Economic Outlook

Economic outlook, April 2019

Reform Progress

Serhiy Verlanov won an open competition for the position of the Head of the State Tax Service

April 23 marked the final stage of the selection of candidates for the Head of the State Tax Service of Ukraine conducted by the Commission of the Higher Corps of the State Service. Three shortlisted candidates presented their program of the service’s development to the selection commission on the air.

Deputy Minister of Finance Serhiy Verlanov received a total of 16.45 points. Based on the competition results, the selection commission recommended the Cabinet of Ministers to appoint Serhiy Verlanov Head of the State Tax Service of Ukraine.

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The Ministry of Finance is concerned with continuous attempts to disrupt the competition for the heads of tax and customs services

Last week, the District Administrative Court of Kyiv terminated the competition for the Head of the State Customs Service. Moreover, applications have been filed to the District Administrative Court of Kyiv to secure a claim for the suspension of the competition for the Head of the State Tax Service. The Ministry of Finance considers these actions ill-grounded. 

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The Ukrainian parliament supported common transit draft law in the first reading

With 234 votes, the Verkhovna Rada supported in the first reading draft law No. 9532 "On common transit treatment" developed by the Ministry of Finance. The draft will be finalized before the second reading with consideration of amendments submitted by MPs.

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The Ministry of Finance expanded reporting for state-owned banks with non-performing loans (NPLs)

Following consultations with international experts, the Ministry of Finance expanded reporting standards for public sector banks and updated the report published on February 28, 2019.

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Competitive selection of applicants for the positions of members of independent supervisory boards of the state banks began

The selection committee resolved to officially announce on the Cabinet of Ministers website the launch of the competitive selection of candidates for the members of supervisory boards of PrivatBank, State Savings Bank of Ukraine and Ukreximbank as well as established its timeline.

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Joint statement by the Ministry of Finance, National Bank of Ukraine, and PrivatBank on the state of affairs around PrivatBank

At this important moment for the future of Ukraine, the following is worthy of special emphasis:
1. Today, PrivatBank is the biggest and most profitable financial institution in the country, with 22 million Ukrainians as its customers. The bank operates in a transparent and stable manner, comprehensively fulfilling its obligations to clients.
2. Yet only two years ago, the state was forced to save the bank in order to maintain the financial stability of the entire country. This bailout cost Ukraine UAH 155 billion in taxpayer money.

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Oksana Markarova: "Annual meetings with the IMF and the World Bank are not merely a long-standing tradition. They are a joint effort to understand global economic trends and share valuable experiences we will then put into practice in Ukraine"

The delegation of the Ministry of Finance chaired by Minister Oksana Markarova participated in the annual Spring Meetings of the International Monetary Fund and the World Bank in Washington, DC, on April 10-14, 2019.

This year, the participants focused on sharing experience in combating poverty and reducing inequality, overcoming the challenges posed by the threat of another global economic slowdown.

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The first quarter of 2019 is completed: state budget revenues have been executed at 95.3% of the initial targets, while expenditures were financed in full accordance with the targets

After a complicated process of 2018 state budget execution, the year 2019 proves to be no less challenging, with the key challenge being the peak of state debt repayment. Now that the first quarter of 2019 is closed, its key performance indicators are available for review.

In the first quarter, state budget revenues increased by 8.7% yoy to UAH 210.5 billion and amounted to 95.3% of the target indicator.

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Ukraine and Denmark signed Framework Agreement to implement Danida Business Finance Programme

Minister of Finance Oksana Markarova and Ambassador of the Kingdom of Denmark to Ukraine Ruben Madsen have signed the Framework Agreement between the Government of Ukraine and the Government of the Kingdom of Denmark on the general terms and procedures, organizational and financial measures concerning the implementation of the Danida Business Finance Program (DBF) in Ukraine.

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Other Policy Developments

The High Anticorruption Court should become a true pillar of the state in the fight against corruption - President

President of Ukraine Petro Poroshenko took part in the ceremony of the appointment of judges of the High Anticorruption Court.

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The Cabinet of Ministers of Ukraine passed regulations on improvement of Ukraine’s Doing Business ranking

The Cabinet of Ministers of Ukraine adopted a resolution aimed at boosting Ukraine’s performance in Doing Business ranking. It was initiated and developed by the Ministry of Economic Development and Trade and stipulates among other: (i) the expansion of e-government services in registration and obtaining permits geared towards acceleration of the LLC registration procedure, (ii) provision of access to information on loan applicants from the state registers to banking institutions; (iii) streamlined import process for particular groups of goods.

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Monetization of subsidies is running flawlessly 

According to the CMU, a full subsidy monetization mechanism launched at the beginning of March 2019 is being implemented without impediments. The subsidy program in Ukraine was initially introduced by the government in 2017 and is aimed at stimulating savings of gas and electricity during the heating season. The monetary compensation for the efficient use of resources accounted for UAH 700m in 2018 with around 1.3m households who received the funds.

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Ukraine’s real GDP increased by 3.3% in 2018 and reached USD 130.8bn

The growth of real GDP has accelerated to 3.3% y-o-y and constituted USD 130.8bn (UAH 3,559bn) in 2018. The corresponding GDP per capita reached USD 3,093 (UAH 84,190). Additionally, the State Statistics Service of Ukraine has improved the GDP increase estimate for the Q4 2018 from 3.4% to 3.5%.

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Ukraine’s international reserves raised to the level of USD 20.6 bn in April 2019

According to the NBU preliminary estimates, Ukraine’s gross international reserves increased by USD 0.4bn over a month reaching USD 20.6bn as of April 1, 2019. Such dynamics is predominantly attributable to international financing attracted under the World Bank guarantee, placement of FX-denominated government domestic bonds, and the NBU’s net FX purchases in the interbank market.

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Capital investments grew by 28% in 2018

Capital investments experienced 27.5% y-o-y growth in 2018 reaching c.UAH 526bn (USD 19bn). At around 71% enterprises’ own funds constitute the major source of capital investments financing followed by state and local budgets accounting for 12.7% of total investments in 2018. With c.34% share, industry remains the largest sector for capital investments with agriculture (c.12%) and construction (c.10%) occupying the second and third positions accordingly.

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Fitch affirms B- for Ukraine with a stable outlook

Fitch Ratings affirmed Ukraine's Long-Term Foreign-Currency Issuer Default Rating at B- with a stable outlook. According to the rating agency, flexible exchange rates in Ukraine, access to the external financing owing to the IMF program as well as moderate external imbalances reduced pressure on international reserves.

The agency’s press release stipulates among other that Ukraine’s further compliance with the IMF program is crucial for the country to facilitate external financing and sustain macroeconomic stability while mitigating vulnerability due to constrained external liquidity and increased political uncertainty.

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Ministry of Finance of Ukraine
11 Mezhyhirska St., Kyiv, 04071

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