Ukraine: Daily Briefing
October 23, 2018, 5 PM Kyiv time
Ukrainian Armed Forces training exercises.
Photo – Ukraine’s Ministry of Defense
1. Russian Invasion of Ukraine
Ukraine’s Ministry of Defense reported at 12:30 PM Kyiv time that in the last 24 hours, no Ukrainian soldiers were killed or wounded in action. In the last 24 hours, Russian-terrorist forces opened fire on Ukrainian positions on the Luhansk and Donetsk sectors of the front 12 times in total. Returning fire, Ukrainian forces killed 3 and wounded 2 enemy combatants in the last 24 hours.
2. Atlantic Council on new Ukraine IMF deal
Writing for the Atlantic Council, Senior Fellow Anders Aslund stated, “On October 19, the International Monetary Fund (IMF) announced that it had finally reached a staff-level agreement with Ukraine on renewed lending. Ukraine hasn’t received any IMF funds since April 2017. Experts had warned that without an IMF tranche, Ukraine’s economy might face a serious financial crisis this fall.
Now the two parties have agreed on economic policies for a new 14-month stand-by agreement of $3.9 billion that will replace the previous agreement, a four-year Extended Fund Facility of $17.5 billion, which would have lapsed in March 2019.
This agreement is of vital importance and very much needed now. First, it will grant Ukraine sufficient international financing until the end of 2019. Second, it will help the Ukrainian government to pursue sound economic policies. Third, it will keep the Ukrainian economy stable during the 2019 election year with the presidential election slated for March 31 and parliamentary elections in October.
Ukraine has substantial debt service coming due in 2019-20 and it would need some $7 billion in external financing during this period. The IMF agreement should solve it all. The IMF itself will probably disburse $2 billion at the end of this year. With IMF approval, the European Union and the World Bank are likely to provide $2 billion, and the government can sell Eurobonds for an additional $2 billion at an admittedly high yield of some 9 percent. In addition, several state corporations are likely to sell Eurobonds or borrow by other means. Thus, $8 billion or so of additional government borrowing is probable.
Given that Ukraine’s public debt has shrunk to 62 percent of GDP, the additional public debt raises no concerns, while the central bank reserves of only $16.6 billion at the end of September corresponded to only 2.9 months of imports and were worrisome. Now the reserves should arouse no concern until the end of 2019. […]
Ukraine’s prior IMF agreement would have lapsed in March 2019, concurrently with the presidential election, which would have been unnecessarily destabilizing. With this new agreement, the IMF offers Ukraine the option of financial stability through both elections.
This is an important step forward for Ukraine that will hopefully reassure investors that Ukraine can maintain macroeconomic stability and thus promote economic growth.”
3. Ukraine’s President says government will expand household gas subsidy program
Ukraine Business News reported, “Battling to defuse political opposition to raising household gas prices at the start of winter, President Poroshenko promised Monday that his government will ‘expand the subsidy program…so not a single person, not a single poor person, not a single unprotected family feels the increase in tariffs in their own budgets.’ The government said it negotiated the IMF down from a 60% hike – to full parity with gas market prices – to the 23.5% hike that starts Nov. 1.”
4. CUTIS Investment Roadshow opens in Toronto
Ukraine’s Cabinet of Ministers reported, “The opening ceremony of the first Canadian-Ukrainian investment forum CUTIS Investment Roadshow was held in Toronto, Canada, in the frames of the celebration of the anniversary of the Canada Ukraine Free Trade Agreement (CUFTA).
The Ukrainian delegation headed by First Vice Prime Minister/ Minister of Economic Development and Trade of Ukraine Stepan Kubiv comprises Deputy Minister of Energy and Coal Industry of Ukraine on European Integration Natalia Boiko, Deputy Minister of Infrastructure of Ukraine on European Integration Victor Dovgan, acting Head of the State Property Fund of Ukraine Vitalii Trubarov, Head of the Antimonopoly Committee of Ukraine Yurii Terentiev and others.
The event gathered together more than 150 participants from business and public sector of the two countries who highly appreciated the interim results of cooperation, as well as expressed interest in deepening the partnership.
CUTIS Investment Roadshow is aimed to become a new platform for enhancing cooperation between Canada and Ukraine in leveraging investment.
During October 23-24, within the scope of the Investment Forum, 20 Ukrainian companies will show off projects in four key areas such as infrastructure, natural resources, agriculture and information and communication technologies. The projects were reviewed and examined by the Canadian company Crossways MK Consulting Inc. and the Ukrainian office of SP Advisors.
In particular, infrastructure projects will be presented by Galnaftogaz Retail (trade in fuel), AVELANA Gold (gold extracting and mining), Energy Privatization Projects (electricity distribution and generation), UMG Investments (a producer of high quality chalkstone), and TIU Canada (a renewable energy market operator in Ukraine).
During the event, Canadian investors will have an opportunity to get familiarized with investment projects, exchange views with Ukrainian officials, and establish informal contacts with representatives of Ukrainian businesses. Particular attention will be paid to the privatization potential of Ukraine.”