change in the banking system as a whole, if we compare the state a week before the introduction of martial law and the latest data that we saw.”
Business in Ukraine leaders are gauging the impact – if any -- of martial law,
according to a survey story by Interfax-Ukraine. The Union of Ukrainian Entrepreneurs has asked member companies to report any restrictions on business activity in the 10 border regions placed under martial until the end of December.
Igor Gumenny, President of UBC Group, the Kharkiv-based refrigerator manufacturer, posts Monday on his Facebook page:
“There is nothing tragic. Meetings, visits of business partners, credit lines, insurance, international contacts are simply postponed. Business and investment negotiations are suspended until after New Year and the Christmas holidays. I hope martial law is only for a month.”
The Ukrainian government needs to have a direct dialogue with business
to “find effective and constructive ways to implement these measures, so that they have the least possible impact on the economy,” urges Denys Khrenov, acting general director of AB InBev Efes, the brewing company.
Oleg Pakhomov, retail business director for Credit Dnepr Bank, says his bank is not changing lending rules,
adding: “We believe that the introduced martial law regime in the current situation should not drastically affect the rights or financial condition of clients. Similarly, Galina Heilo, board chair of Aybox Bank, says martial law has not yet affected the bank’s lending plans.
To fill seats, Europe’s low cost airlines will have to heavily promote Ukraine among Europeans as a vacation destination
and Kyiv and Lviv as “city break’ weekend destinations, Denis Antoniuk, former head of the State Aviation Service, tells Interfax-Ukraine. Praising the arrival last month of Ryanair and Wizz Air’s expansion of its Ukraine route network, Antoniuk warns: “Most routes from and to Ukraine just do not have enough passengers, unless serious measures are taken to generate new passenger flows.” Both Ryanair and Wizz Air have powerful marketing systems that in recent years have flooded little known cities like Sofia, Bulgaria, with EU budget tourists looking for new, inexpensive destinations.
Air passengers through Lviv this year are up 47% through November yoy, to almost 1.5 million,
the airport reports on its Facebook page. Of the nearly 125,000 passengers in November – up 57% over last year – almost all – 87% - flew internationally. This year, the number of foreign cities with direct scheduled flights to Lviv has tripled – to 35. On Dec. 14, Wizz Air starts service to a 36th destination – Frankfurt-Hahn.
Citing Ukraine’s martial law,
Bulgaria Air has suspended for two weeks its flight from Sofia to Odesa. The twice a week flight was launched last February.
EU Approves €500 million USD in Aid for Ukraine…UGV Plans to Increase Gas Drilling by 67% in 2019…Work Underway on $1 billion USD in Public-Private Port Upgrades…Boryspil Airport Kyiv Express Train Now Running 30 Times a Day
By James Brooke
December 3rd 2018
In a clear signal of support to Ukraine, the EU has approved disbursement of €500 USD million in aid to Ukraine – two weeks before the IMF and the World Bank are to approve similar aid.
Valdis Dombrovskis, EU Vice President for Financial Stability said on announcing the move Friday: “Today's European Commission decision on disbursement comes at a crucial moment when Ukraine and its people face a new aggression from Russia and need to see solidarity from international partners. Such aggressive behavior is not acceptable in today's Europe." According to a post on Ukraine’s Finance Ministry website, the aid is to arrive in mid-December, in the form of loans with annual interest rates below 2%.
The EU approved up to €1 billion USD in aid to Ukraine last summer in return for the government to make free market-oriented changes.
These include: fighting corruption, improving transparency of company registers, enhancing the predictability of taxes and strengthening governance of state companies. On Friday, Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, reminded Kyiv of this linkage, saying: “This is an important and encouraging signal that Ukraine continues to deliver on reforms despite the current security environment and the upcoming electoral cycle."
Using new German and Chinese drilling rigs, Ukrgazviboduvannya, the nation’s largest oil and gas producer, plans to increase drilling volumes by two thirds in 2019,
a record jump for the state energy company. Next year, UGV plans to drill 524,000 meters, more than double the 2017 level, Michael Paduchak, head of drilling for UGV, said Friday at the company’s Technology Day in Kyiv. A unit of Naftogaz, UGV aims to produce 20 billion cubic meters of gas in 2020, 22% more than this year’s forecast level.
By Dec. 1, Ukraine used up 10 quotas for duty free exports of agricultural products to the EU:
honey, butter, chicken meat, cereals, corn, wheat, malt and wheat gluten, processed tomatoes, and grape and apple juice. Quotas for garlic and starch are to be filled in coming days, reports Ukraine’s Agrarian Business Club. After Asia, the EU is Ukraine’s second-largest market for food sales.
Uzbekistan, the largest importer of Ukrainian sugar, has suspended sugar imports from Ukraine due to a “ban on accepting and customs clearance of Ukrainian goods,”
reports Ukrtsukor, the National Association of Sugar Producers. Last year, Uzbekistan bought 60% of Ukraine’s sugar exports. It is unclear if Uzbekistan’s ‘ban’ applies only to sugar or to all imports from Ukraine. The Central Asian country depends heavily on wage remittances from guest workers in Russia.
Grain handling capacity at Ukraine’s sea ports has increased this year by 14% to 50 million tons,
Maksym Shyrokov, head of the Sea Ports Authority’s Yuzhne branch, tells a grain terminal conference in Kyiv. This year, grain terminals were built at the ports of Yuzhne, Berdyansk and Olbia, raising the national total to 52. Over the last five years, the flow of grain through the nation ports has doubled, from 22 to 44 million tons,
Looking ahead, $1 billion worth of public private investments are underway to build terminals, reloading complexes and berths in Chornomorsk, Mariupol, Mykolaiv, Odesa and Yuzhne ports,
Shyrokov says. The ratio of private funds to public funds is 5:1.
Work is starting on a $55 million China-Ukraine public private investment to increase grain and vegetable oil handling facilities at Mykolaiv,
now Ukraine’s second busiest Black Sea Port, after Odesa. Raivis Veckagans, head of the Sea Port Authority, reports from Mykolaiv that the port’s grain handling capacity will be increased by 2.5 million tons a year and oil handling by 1 million tons. The state agency is to spend $12 million, largely for dredging. Kyiv’s Orum Group is building the grain and vegetable transshipment complexes. In addition, an Orum unit, Seaside Terminal, plans to invest $4 million to rebuild the Mykolaiv-Vantazh rail station, increasing its capacity. Separately, the Infrastructure Ministry reports that COFCO -- China National Cereals, Oils and Foodstuffs Corporation -- will invest up to $30 million in berth capacity and river logistics.
Kyiv’s new train to the plane – the Kyiv Boryspil Express train – runs at full schedule this week --
30 times a day, around the clock, linking Kyiv’s Central Rail Station with Boryspil, the nation’s busiest airport. Frequencies vary. Roughly every half hour at peak times -- 6 am to 10 am; 6 pm to 10 pm. Once an hour during other times. The fare is 80 UAH, about $2.85 and the ride takes 38 minutes, with one stop at Darnitsa, the Left Bank rail hub. Next year, a stop at Vydubichi is to be added, making for easy access to the Metro Green line. By contrast, the bus costs 100 UAH and drive times are hostage to snow, rush hour traffic jams and repairs on bridges over the Dnipro.
Ten years in the making, the project suffered a setback when the first $50 million tranche of Chinese financing disappeared,
and Vladislav Kaskiv, the Yanukovych-era director of the State Investment Project, ran away. One year ago, he was extradited to Kyiv from Panama, only to be released on bail. It is unclear where the case stands. Instead of a $365 million, five-year project financed with Chinese loans, today’s project was built in nine months, for $17 million, financed by Ukrzaliznitsya. The national railroad built a 300-meter rail bridge over the Kyiv-Kharkiv highway, four kilometers of new track, and a new station at Boryspil’s Terminal D. UNIAN’s Alexander Kunitsky writes: “By launching the express train, Ukraine showed the ability to implement large infrastructure projects. And Kiev residents and guests of the capital received a comfortable way to get to the airport.”
After taking the train Sunday evening, the UBN offer these travel tips.
From Boryspil, there is no signage inside Terminal D, the main terminal. Outside on the arrivals level, a large blue and white Ukrzaliznitsya beckons passengers to a covered walkway. About 100 meters down the walkway stands Boryspil rail station. There tickets can be bought, with a credit card or bank card, from two vending machines, or, with cash, from an attendant in a booth, exact change appreciated. A conductor opens the door of the next train – a single, self-propelled, heated car. Riders wait in the car. Seating is open. The ride is quiet, smooth and fast. On board, there is no wifi or electric outlets.
Arrival at Kyiv Central station’s Platform 14 means lugging bags up two flights of stairs.
There is a pleasant, guarded waiting room – heated, with electric outlets, Wi-Fi and a children's area. A ticket is your access. Tickets can be bought at the four electronic vending machines outside the waiting room, or at the main station ticket windows. Tickets are valid for 24 hours.
Russia Blocks 35 Ships from Ukraine’s Azov Ports…EBRD and Germans Plan EUR300 million Loans to Southeast…Nord Stream 2: 25% Built…Farmers Harvest Record Grain Crop
By James Brooke
November 30th, 2018
Russia is blocking 35 ships carrying cargo to or from Ukraine’s Azov seaports Ukraine’s Infrastructure Minister Volodymyr Omelyan charged Wednesday night.
“The Ukrainian ports of the Azov Sea, Mariupol, and Berdyansk are actually blocked by the Russian Federation for the entry and exit of ships," he writes on Facebook. “The goal is obvious - blocking the work of Ukrainian ports in the Azov Sea and gradually removing Ukraine from our legal territories, enshrined in international law.”
As of 11 am Thursday, 12 ships were waiting near the Kerch Bridge
for Russian permission and pilot assistance to pass through the Kerch–Yenikale shipping canal en route Mariupol, the port director of Mariupol writes on his Facebook page. In addition, he writes, 10 ships are awaiting permission to exit the Sea of Azov after loading cargo in Mariupol. First dredged in the 1870s, the maritime channel links the Black Sea and the Azov Sea and must be traversed with pilot assistance due to its relatively shallow average depth.
In response to the blocking of ships, Federica Mogherini, the EU’s High Representative
for Foreign Affairs and Security Policy, stated: “The European Union expects Russia to ensure unhindered and free passage through the Kerch Strait to and from the Azov Sea, in accordance with international law.”
The EBRD approved Wednesday an EUR 150 million loan to a Norwegian investment to build a wind power farm on Lake Syvash, facing Crimea.
Located 25 km west of the Sea of Azov, the nearly EUR 400 million project by Norway’s NBT would be on the edge of a threatened Russian land corridor connecting Donetsk and Crimea.
KfW, German’s State Development Bank, is negotiating an EUR 150 million loan to upgrade Odesa port and to repair two highways in the east:
Mariupol to Zaporizhia, and Pokrovsk, Donetsk to Mykhailivka, Luhansk. According to deputy Infrastructure Minister Victor Dovhan, KfW is also interested in helping to finance electrification of rail tracks to Ukraine’s Black Sea ports.
With martial law covering 10 border regions until Dec. 26, the American Chamber of Commerce in Ukraine is advising “a business as usual approach until further notice.”
“We have launched a special task force to monitor, liaise with authorities and support members,” writes Andy Hunder, Chamber President. “We are monitoring commercial vessels coming in and out of the Mariupol and Berdyansk ports in the Azov Sea.
IMF Managing Director Christine Lagarde said Thursday that the IMF Board will review the standby program with Ukraine after Dec. 10.
“The preliminary assessment is satisfactory and the process is expected to be completed shortly,” she said after having a ‘constructive’ telephone call Wednesday night with President Poroshenko. Bloomberg reports that the first tranche of the IMF program could be $1.4-1.5 billion.
Dragon Capital writes:
“The latest upbeat statement from the IMF signals that the IMF Board is likely to approve a 14-month $3.9bn Stand-by program for Ukraine by the end of the year.”
Concorde Capital’s Alexander Paraschiy writes:
“All this confirms our expectation that Ukraine will receive the first tranche under new $3.9 billion stand-by loan program with the IMF by the end of this year.”
Gazprom says that 300 km, or 25% of the total 1,220 km, of Nord Stream 2 has been laid on the Baltic seabed,
offshore of Greifswald, Germany and in the economic zone of Finland. According to the Russian state energy company, the twin tube line will be completed on schedule, about this time next year.
Ukraine’s gas transportation system is cheaper and more reliable than Nord Stream 2,
Prime Minister Groysman told German Federal President Frank-Walter Steinmeier when they met Thursday in Berlin. Earlier in the day, at the opening of a Germany-Ukraine business forum, Chancellor Angela Merkel said: “Despite the different opinions about the North Stream 2, we fully support the status of Ukraine as a transit country of gas." She said Germany will be able to control the volume of gas supplied by Nord Stream 2.
As of Thursday, Ukraine’s farmers harvested a record 68.5 million tons of
grain from 14.5 million hectares, 98% of the forecast area, reports the State Statistics Service. The previous record was in 2016 when 66 million tons of grain were harvested. Last year, the harvest fell to 61.3 million tons.
Since the start of the grain marketing year, on July 1, Ukraine has exported 17.6 million tons of grain.
Largely passing through the Black Sea ports, this flow of food includes: 9 million tons of wheat were exported, 5 million tons of corn and 3 million tons of barley. In the last marketing year, ending on June 30, Ukraine exported 39.4 million tons of grain, according to the Ministry of Agrarian Policy and Food. This marketing year, exports are expected to rise 8%, hitting 42.5 million tons.
Real, inflation-adjusted wages were up 14.2% yoy in October, to $328 per month,
the State Statistics Service reports. As usual, the highest monthly wage was in Kyiv -- $493. The National Bank of Ukraine expects real wage growth will slow to 7% in 2019 and to 5% in 2020.
Through October, retail sales are up 5.4% yoy,
the State State Statistics Service reports. The highest growth was observed in government-controlled Luhansk – up 27%; government-controlled Donetsk – up 12.9%; Zakarpattia – up 11.5%; and Poltava – up 11.4%. ICU view: Consumer demand will remain the key driver of economic growth for the rest of 2018 and 2019 thanks to rising real disposable income of households against the backdrop of a further increase of remittances, a 12% minimum wage hike since January 2019, and a tight labor market.
Ukraine’s largest e-commerce companies, Rozetka and EVO Group, are merging this week,
after winning approval from Ukraine’s Antimonopoly Committee on Tuesday. Rozetka bought a 56 percent stake in EVO from Naspers, the South Africa-based multinational internet and media group. Rozetka and Evo plan to create a new enterprise, placing all their online stores they own under one umbrella, including Bigl, Crafta, Deal, Kabanchik, Prom, Shafa and Vchasno.
Optimism on IMF Aid to Ukraine…Insurance Premiums Could Rise for Sea of Azov Shippers…Banking and Forex Markets to Operate Normally Under Martial Law…EU Wobbly on More Sanctions Against Russia…Skoda Returns to Ukraine
By James Brooke
November 29th 2018
Optimism reigns on international financial support for Ukraine.
Prime Minister Groysman told journalists in Berlin on Wednesday that he expects “a positive decision in December” by the IMF Board on Ukraine’s $3.9 billion standby program. Separately, Finance Minister Oksana Markarova tells reporters that on Dec. 18, the World Bank will review $750 million financing for Ukraine -- $100 million more than initially announced. Concorde Capital’s Alexander Paraschiy writes: “International support seems to be arriving on schedule. We do expect that Ukraine will receive $2.7-3.0 billion from international financial institutions and the EU by the end of 2018.”
Insurance premiums could rise for ships servicing Ukrainian ports in the Sea of Azov,
Infrastructure Minister Volodomyr Omelyan says. “We see clearly that there is a rise in prices for supplies, and this worries us, because it’s not only Ukraine that pays, but also European taxpayers,” he told reporters after a ministry meeting on the issue on Wednesday. Separately, Alexander Basyuk, the ministry’s director for sea transport reform, told the European Business Association, he does believe that martial law will reduce the number of ships docking at Ukraine’s ports.
Martial law and the closing of the Ukraine unit of Russia’s VTB bank have not caused a run on bank deposits in Ukraine,
according to Kateryna Rozhkova, first deputy governor of the National Bank of Ukraine. “Not a single bank turned to the NBU these days for liquidity support,” Rozhkova wrote on Facebook. She said that the withdrawal of 2% of bank deposits in recent days was largely attributed to consumer paying for Black Friday purchases.
During the one month of martial law, the banking system will operate without any new restrictions on currency or money markets,
the National Bank of Ukraine said in an official statement. “Today, banks are sufficiently stable, liquid and capitalized,” the central bank said. “Accordingly, no administrative restrictions on the currency or money market are being introduced.” If needed, the central bank can intervene to help troubled banks. Similarly the bank said it is monitoring exchange rates and has enough reserves -- $17.8 billion – to “intervene to smooth excessive exchange rate fluctuations.”
Martial law’s initial negative impact on the hryvnia exchange rate and on Ukrainian Eurobond prices “will fade away,”
ICU investment bank writes. “Given further escalation is not likely, negative impact from the conflict and the introduction of martial law on the hryvnia and Ukrainian Eurobonds will fade away,” ICU writes.
Germany and France oppose stricter sanctions against Russia for attacking and capturing three Ukrainian Navy boats on Sunday,
Germany’s Die Welt newspaper reports. U.S. State Department Spokesperson Heather Nauert says Europe should enforce existing sanctions and should think hard about the Nord Stream 2 gas line linking Germany and Russia. Concorde Capital’s Zenon Zawada writes: “Sanctions enforcement is realistic, as well as a new round of sanctions. But abandoning Nord Stream 2 is a bit unrealistic, considering how much has been invested in it so far, particularly by German interests.”
Last year, Mariupol exported $2.3 billion worth of steel by Metinvest,
almost one quarter of Ukraine’s total steel exports, ICU writes. In the event of a Russia blockade of the port, Meinvest could turn to rail and “fully redirect its steel shipments from Azov ports to Black Sea ports,” ICU writes.
The world will need 50% more food by 2050.
For Ukraine to grow into a true food superpower, it needs to increase investment to triple grain yields to US levels – 11 tons per hectare. At the same time, investment is needed in infrastructure to eliminate the farm gate to port gate bottlenecks, attendee of the Ukrainian Agribusiness Forum were told Wednesday. For food exports, Mikolaiv is now the leader, handing 31 %. Yuzhne comes in second place with 21% and Chornomorsk in third place, with 18.4%.
Ukrzaliznytsia seeks to hike freight rates by 26% in 2019.
By contrast, the government is forecasting inflation to end 2019 at 7.4% Dragon writes: In the last few years, [UZ] started with proposing a circa 25% tariff hike, but typically ended up with a 15% increase.”
GE Transportation delivered 15 US-made TE33A Trident diesel locomotives to Ukraine this fall.
Half have been certified for use on Ukrainian Railways, says Evhen Kravtsov, CEO of the state railroad. In coming days, they should start hauling freight.
Skoda Transportation, the Czech manufacture of rail rolling stock, has opened an office in Dnipro.
The goal is to revive a five-year old project to build 480 electric locomotives with Zaporizhia Electric Locomotive Plant. The project was frozen in March 2014 due to Russia’s military attacks on eastern Ukraine. Skoda believes the conditions are right to renew the project.
Gazprom appears to be waiting to learn the outcome of Ukraine’s national elections before negotiating a long term contract to send Russian gas through Ukraine’s gas transportation system,
Andriy Kobolyev, CEO of Naftogaz, tells Channel 5 TV. With Ukraine’s election cycle over next fall and the Gazprom contract expiring a few weeks later, at the end of 2019, the Russian company may simply book gas transit volumes for periods as short as one month, Kobolyev predicted.
World Bank to approve $750 million loan to Ukraine on Dec. 18…Central Bank Closes 2 Ukraine Units of Russia’s VTB…Residential Construction Drops 15%...E-Commerce Shows Dynamism in Brand Survey
By James Brooke
November 28th 2018
Prime Minister Groysman is to ask German Chancellor Angela Merkel tomorrow to pressure the Kremlin to keep shipping free on the Azov Sea.
The two leaders meet in Berlin Thursday morning to open a German-Ukraine business forum. On Tuesday, German Foreign Minister Heiko Maas said further sanctions against Russia will be debated at the next monthly meeting of EU foreign ministers.
Martial law is expected to have a minimal impact on business after the 30-day regime starts today in 10 of Ukraine’s 24 regions.
Maksym Sysoiev, a lawyer for the Ukraine office of the Dentons law firm, lists several possible impacts: compulsory employment, compulsory acquisition of private ownership, use of resources and employees of any enterprises regardless of their ownership, and special regime for the entry and exit and restriction for movement of vehicles.
Although shipping has been restored to Ukraine’s Azov ports, Ukrzaliznytsia is preparing back up plans
for rerouting steel and grain shipments from these ports -- Berdyansk and Mariupol -- to the nearest Black Sea ports – Kherson and Mikolaiv. Yevhen Kravtsov, acting CEO for the state railroad writes on Facebook: “In the event of a change in the logistics of the carriage of goods by sea, in particular in the Azov region, Ukrzaliznytsia is ready to reorient goods to other ports.”
The World Bank Board is to review $750 million in loan guarantees for Ukraine on Dec. 18,
Ukraine’s Foreign Ministry writes on Facebook. By placing Ukraine on its agenda, the Board signals that it expects the IMF Board will approve the $3.9 billion standby program for Ukraine when it meets in early December. Release of the World Bank money is contingent on Ukraine having an IMF program.
Germany signed an agreement Tuesday to provide EUR 85 million to Ukraine
for technical cooperation and financial cooperation, tweets Andriy Melnyk, Ukraine’s Ambassador to Germany. Three quarters of the money is to be loans and one quarter grants. Separately, Gennady Zubko, Minister of Regional Development and Housing, announced that Germany will contribute an additional EUR 10 million to converting gas subsidy payments into investments in energy efficiency.
In the latest move against Russian banks in Ukraine, the National Bank of Ukraine declared Ukraine subsidiary of Russian state bank VTB insolvent
on Tuesday, citing its declining liquidity and worsening financial position. Earlier this month, the central bank revoked the banking licenses of BM Bank, another VTB subsidiary. Last year, the Kyiv government imposed sanctions on Russian banks operating in Ukraine. Since then, the central bank has failed to approve sales of the banks. VTB’s work here was paralyzed this fall after a Kyiv court ordered the freeze of its assets to implement a September ruling against Russia at an international arbitration court in The Hague.
VTB Ukraine’s closure will not affect banking stability,
the central bank says. On Oct. 1, VTB Bank ranked 25th among the 82 banks operating in Ukraine, accounting for only .6% of assets. The National Bank says 97% of depositors of VTB Ukraine – or 59,108 people -- will receive their deposits in full, since their size is below the $7,142 insurance limit of the Guarantee Fund of Individuals' Deposits. However, this covers only one quarter of the $131 million on deposit at the bank.
Capital investment was up by 20% through September yoy,
matching the 21% growth recorded for the same period last year. These are real growth increases, adjusted for inflation, according to the State Statistics Service. Capex highlights for January-September 2018: industrial investment up 25%; transportation – largely rail – up 43%; and extraction – oil, gas and iron mining – up 51%. Of investment, 73% was self-financed by companies, with bank loans accounting for only 7%. Dragon Capital writes: “Imposition of a 30-day martial law in selected regions following an escalation of tensions with Russia in the Sea of Azov, may hit business confidence and cause investment activity to slow.”
In the latest investment to add value to Ukraine’s agricultural commodities,
the first stage of a EUR 25 million plant for producing frozen bakery products has opened in Novi Petrivtsi, just north of Kyiv. Half of output will be for export, Yuriy Tryndiuk, founder of the company, Khlibni Investytsii Holding, tells Interfax-Ukraine. With the new lines, the bakery plans to triple its production to 90 tons a day of ciabatta, French baguettes and other artisan breads.
Oil and gas permits will now be auctioned through ProZorro.Sales,
under a contract signed Tuesday by the online auction platform and Geonadra, the State Service of Geology and Mineralogy. With the first auctions to take place within weeks, Oleg Kirilyuk, head of Geonadra writes on Facebook: “It is very important for us to make obtaining special permits for subsoil not only transparent but also efficient."
Through September, 5.2 million square meters of residential housing were commissioned, 15% less than during the first nine months of last year.
The decline follows a 9% increase last year. Increasing demand for studio and one bedroom apartment translates into a drop in housing space going into operation, reports Lev Partskhaladze, deputy minister of regional development, construction and utilities. Half of new housing space is in apartment buildings. Kyiv and Kyiv region account for a total of 30% of the new space. The biggest boom is in Kherson, where new residential space has tripled, year over year.
Seven Ukrainian furniture companies will furnish 3,000 new apartments in Israel
for a local construction company. Alexandr Sekeda, a Ukrainian designer, is coordinating the work by the companies, all members of the Ukrainian Association of Furniture Manufacturers.
E-commerce is the most dynamic segment this year for Novoe Vremia’s annual listing of Ukraine’s top 100 brands.
After Morshinska, the water company, Rozetka, the nation’s largest e-commerce platform, comes in second, and Nova Poshta, the private delivery company, comes in third. Also in the top 100 are: Citrus -- 28th place; Foxtrot – 36; Allo – 38; Comfy – 61: and Prom.ua – 67. Prom.ua was the fastest growing brand, with its brand valuation jumping by 190% since last year.
Justin, a new private delivery company, is joining Ukraine’s fast growing delivery business, opening 330 branches by the end of this year.
To cultivate online shoppers, Justin plans to offer order tables at its branches, which are generally located near supermarkets and in shopping centers. Through September, e-commerce is up in Ukraine by one third year over year, to $3.1 billion in sales.
By James Brooke
For comments and story tips, James Brooke can be reached at: firstname.lastname@example.org
For more Business News from Ukraine visit Ukraine Business News' site: www.ubn.news.
This article has been published on Fryday's website with permission from Ukraine Business News.
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