For a number of years international organizations present in Ukraine and civil society organizations work on publishing lists of systemic reforms that Ukraine needs. There are a number of documents that has been published already, e.g. coalition agreement drafts, Blue Ribbon Commission reports etc.
Coming presidential elections just as previous rounds of elections spur the activity of the independent think-tanks in reform writing exercises. Another report called Modernization of Ukraine has come out authored by a coalition of think-tanks under George Soros Foundation (IRF) in Ukraine. Quality of the report leaves a lot to be desired with some parts better than the others.
The report just repeats numerous previously issued lists of reforms. Authorities in Ukraine pay little attention to these voluminous documents, provided the issues raised come out just before elections and are never persistently kept up on the agenda afterwards.
Wednesday, December 9, 2009
Tuesday, December 8, 2009
Real estate market shows no signs of mid-term revival
Number of transactions on the housing market is minimal. This atumn only 1500 transactions per month was registered on the Kiev market, compared to 8900 in 2008 and 13000-15000 in 2007. Experts in the field do not believ that any revival is due for the next half a year. Then it all depends on whether the situation with bank loans improves. Source.
Monday, December 7, 2009
National Bank will evaluate banks early January 2010
Martin Reiser, World Bank (WB) director for Ukraine, Belarus and Moldova, said that National Bank of Ukraine (NBU) will conduct new diagnostic evaluation of Ukrainian banks in the first weeks of 2010. Such an evaluation will be used by WB for the decision on aid for rehabilitation of Ukraine's banking sector. First such evaluation was conducted in early 2009.
WB reps think that the worst scenario for Ukraine's banking sector was averted. Now the banks should work more on transparency of their ownership and protection of their clients.
Another point of critique is the policy of management of Ukraine's state banks. Oschadbank is said to be in a risky position due to issuing loans to Naftogaz, Ukraine's oil and gaz state holding. WB reps think that institution like Oshadbank should be restructured or liquidated. Interfax.
Sunday, December 6, 2009
Steel demand ready to rebound?
Recently many signs point to a chance of a recovery in the steel industry. Chinese demand drives iron ore prices upwards, however, there are reservations wrt to sustainability of this demand. Capacity utilization in steel industry grew in 2009 compared to 2008 and steel production shows an upward trend in the recent months according to World Steel Association (see graph below).
Thursday, December 3, 2009
EU and US grow tired of Ukraine
Ukraine fatigue spreads among Ukraine's Western partners in Europe and in the US. Economist publishes an article basically saying that US will not endanger its "reload" of relations with Russia, which basically means Ukraine will not be in the Washington's eye that much anymore.
EU in its turn, as the article in Telegraph says, is losing patience with Ukraine. For some strange reason European officials don't like that Ukrain doesn't move with reforms and finances with electoral promises with international money.
Ukraine is a difficult partner to deal with lately, especially with elections coming up. Hopefully things will change after the president is elected and local and national parliamentary elections are done.
EU in its turn, as the article in Telegraph says, is losing patience with Ukraine. For some strange reason European officials don't like that Ukrain doesn't move with reforms and finances with electoral promises with international money.
Ukraine is a difficult partner to deal with lately, especially with elections coming up. Hopefully things will change after the president is elected and local and national parliamentary elections are done.
Wednesday, December 2, 2009
Steel and chemical industry get cheaper gas in 2010
Dec 2, Cabinet of Ministers announced gas price forecast for 2010 to be at USD 331 per thousand cubic meters. Apparently is is the price of import Russian gas at the border of Ukraine. Naftogaz reps say that this price is inflated because it is based on the oil price forecast of USD 90 per barrel.
Razumkov Center expert Volodymyr Saprykin says that realistic gas price of imported gas at the border is the one Gazprom is quoting, that is USD 280 per tcm. However, he notes that with add-ons (such as VAT, transportation and distribution tariffs as well as profit margin of Naftogaz and distribution companies) the gas for industrial companies will be more expensive. Also, he thinks that population will also get more expensive gas in the second quarter of 2010.Steel industry and metallurgy will get their gas cheaper and will likely to be cross-subsidized by more profitable sectors.
Its apparent that the gas for population and for heat will not get more expensive in the first quarter due to presidential elections. This is likely to be a reason of a blow to financial stability of Naftogaz in the beginning of the year due to inability to charge cost-covering prices and because of slacking payment discipline. Source.
Razumkov Center expert Volodymyr Saprykin says that realistic gas price of imported gas at the border is the one Gazprom is quoting, that is USD 280 per tcm. However, he notes that with add-ons (such as VAT, transportation and distribution tariffs as well as profit margin of Naftogaz and distribution companies) the gas for industrial companies will be more expensive. Also, he thinks that population will also get more expensive gas in the second quarter of 2010.Steel industry and metallurgy will get their gas cheaper and will likely to be cross-subsidized by more profitable sectors.
Its apparent that the gas for population and for heat will not get more expensive in the first quarter due to presidential elections. This is likely to be a reason of a blow to financial stability of Naftogaz in the beginning of the year due to inability to charge cost-covering prices and because of slacking payment discipline. Source.
Ukraine's macro outlook for 2010 according to UkrSibBank
Ukrainian economy is to deliver moderate (2.7%) growth next year, bouncing
back from distressed levels. Consumption would remain broadly stable in
nominal terms providing opportunities for import substitution. Growth is to
be net-export driven.
Some adjustments take place in current account and export mix, improving
resistance to possible fluctuations on steel market. Still, vulnerability of
Ukrainian economy to movements of global steel prices remains
pronounced. Ukraine would see C/A surplus next year due to weak currency.
Ukraine will go through election cycle in early 2010, while the IMF
cooperation is likely to be frozen for some time.
Public finance will see the second consecutive year of double-digit deficits
as a percentage of GDP. The budget is likely to be redrafted with
participation of IMF technical experts over 2010.
CPI is declining due to subsiding pressures on demand side, but it would
remain high slipping in single-digit zone only in 2011.
Local currency is cheap comparing to CEE peers, but high public deficits
coupled with Ukraine’s sensitivity to global conjuncture introduce downside
risks over the course of 2010.
Banking system can cope with asset quality, albeit it might still need capital
injections and would not be able to restore growth soon. Central bank
should seek ways to inject UAH funding to the system.
Domestic interest rates are well in double digits and would remain high in
1H2010 due to crowding-out by public debt, de-leveraging of external debt
and limited inflow of deposits to domestic banking system. From 2H2010
onwards we expect domestic rates to decline.
Full Report
back from distressed levels. Consumption would remain broadly stable in
nominal terms providing opportunities for import substitution. Growth is to
be net-export driven.
Some adjustments take place in current account and export mix, improving
resistance to possible fluctuations on steel market. Still, vulnerability of
Ukrainian economy to movements of global steel prices remains
pronounced. Ukraine would see C/A surplus next year due to weak currency.
Ukraine will go through election cycle in early 2010, while the IMF
cooperation is likely to be frozen for some time.
Public finance will see the second consecutive year of double-digit deficits
as a percentage of GDP. The budget is likely to be redrafted with
participation of IMF technical experts over 2010.
CPI is declining due to subsiding pressures on demand side, but it would
remain high slipping in single-digit zone only in 2011.
Local currency is cheap comparing to CEE peers, but high public deficits
coupled with Ukraine’s sensitivity to global conjuncture introduce downside
risks over the course of 2010.
Banking system can cope with asset quality, albeit it might still need capital
injections and would not be able to restore growth soon. Central bank
should seek ways to inject UAH funding to the system.
Domestic interest rates are well in double digits and would remain high in
1H2010 due to crowding-out by public debt, de-leveraging of external debt
and limited inflow of deposits to domestic banking system. From 2H2010
onwards we expect domestic rates to decline.
Full Report
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