Fitch Ratings has affirmed Ukraine’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) at ‘B’ with a stable outlook, the rating agency said on its website.
“The ratings of Ukraine reflect its credible macroeconomic policy framework that had lowered inflation and narrowed fiscal deficits prior to the coronavirus shock, and a record of multilateral support. These strengths are set against low external liquidity relative to high financing needs associated with large sovereign debt repayments, a vulnerable, albeit improving, banking sector, and weak governance indicators. The coronavirus shock has at least temporarily reversed Ukraine’s improvements made in recent years in terms of a declining debt burden, normalization of growth prospects after the 2014-2015 geopolitical and economic crises, and reduced growth volatility,” it said.
“Ukraine’s new IMF program has been designed to reduce financing constraints and support a recovery in international reserves. Ukraine received the first tranche ($2.1 billion) under a $5 billion 18-month Stand-By Arrangement (SBA) for budget support in June. The sovereign also issued a $2 billion eurobond in July. Easing of external-financing constraints allowed the sovereign to buy back external bonds maturing in 2021-2022 and to repurchase close to 10% of its outstanding GDP warrants,” the report says.
“Fitch estimates that Ukraine has met close to 68% of its 2020 fiscal financing needs of $23.5 billion ($14.2 billion in amortizations including debt prepayments). Fitch expects one additional disbursement from the IMF SBA ($700 million) and the first tranche of a new EUR1.2 billion loan in 2020. Available domestic liquidity and government cash holdings provide room to accommodate remaining financing requirements, which in turn are dependent on the pace of expenditure implementation. Domestic banks, most notably state-owned, have increased exposure to government debt, as foreign investors have reduced their share of domestic government bonds by about $1.5 billion since February to 16% (not including National Bank of Ukraine, NBU, holdings),” according to the document.
“International reserves rose to $29 billion at the beginning of September, due to central bank FX purchases (net $1.2 billion YTD in 2020) and external financing. We expect international reserves to finish 2020 at $27.4 billion or 4.5 months of current external payments (CXP), slightly above the projected 4.1 months for the ‘B’ median. In our forecast for a gradual return of the current account deficit and continued access to external financing, reserve coverage will average 3.8 months of CXP in 2021-2022. External liquidity, measured by the country’s liquid external assets-to-liquid external liabilities, will rise to 112% for 2021, close to the 118% forecast for the ‘B’ median,” it reads.
“External financing needs have declined compared with previous years (35% of international reserves) in spite of large debt repayments, reflecting higher international reserves and a projected current account surplus (2.5% of GDP) in 2020, due to fairly resilient exports and remittances, sharp decline in imports and improved data availability on reinvested earnings by foreign investors. External financing needs will rise in 2021-2022 with the return to a current account deficit (reaching 3.5% of GDP by 2022). External sovereign amortizations (government plus NBU) will decline from $6 billion in 2020 but will remain large averaging $4.3 billion in 2021-2022 (bond repayments of $2 billion and $1 billion, respectively),” Fitch experts noted.
“Fitch considers that continued engagement with the IMF is key for Ukraine to maintain access to external financing. However, the IMF SBA implementation risks are significant given Ukraine’s poor record from previous programs and potential judicial rulings and legislative initiatives that lead to reform reversals. In Fitch’s view, unexpected and frequent cabinet changes early in the year, especially those related to key economic positions such as the Minister of Finance, and political pressure on NBU, leading to the governor’s resignation in July, create policy uncertainty. In addition to eroding hard-earned policy credibility, reduced central bank independence could lead to reversal in the improvements in macroeconomic and financial-sector stability, constrain access to external financing and increase Ukraine’s vulnerability to shocks,” they added.
“Inflationary pressures remain subdued (2.4% y-o-y in July; core 3%), but inflation is expected to approach the 5% NBU target by end-2020 due to higher energy and food prices as well as recovering domestic demand. Fitch expects inflation to average 5.3% in 2021 and 5.7% in 2022, above the forecast 4.4% and 4.8% ‘B’ medians. The NBU cut policy rates to a record low 6% in June (750bp in H1, 2020) in response to the pandemic, but further easing could be constrained, in Fitch’s view, by rising inflationary pressures and the proposal of a significant minimum wage increase in 2021,” they stated.
“Fitch maintains its April forecast that the economy will contract 6.5% in 2020. The economy reportedly contracted 11.4% in Q2, 2020. Improving retail sales, industrial production and construction reflect reviving consumption and investment, while faster expenditure implementation in H2, 2020 and lower interest rates will support recovery. We expect growth to reach 3.8% and 3.5%, respectively, in 2021 and 2022, in line with our medium-term forecasts for Ukraine. However, downside risks to our forecasts remain, given uncertainty around the extent and duration of the coronavirus outbreak, and the duration or re-introduction of restrictions, especially given the reported uptick in coronavirus cases in Ukraine,” Fitch said.
“Fitch forecasts the general government deficit to reach 6.5% of GDP in 2020, below the projected 7.7% under the IMF SBA and 7.3% ‘B’ median. Large dividend payments from state-owned companies (1.8% of GDP), and recovering tax collection (except for import-related taxes) have supported government revenues, while expenditure growth remains moderate YTD and concentrated in social transfers and health spending. We forecast fiscal consolidation to proceed at a gradual pace, with the general government deficit shrinking to 5.4% of GDP in 2021 and 4.2% in 2022. Although the government has indicated they intend to pursue expenditure initiatives to support growth such as the proposed minimum wage increase (up to 30% in 2021), the actual pace of fiscal consolidation will depend on continued engagement with the IMF and available financing,” it added.
“General government debt will increase to 57.4% of GDP (65.1% including guarantees) and 60% by 2022, from 44.4% (50.4% with guarantees) in 2019 and close to the forecast 65.3% ‘B’ median. Fitch forecasts that Ukraine general government debt will stabilize at around 60% in 2022-2023 and decline gradually thereafter with the return of primary surpluses. Risks to the debt dynamics stem from a weaker exchange rate (64% foreign currency-denominated debt), lower-than-expected growth or failure to narrow the fiscal deficit,” it summarized.
The Ministry of Health is in negotiations with foreign companies regarding the purchase of vaccines against COVID-19 immediately after their registration, Health Minister Maksym Stepanov has said during the hour of questions to the government in the Verkhovna Rada.
“We are negotiating with AstraZeneca regarding the number of vaccines they will be ready to supply to us. It has already been decided that, if confirmed, we are ready to make an advance payment. In addition, we are negotiating with a Chinese manufacturer, which is also at the third stage of testing. Ukraine was accepted into the COVAX initiative on the distribution of vaccines – 20% of the population, about 8 million doses for our country. The process of signing the relevant agreements, memorandums is underway, so that after the registration of vaccines we could receive them. We also communicate with other companies,” he said.
In addition, the minister said that the Ministry of Health is increasing its capacity to combat the pandemic.
“Laboratory centers are provided with tests for about 1.5 months. The tests are purchased mainly from two Ukrainian manufacturers, they are also purchased at the expense of the World Bank. In five months, we resumed the work of laboratory centers (from four to 69), and increased the number of PCR tests per day from 200 to almost 25,000. The total number of tests made has already reached almost 1.7 million,” Stepanov said.
He also noted that the situation with the incidence of doctors with COVID-19 has changed: to date, the number of sick doctors has decreased by almost four times.
Almost all works were carried out manually, because it is impossible to use heavy equipment at the object, co-owner of the company Yevhen Konovalov told Interfax-Ukraine.
The new alleys were paved with uniform pattern granite tiles and new street light poles with modern LED lamps were installed, the company said.
The stairs, lecture center and art compositions were decorated with lighting.
Also, the retaining wall was reinforced. Benches were installed. New trees and shrubs were planted.
Automatic retractable poles were installed to limit access of vehicles to the alley. In addition, the runoff water system was replaced.
Peizazhna Alley is a landmark in central Kyiv. A view of Podil and the Dnipro River opens from the observation platform, which is located in the Upper City.
The alley was constructed in 1980. Sculptures, art installations and a square appeared there as time went on.
The facility requires an extensive overhaul. The second stage of the modernization starts in the near future and will be completed in 2021.
The project was carried out by Rostdorstroy LLC, a part of the RDS group of road construction companies, which won a tender worth UAH 110 million at the beginning of 2020.
RDS Group is included in the top three road construction companies of Ukraine. It includes Kyivshliakhbud and Rostdorstroy. The core business is construction, reconstruction and maintenance of roads and bridges, construction of airfield complexes.
As of July 2020, the company worked in nine regions of Ukraine and had ten production facilities. In particular, it was constructing concrete road N-14 Kropyvnytsky-Mykolaiv, a railway overpass road and a section of the first in Ukraine concrete road within the framework of the overhauls of highway N-31 Dnipro-Reshetylivka in Poltava region. In 2019, the company won a World Bank’s tender for works on first-category highway M-03 Kyiv-Kharkiv-Dovzhansky.
The ultimate beneficial owners of RDS Group are Ukrainian citizens Yuriy Shumakher and Yevhen Konovalov.
KONOVALOV, KYIV, MODERNIZATION, PEIZAZHNA ALLEY, RDS, SHUMAKHER
The Cabinet of Ministers at a meeting on September 2 updated the principles of strategic reform of state-owned banks, which envisage reducing the state’s share in the banking sector from 60% to 25% by 2025 through partial or full privatization of each of the four state-owned banks.
According to the text of the corresponding document, posted on the website of the Ministry of Finance, the state plans to find a minority investor for Ukeximbank with potential privatization in the long term.
In addition, the Cabinet of Ministers kept plans for the state’s withdrawal from PrivatBank’s capital in the future, as well as for converting a loan from the International Finance Corporation (IFC) of the World Bank into additional capital of Ukrgasbank. In particular, it is planned that an agreement between the IFC and Ukrgasbank will be concluded by October 2020.
The principals of strategic reform of state banks also indicate that at the moment the state is creating all the necessary prerequisites to ensure the entry of international financial organizations into the capital of Oschadbank by the end of 2020, in particular in October 2020 the latter is planned to enter the Deposit Guarantee Fund.
According to the government’s expectations, the participation of international financial organizations in the capital of Oschadbank will lead to a major or full privatization of the bank by the end of 2025.
The corresponding document also specifies that preparations for the state’s withdrawal from the capital of the banks will begin after the end of the “coronavirus crisis” and the achievement of a stable economic recovery (GDP growth over two quarters), but no later than December 2021.
Many people, who have become vegetarians, risk gaining negative experience of eating poor quality seasonal fruit and vegetables, says nutrition expert Veronika Vero, who is also an author of health improvement programs.
“In my practice, I often noticed the presence of nitrates in seasonal fruit. Since vegetarians often have an increased sensitivity to tastes, such people may have a stronger reaction to nitrate-containing food than ‘omnivorous’ people,” Veronika said.
According to the expert, after long body purification, consumption of any contaminated food may cause at least an allergic reaction or even a serious poisoning. This is connected with changes in vegetarian’s metabolic processes.
“The body of a person consuming both animal and plant food can accumulate toxins for years, but finally this may cause liver cirrhosis or another serious disease. As to vegetarians, their bodies response immediately as they do not accumulate toxins,” Vero said in a program on healthy nutrition on the Expert Club YouTube channel.
She said people, who decided to become vegetarians, first of all should focus on self-improvement and self-education, because learning healthy nutrition programs is one of the most important tasks of a person, who decided to refuse from eating meat.
Veronika Vero, a vegetarian and healthy nutrition expert, spent more than eight years of training at a research and development center. She is the author of several programs, seminars, as well as physical, mental and energy retreats.
The full video is available on the Expert Club YouTube channel.
EXPERT, EXPERT CLUB, FRUIT, HEALTHY NUTRITION, MOROZOV, URAKIN, VEGETARIANISM, VERO
Doctor of Biological Sciences Sviatoslav Morozov, who is also a healthy nutrition expert, says food producers first of all aspire to reduce their products’ cost value and often ignore the harm they may cause to consumers’ health. Otherwise, they will be simply unable to withstand the market competition.
“Speaking about monotonous diet for farm animals and various chemical additives, they are used not to poison consumers. Nobody pursues such a goal. The task is different – to cut the cost value and make products with a very long shelf life,” Morozov said.
In a commentary to the Expert Club YouTube channel, the scientist also noted that these rules are used for all categories of food, including meat, dairy and vegetarian products.
“The problem of chemical additives and foreign substances, which could get into food in the process of animal or plant breeding as well as during their processing, is very topical today. For example, natural wine from the wood can be stored for only three days, after which yeast appears in it. It can be stored for a very long time only due to chemical additives,” the biologist said.
According to Morozov, in order to make sure that the food is clean, one should know the brands which are certified to make products without harmful additives. Today, this can be easily done through the Internet.
The full video is available on the Expert Club YouTube channel.
EXPERT, EXPERT CLUB, HEALTHY NUTRITION, MOROZOV, URAKIN, VEGETARIANISM, VERO
