Japan Rating and Investment Information, Inc. (R&I) has upgraded Ukraine’s foreign currency issuer rating from B to B+, rating outlook is stable.
“When fiscal consolidation efforts to date and enhanced resilience to external shocks are also taken into account, economic and fiscal conditions are expected to recover in 2021 and beyond,” R&I said in a Thursday press release.
R&I said that the International Monetary Fund (IMF) financial support for Ukraine, together with loans from the World Bank and the European Union (EU), will help stabilize the government’s funding, which R&I views favorably.
R&I believes that the improved political and social stability under the leadership of President Volodymyr Zelensky will allow the government to focus on rebuilding the economy.
R&I said that among other positive moments is that foreign reserves are on the rise, standing at $28.8 billion as of end-July 2020, which covers 4.9 months of imports. Gross external debt is declining as a percentage of GDP. As of end-March 2020, the ratio was 75.8%. With external debt maturing within one year falling to 29.3% of GDP, the short-term external debt to foreign reserves ratio declined to around 1.6x from more than 2x seen until the previous year.
There is little concern over the government’s foreign currency liquidity, R&I said.
The banking sector has improved profitability. Supported by growth in deposits, the sector also maintains stability on the liquidity front.
“R&I will follow their [government and National Bank of Ukraine’s] efforts to ensure financial stability, as the impact of the coronavirus is anticipated to emerge going forward,” the agency said.
In R&I’s view, containing infections, reinforcing the healthcare system and rebuilding the economy are top priorities for the government’s fiscal policy.
The Interdepartmental Commission on International Trade (ICMT) at a meeting on Wednesday decided to initiate an anti-dumping investigation into the import of cement from Turkey, and also established a single quota for imports of sulfuric acid, regardless of the country of origin.
“Members of the ICMT considered the liberalization of special measures regarding the import of sulfuric acid and oleum to Ukraine, regardless of the country of origin and export. In particular, it was decided to amend the current decision on the application of special measures by establishing a single quota for the import of sulfuric acid, regardless of the country of origin,” the Ministry for Development of Economy, Trade and Agriculture said on its website on Wednesday.
At the same time, the Ministry of Economy added that the ICMT will additionally consider the issue of further liberalizing the action of special measures.
Among the decisions of the commission is to terminate the investigation of the import of syringes regardless of the country of origin and export without the application of special measures, as well as to terminate investigations on the import of caustic soda, regardless of the country of origin without the application of special measures.
The Solway Investment Group international investment group, owning Pobuzhsky Ferronickel Plant (PFP, Kirovohrad region), has stopped supplying nickel ore to Ukraine from Indonesia due to the export ban of this state.
“At the moment, we do not supply ore from Indonesia to Ukraine. The Solway Group is developing two ferronickel projects in Indonesia, and they provide the most modern waste disposal and closed water supply technologies,” the company said in response to a request from Interfax-Ukraine.
At the same time, they said that “regarding PFP, we inform you: the plant is fully provided, operates at full capacity and in the long term there are/are being worked out various options for providing high-quality raw materials.”
PFP processes about 1.5 million tonnes of ore per year, which was previously supplied from Guatemala (about 45% of supplies in monetary terms) and Indonesia (55%).
Indonesia announced the introduction of a ban on the export of nickel ore, first from October 28, 2019, then from January 1, 2020.
INGO Insurance Company (Kyiv) in January-June 2020 collected more than UAH 766 million of insurance premiums, which is 2.3% more than in the same period a year earlier, according to a press release from the insurer.
It is noted that premiums for motor insurance amounted to more than UAH 341 million, personal insurance more than UAH 237 million, complex insurance (property and liability) more than UAH 155 million, special lines almost UAH 30 million, other types more than UAH 2.7 million.
The company reports on the continued high dynamics of annual growth in demand for health insurance. The current situation with COVID-19 has only increased the importance of health protection, so insurance premiums and voluntary medical insurance payments are steadily increasing even in the conditions of a “quarantine” economy. Monthly sales are growing by 20-25% compared to previous months, and up to 40% compared from 2019.
The decline in demand in the corporate segment of motor insurance from INGO began at the end of March and reached its peak in April (minus 45% compared to the same period in 2019). At the same time, in May and June the deferred demand worked and the indicators for KASKO recovered to the level of 2019. There was no reduction in business activities in the OSAGO segment.
Sales of Green Card insurance contracts and insurance of people traveling abroad have dropped significantly.
The company notes that due to changes in legislation on alternative energy, the volume of construction of new solar and wind plants has significantly decreased. The development of the industry, which was the driver of growth in property insurance in 2019, actually stopped. At the same time, there is a noticeable increase in infrastructure construction (roads, bridges).
As of September 1, Ukrainian farmers harvested 38.4 million tonnes of grain and leguminous crops from an area of 9.68 million hectares (63% of the forecast).
According to a report on the website of the Ministry of Economic Development, Trade and Agriculture, 29,800 tonnes of millet were threshed from an area of 15,900 hectares (11%), 221,500 tonnes of sunflower from an area of 150,000 hectares (2%).
Harvesting of crops such as wheat, barley, peas and canola has been completed.
In addition, according to the ministry, the harvesting of buckwheat has begun in six regions, which has already harvested 19,700 tonnes from an area of 11,290 hectares.
In general, Ukrainian agricultural producers have already harvested 41.2 million tonnes of basic crops from an area of 10.94 million hectares.
“According to the Ukrainian Weather Center, due to dry weather in Ukraine, moisture in the soil is insufficient, which has a direct impact on crop yields. However, thanks to the May precipitation, the forecast volume of the harvest remains optimal both for domestic consumption and for export to foreign markets,” the Economy Ministry said.
DTEK Energy saw a net loss of UAH 16.522 billion in January-June 2020 compared with UAH 3.342 billion in net profit for the same period in 2019, according to the company’s report released on Monday.
The company’s revenue in January-June this year amounted to UAH 20.447 billion, which is 42.6% less than in the same period last year (UAH 35.626 billion, taking into account the revaluation).
According to the report, the gross loss amounted to UAH 0.732 billion compared with UAH 9.161 billion of gross profit in the first half of 2019.
DTEK Energy told Interfax-Ukraine that the company’s production and financial results continue to be affected by the systemic crisis in the energy sector.
Thus, in the first half of the year, coal production by the company decreased 23% compared to the same period last year, to 8.7 million tonnes, and electricity production decreased 36.2%, to 10.1 billion kWh.
An additional negative effect was caused by the depreciation of the national currency due to the general economic recession. Loss on exchange rate differences amounted to UAH 5 billion compared with a profit of UAH 2.6 billion in the first half of 2019.
“To normalize the operation of the energy market, it is necessary to remove restrictions that distort its operation and lead to an economic imbalance of the entire industry. Compliance with the principles of free pricing will make it possible to ensure financial recovery of both private and public generation,” DTEK Energy said.
