The need to develop a National Revenue Strategy (NRS), which is discussed in the program of cooperation with the International Monetary Fund, is due to Ukraine’s high current dependence on foreign aid and the need to reduce it in the future, Finance Minister Serhiy Marchenko said
“Why do we need a National Revenue Strategy at all? Because we are now 50% dependent on foreign aid. Ukraine cannot live like this, it cannot! … The National Revenue Strategy aims to create conditions for a revenue base inside the country to reduce external dependence,” he said in an interview with Interfax-Ukraine.
The minister added that another most important task of the strategy is to establish fairness in terms of taxation. “Those who have income should pay taxes and without all kinds of ways of preferential treatment,” Marchenko explained.
He specified that according to the agreements with the IMF a corresponding action plan should be prepared in May and the strategy itself should be adopted by the end of the year.
“I see no problem with the documents, which should be prepared by the Ministry of Finance and the National Bank – we are quite competent here and are ready to move quickly,” said the head of the Ministry of Finance.
As reported, the four-year EFF program with the IMF stipulates that in the second phase, which tentatively begins in 2025, fiscal policy will focus on critical structural reforms to guarantee medium-term revenues through the implementation of the NDS along with improved public financial management and the introduction of public investment management reforms to support post-war recovery.
The strategy, as stated in the Memorandum with the IMF, will define the key principles and objectives of tax policy and administration for both the short-term and post-war recovery, and outline the steps to be taken to prepare and implement the NSDS.
The Cabinet of Ministers of Ukraine adopted a decision on March 24 instructing the Ministry of Finance to begin preparing the NSD for 2024-2030. By the end of May, an action plan must be developed, including to address key issues identified through the taxpayer survey, which will be an input into the NSD roadmap. This requirement is one of the program’s 19 structural beacons.
A gap analysis, supported by IMF technical assistance, will then be carried out to use this information in a roadmap for the NDS (2024-2030), with clear revenue and other policy targets, and guidelines for coordination between government agencies, donors, the private sector and civil society, led by the Ministry of Finance. This should be completed by the end of July 2023, and the final strategy will be adopted by the end of 2023, another structural beacon.
According to Rostislav Shurma, deputy head of the Office of the President, the NSD will primarily be driven by the concept of a tax model. “This is a concept that we have proposed and will discuss in some modified form with both the government and the IMF,” he said on March 23 on the sidelines of the Ukrainian Tax Reform and Anti-Corruption Summit.
Turkish Health Minister Fahrettin Kocia said Thursday that President Recep Erdogan’s health is fine, Turkish media reported.
“I was with him this morning. He is fine. The effects of the infection he contracted have diminished,” the minister wrote on social media.
For his part, Fahrettin Altun, head of the Turkish presidential administration’s communications department, denied reports about Erdogan’s serious condition that appeared earlier in the media, and said that the Turkish leader continues to work.
“The opposition is trying to gain political advantage by spreading unfoundedly distorted information even about our president’s health condition. Our president continues to serve with great strength, health and energy,” Anadolu quoted Altun as saying.
The agency recalls that the day before the Center to Combat Disinformation of the Communications Department denied reports in some social media accounts that Erdogan “had a heart attack and was hospitalized. According to the center’s statement, they do not reflect the truth.
Turkish and foreign media reported that Erdoğan felt unwell during an interview on Tuesday night, for which he had to interrupt his live broadcast. Allegedly, it was an acute digestive disorder.
“There was quite intense campaign work yesterday and today, and because of this work, my stomach got sick,” Erdoğan explained on Tuesday.
Because of his health problems, Erdogan cancelled campaign events that were scheduled for Thursday. At the same time, Anadolu writes that the president cancelled plans to rest after a number of his campaign events.
The Ministry of Foreign Affairs of Ukraine in cooperation with other agencies continues an operation to rescue Ukrainians who found themselves in the zone of military operations in Sudan. In total, thanks to a multi-level, carefully planned operation, Ukraine has already evacuated 91 citizens from Sudan, the spokesman for the Ukrainian Foreign Ministry, Oleg Nikolenko, said.
“Over April 24-26, diplomats evacuated three groups of citizens: 83 Ukrainians and 4 Sudanese – members of their families, as well as 51 foreigners (citizens of Georgia, Peru, Canada and St. Kitts and Nevis). Sixty-four have expressed a desire to return to their home country. They are expected to arrive today by charter flight to Poland and will be delivered to Ukraine. Another group of five Ukrainians was evacuated to Egypt by bus this morning. They are now safe. Another three citizens were evacuated in coordination with the German government,” Nikolenko wrote on Facebook.
He noted that the Ministry continues to monitor the security situation and take measures to ensure the safety of Ukrainian citizens in Sudan. In case they wish to evacuate, the Ministry of Foreign Affairs and the Ukrainian Embassy in Egypt will provide them with maximum assistance.
The National Bank of Ukraine (NBU) has improved its forecast for the country’s gross domestic product growth in 2023 to 2 percent from 0.3 percent in its January forecast, which is largely due to lower security risks, the restoration of the energy system, as well as soft fiscal policy.
“The economy will return to growth as early as this year and accelerate in the years ahead on the back of the reduced security risks in the forecast. Given the rapid recovery of the energy system, as well as the soft fiscal policy, the forecast of economic growth in 2023 has been improved from 0.3% to 2%,” the NBU said in a press release on Thursday.
It is indicated that the reduction of security risks from next year, which is allowed in the baseline scenario of the NBU forecast, will accelerate economic growth – up to 4.3% in 2024 and 6.4% in 2025.
Besides, de-occupation of territories and full opening of the Black Sea ports will gradually increase industrial production and crops.
The central bank also expects domestic demand to expand due to the return of some forced migrants.
The regulator noted that under the assumptions of the danger situation, no significant power shortages are envisaged in the future, except for local and situational deficits in the second half of the year.
At the same time, an increase in budget expenditures against the background of significant volumes of international financial aid will support economic activity and consumption.
Metinvest Digital, the IT expertise center of the largest Ukrainian mining and metallurgical holding Metinvest, implemented SAP at Metinvest-Shipping, the logistics division of the Metinvest Group.
According to the company’s press-release issued on Thursday, now Metinvest has one of the largest and most complex SAP-landscapes not only in Ukraine but also in Central and Eastern Europe.
It was specified that SAP was implemented in order to organize maximum comfortable platform that integrates processes of economic activities of Metinvest-Shipping with assets using its services into single SAP-landscape. The purpose of the project is to create an end-to-end chain of automation and control of logistics services in the group. Today 16 enterprises of Metinvest are keeping records in SAP.
Metinvest Digital has certain corporate templates which could be adapted and quickly implemented in Metinvest-Shipping. However this company is different from Metinvest enterprises, which produce metal or ore. Specialists have developed a unique solution for the group’s logistics asset, the press release states.
It is also explained that Metinvest-Shipping is a company with a wide portfolio of services. It services rail and road transport, provides sea and river agent, brokerage and inspection services. The company’s business model includes providing both in-house and leased fleet services, as well as procuring logistics services from the market on behalf of customers.
An additional challenge was the integration of the accompanying tender platform for the procurement of automotive services and the proposal to integrate data from the software complex of the information and dispatch service, which uses production assets of “Metinvest”.
The press-service notes that it was impossible to apply either template or ready-made solutions to such services. The developers needed much more time to study similar solution design processes in the industry, because initially there was no project of such level of complexity on the market.
Of the entire project, about half of the solutions were corporate, and the rest were either thoroughly adapted to the needs and characteristics of Metinvest-Shipping, or completely developed from scratch.
The main challenge for the specialists was the unique development of the system, which should take into account a wide range of services and a developed business model that would enable to manage its own and leased vehicles for logistics services, provide purchase and sale of Metinvest-Shipping’s services in Ukraine and abroad, as well as provide services to its subdivisions.
Before the war, there were about a hundred executives working on the project, two-thirds of whom were Metinvest Digital employees, and the rest were outsourced workers. Since the start of the war, the company severed all relations with Russian and Belarusian contractors. Metinvest Digital also refused the services of Ukrainian contractors and redistributed resources among its employees in order to optimize its financial burden. These resources were much less than it was needed, but the specialists of the company managed to adopt all the practices of the contractors, to completely re-plan the work on the project and to complete all the work with the internal expertise.
The work of the project participants of “Metinvest Digital” and “Metinvest Shipping” at the stage of development and integration testing was complicated by active hostilities in the cities of presence, power and Internet outages.
As a result, Metinvest Digital’s developers created up-to-date and fully harmonized data accounting for Metinvest-Shipping in terms of corporate reporting. The project provided the basis for many vectors of its development – integration with consumers of services as well as financial services of buyers of foreign assets.
Over time, the company plans to refine the solution. First, to automate the process of purchasing services by any enterprises of Metinvest Group in Metinvest-Shipping. Secondly, to create an automated workstation (ARM) for the forwarder, so he could work both in Ukrainian and foreign ports.
“Unfortunately, the war has changed the logistics chains of Metinvest-Shipping. But since Metinvest Digital developed the solution from scratch, it already knows how it can be integrated into the material accounting of foreign enterprises. Metinvest Digital took on additional training and support to be able to support the customer in the conditions of war. The company’s specialists also took part in the development of new business processes and coordination with other assets of the new system and terms of cooperation with Metinvest Shipping,” the press release emphasizes.
“Metinvest Digital is a Ukrainian IT company specializing in the digital transformation of large businesses and implementing projects in Ukraine, Europe and North America. The company designs, implements and supports complex IT solutions for technological infrastructure building, information systems development, strategic outsourcing, data migration, system integration, cyber security and information security. “Metinvest Digital is an IT business partner of Metinvest Group, servicing more than 30 enterprises of the holding worldwide. The company is a certified partner of Microsoft (Gold Certified Partner) and SAP (Silver Partner).
Metinvest Shipping handles cargos in the largest ports of Ukraine, as well as organizes railroad shipments in Ukraine and abroad.
“Metinvest is a vertically integrated mining group of companies that manages assets in each link of the production chain, from iron ore and coal mining and coke production to semi-finished and finished steel production, pipe rolling and coil production and production of other high value-added products. The Group consists of mining and metallurgical facilities located in Ukraine, Europe and the USA and has a sales network covering all key global markets.
The major shareholders of Metinvest are SCM Group (71.25%) and Smart Holding (23.75%) that jointly manage the company.
Metinvest Holding LLC is the managing company of Metinvest group.
Solway Investment Group, an international investment group that owns Pobuzh Ferronickel Combine LLC (PFC, Kirovograd Region), intends to apply to courts for compensation for damages caused by Russia’s invasion of Ukraine.
According to the company’s information sent to Interfax-Ukraine agency on Wednesday, Ukrainian businessmen support the Ukrainian government’s initiative to protect business and create an international register of losses, fixation and evaluation of damages as a result of Russian aggression and carry out independent expert evaluation of losses, including loss of profit.
It is specified that last week lawyers of a number of enterprises took part in consultations with forensic experts for fixation and evaluation of damages – both direct and indirect, including loss of profit, caused to enterprises as a result of the russian aggression.
The event was held at the initiative of the Ukrainian Association of Ferroalloys Producers (UKRFA) and other electrometallurgical products for association member enterprises.
Earlier UKRFA representatives participated in the events dedicated to different aspects of assets protection. In December last year the Ministry of Justice of Ukraine registered the joint order of the Ministry of Economy of Ukraine and the State Property Fund of Ukraine “On approval of the methodology of determination of damage and loss volume, caused to enterprises, institutions and organizations of all forms of ownership in the result of destruction and damage to their property in connection with armed aggression of the Russian Federation, and also loss of profit from not
According to Serhiy Kudryavtsev, executive director of UkrFA, who is quoted in the press release, the said methodology will be mandatory for use in the assessment of damage caused to victims of armed aggression, as well as for forensic examination related to the assessment of damage. Official publication of the order, after which it will come into force, is expected.
“To date, many large businesses are already active in fixing and assessing losses, which requires the involvement of forensic experts, whose findings will be used by businesses to justify claims for recovery of losses at the expense of Russian assets in the relevant courts,” the press release states.
PFC plans to apply to judicial experts in order to conduct an appropriate study and obtain a conclusion, because because of the Russian aggression incurred real damage, the metallurgical production, on which the welfare and socio-economic situation of the Pobuzhsky territorial community depends, is terminated.
“Thus, as a result of Russian attacks on the power system of Ukraine, since November 1 of this year, PFC was forced to stop work, when both the electric furnace for production of ferronickel and part of the main metallurgical equipment were shut down. Moreover, the township of Pobuzhskoye was also blacked out, and the plant, which is the township’s backbone enterprise, had to miss out on utilities,” PFC general director Denis Shevchenko was quoted by the press service as saying.
According to him, the preliminary assessment of the damage is now about $12 million. According to the Head of the Frontier Committee, in the conditions of receiving reparations from the aggressor not only the direct losses caused to the property complex should be taken into account, but also compensation of the expenses that arose as a result of the disruption of the normal operation of transport in the country should be envisaged. He believes that the involvement of international institutions in the collection of damages from the aggressive actions of the occupiers in favor of Ukrainian business will contribute to the early recovery of Ukraine.
At the same time, the general director noted that the amount announced was only a preliminary estimate, because the calculation of losses should also take into account the fact that after the start of the Russian invasion, which caused the disruption of logistics and led to the inability to obtain the necessary amount of raw materials, the plant was forced to shut down one electric furnace.
“Before the Russian missile attack on the substation, we were operating at a part load – about 40% of the main load. After the bombing of the substation, the combine was left without power supply, which caused the furnace and its support systems to stop. We took a number of measures to prevent the accident, because the furnace was loaded with liquid metal and slag with a total weight of about 1500 tons,” explained Denis Shevchenko.
Today, PFC does not process the ore into marketable ferronickel.
In his turn, Rustam Dzhamgurov, PFC Deputy Director General for Legal Affairs, stressed that involvement of judicial experts, including international ones, is a prerequisite for preparing a lawsuit in court. And the creation of an appropriate register will allow an objective assessment of the amount of losses in order to further recover them from the assets and reparations from the aggressor state.
“Obtaining an expert opinion on the damage caused by the Russian aggression will enable us to sue for damages. It should be taken into account that an enterprise incurs losses every day, so it is advisable to cover the maximum period to accrue the amount of losses and file a lawsuit in court. We are also waiting for the definition of a clear mechanism to recover the damage caused to Ukrainian business at the expense of the assets of the aggressor state. Without this, any suits in Ukrainian and/or international courts are problematic and the decisions of these courts may not be implemented”, stated the lawyer.
Pobuzhsky Ferronickel Combine is the only enterprise in Ukraine, which produces ferronickel on an industrial scale.
In 2003, after a long downtime, the international company Solway Investment Group bought the assets of the enterprise and restarted it a year later. The Pobuzh ferronickel plant was reorganized into Pobuzh Ferronickel Combine with resumption of ferronickel production as well. The main raw material base for ferronickel production is imported ore.
At present PFK is fully integrated into the production process of Solway Investment Group. The total amount of the group’s investment in the combine is more than $130 million.
At the beginning of November 2022, PFC announced a forced suspension of production due to Russian shelling of the energy infrastructure.
Solway, an international investment group, started its operations in 2002. It is a private company running a diversified business in the mining and metallurgical industries. Key companies of the group are registered in Switzerland, Luxembourg, Estonia and Malta. 100% of its share capital is owned by EU citizens. Solway’s main production assets are located in Northern Macedonia, Guatemala, Indonesia, Argentina and Ukraine.
