Crisis in Ukraine: Daily Briefing
26 September 2016, 6 PM Kyiv time
1. Russian Invasion of Ukraine
The National Security and Defense Council of Ukraine (RNBO) reported that yesterday towards Luhansk, Russian-terrorist forces fired on Ukrainian positions at Popasne and Novozvanivka. Towards Donetsk, Russian-terrorist forces shelled Ukrainian positions at Avdiyivka with mortars and grenade launchers. At Verkhnotroitske, Russian-terrorist forces fired on Ukrainian positions. Towards Mariupol, Russian-terrorist forces fired on Ukrainian positions at Maryinka, Pavlopil and Novotroitske. The RNBO reported that in the last 24 hours, no Ukrainian soldiers were killed and two Ukrainian soldiers were wounded in action. On 23-24 September, one Ukrainian soldier was killed and seven Ukrainian soldiers were wounded in action.
2. Ukraine’s President: over 700 Russian tanks, 1,250 artillery systems in Russian-occupied Donbas
In an interview with CNN, Ukraine’s President P. Poroshenko stated that “there are more than 700 Russian tanks, more than 1,250 artillery system, more than 1,000 armed personnel carrier, more than 300 multi-rocket launch system in the occupied areas of Donbas,” the President’s press service reported.
3. World Bank publishes September 2016 Ukraine economic update
The World Bank published its September 2016 Ukraine economic update, which stated, “Growth is projected at 1 percent in 2016 and 2 percent in 2017. In the medium term, growth could pick up to 3-4 percent if deeper structural reforms bolster investor confidence and productivity growth. The real depreciation, if coupled with reforms to create a level playing field for the private sector, enhance competition, and tap the EU market, would support exports and tradable sectors. Reforms to improve expenditure efficiency would create fiscal space to unlock public investment, while continued reforms in the banking sector would permit a gradual resumption of lending. The outlook is subject to serious risks, including an escalation of the conflict, further deterioration in the external environment, and difficulty to advance reforms in a complex political environment. […] Further cooperation with the IMF and other official creditors will be important to meet external financing needs, rebuild international reserves, and restore the investor confidence.” The full report is available at http://www.worldbank.org/en/
country/ukraine/publication/ ukraine-economic-update-fall- 2016
4. Atlantic Council: How Ukraine can signal it’s serious about reform
Writing for the Atlantic Council, O. Bedratenko stated, “Thirteen months since the last tranche, the IMF has finally allocated the third tranche of its program to Ukraine, bringing the total disbursement to $7.6 billion. Although it is less than the originally planned $1.7 billion and came with substantial delays, the receipt of the $1 billion tranche was celebrated by the Ukrainian government as the first time Ukraine has progressed that far in any of its IMF programs. In its previous programs, Ukraine was quick to abandon the difficult IMF-prescribed reforms soon after its economic crises became less acute. This program also tested Ukraine’s commitment to reform several times, with mixed success. […] Progress since the Euromaidan has been uneven, but some important reforms have started and progressed. They include reducing the deficit of Ukraine’s energy monopoly, Naftogaz, and bringing gas prices to cost recovery levels; improving governance standards for the largest state-owned enterprises (SOEs) and launching a competitive process to select their managers; establishing anti-corruption institutions, like NABU; and reforming the financial sector. Still, many of these reforms are behind schedule. Thus, the new anti-corruption agencies still don’t have sufficient operational independence to function efficiently and demonstrate results; no large state-owned enterprise has been privatized; and the system of energy subsidies needs to be made more targeted and transparent. […]The most important reform that has been put off is pension reform. It has been the elephant in the room during this program and is likely to become a visible indicator of Ukraine’s progress in the coming year. […] Passing pension reform will be a challenge, even if this unpopular reform is packaged as part of the December budget process. […] A strong commitment to reform is important not only to secure official loans like the IMF program, US credit guarantee, and the EU Macro-Financial loan, but also to win investors’ trust. Ultimately, while official lending can help prevent crises, an increase in private investment is what is ultimately needed to put Ukraine on the path toward sustainable economic growth. Unfortunately, investors’ trust has been substantially weakened by long-lasting administrative controls on the foreign currency market, including those related to dividend repatriation, and the backlog of problems with the judiciary system. Addressing these issues and achieving tangible results in anti-corruption reform and privatization, as well as acting jointly with the Rada on unpopular pension reform, will serve as important signals that Ukraine is firmly on the reform track.”