The National Bank of Ukraine (NBU) has revised approaches to calculating foreign direct investment (FDI), in particular, reevaluated the cost of FDI, which was previously calculated in foreign currency, to the hryvnia equivalent, the NBU press service said on Friday.
According to the report, the National Bank also began to consider reserves, additional capital, retained earnings and damage to the application to the charter capital of enterprises with FDI.
In addition, the regulator changed the approach to accounting for negative capital indicators in companies with FDI, in particular for such enterprises, the NBU began to use zero values in calculations.
As a result of the new calculations, FDI in Ukraine in 2019 increased by 5.1%, to $51.4 billion, and investment from Ukraine decreased 56.5%, to $3.5 billion.
“After the recalculation, FDI volumes generally increased. For example, in 2019, FDI volumes increased by about $2 billion only due to significant profits while the business environment was favorable. Last year’s appreciation of the exchange rate also contributed to an increase in the FDI volumes in U.S. dollar terms,” Director of the Statistics and Reporting Department Yuriy Polovnev said.
He said that the recalculation of FDI will not affect the balance of payments.
Ukrainian enterprises increased the consumption of metal by 3.26% in January-May of this year compared to the same period last year, to 1.66 million tonnes.
According to an Ukrmetallurgprom association press release published on Friday, 434,700 tonnes, or 26.2% of the domestic metal consumption market, were imported in the first five months of the year.
“In January-May 2020, 1.66 million tonnes of rolled metal were delivered to domestic consumers, of which 434,700 tonnes, or 26.2%, were imported. For five months of 2020, there was an increase in the consumption of rolled metal in the domestic market compared to January-May 2019 by 3.26% with a simultaneous decrease in the share of the imported component by 7.6%,” the association said in the press release.
According to Ukrmetallurgprom, in January-May 2020, Ukrainian metal enterprises produced 7.43 million tonnes of rolled metal (93.8% compared to the same period in 2019), of which about 6.21 million tonnes or 83.5% were exported, according to information from ETR-Spectrum LLC.
The share of semi-finished products of export deliveries in January-May 2020 accounted for 49.74%, which exceeds the indicator for the period January-May 2019 (45.38%). The share of flat products of export deliveries in the first five months of 2020 is slightly lower than in the same period in 2019 (32.05% and 34.00%, respectively). The same picture is observed with regard to long products – 18.21% in January-May 2020 compared with 20.62% for the same period in 2019.
The main export markets for Ukrainian metal products in January-May 2020, according to ETR-Spectrum LLC, were the countries of the European Union (31.1%), Africa (14.8%) and other European countries (14.1%).
Among the metallurgical importers in January-May, the CIS was at the first place (39.1%), the EU-28 was the second (26.1%), and the Asian countries third (18.0%).
Ukrainian President Volodymyr Zelensky during a working trip to Kherson region has inspected the reconstruction progress at the Kherson International Airport.
“The head of state was informed that an investment project had begun in 2019 to ensure aircraft landing in the evening and at night, as well as in difficult weather conditions. The project has received over UAH 46 million from the State Regional Development Fund and more than UAH 5 million of regional development funding. The project’s implementation has already been funded by more than UAH 11 million. The opening of the airport’s updated lighting system is scheduled for September this year,” the presidential press service said on Friday.
In addition, the regional airport development program for 2018-2020 is currently being implemented. Routine runway repairs have been carried out, workers have been trained to launch the Kherson-Krakow flight, and additional equipment has been acquired to improve the quality of passenger service. The Ukrainian State Air Traffic Services Enterprise also decided to update landing systems at the airport in 2020.
“All this will allow the airport to get the first category of aircraft landing according to International Civil Aviation Organization (ICAO) standards,” the report says.
Head of Kherson Regional State Administration Yuriy Husiev stressed that the airport is strategic.
“In the south, this is one of the very important hubs, and I would like it to become a hub for flights from Mykolaiv, Kherson regions. Even from Zaporizhia they come to us because Ryanair launched very popular flights,” he said.
At the same time, the question remains of reconstructing the runway, updating the fleet of aircraft.
Infrastructure Minister Vladyslav Krykliy said the total cost of the full restoration of the runway is UAH 1.2-1.5 billion, and UAH 910 has been spent on it this year. He added with the president’s support the amount of funding may be increased this year.
Dynamics of changes in population of Uraine from 1991-2020
Ukrainian President Volodymyr Zelensky has said he will do his best to provide domestic businesses with cheap loans.
The president’s press service reported that on Friday the head of state met with farmers in Kherson region and the latter again complained about high interest rates for loans.
“The interest rates have been reduced to 8-10% per annum, but this is not enough to do business in a normal way. We understand everything and we will tackle the issue. At least the national banks will work for domestic entrepreneurs,” Zelensky said.
He recalled that the Affordable Loans at 5-7-9% program has already been launched and it will be improved.
“We are doing the utmost to provide [interest rates at the level of] 5-7-9%. I came from business, we took [loans] at 18-25% and that was terrible. The figures I am speaking about – we are doing our best to ensure these figures. And we will win,” the president said.
The entrepreneurs also touched upon the issue of cutting the VAT rate for a range of farming products, including livestock products.
Winemakers suggested the head of state to develop a comprehensive development program for winemaking.
Head of Kherson Regional State Administration Yuriy Husiev asked the entrepreneurs to collect their proposals and send them to the government so that it can develop a support program.
“We will consider the issue. Let’s send them [the proposals] to the government and the President’s Office – we’ll consider them simultaneously,” Zelensky said.
The World Bank’s Board of Executive Directors today approved a $350 million First Economic Recovery Development Policy Loan (DPL) for Ukraine in support of reforms that are critical to economic recovery. According to the press service of the World Bank, the key reforms supported by the DPL include: strengthening land and credit markets by creating a transparent and efficient market for agricultural land and resolving non-performing loans in state owned banks; fostering de-monopolization and anti-corruption institutions including by restructuring the gas sector; bolstering the social safety net for the vulnerable elderly population to cushion the impact of the COVID-19 pandemic.
“The COVID-19 pandemic is resulting in a sharp economic downturn that is hurting the incomes of ordinary Ukrainians and small businesses, and straining the government’s budget. This development policy loan provides $350 million to support budget expenditures at a difficult time. The World Bank welcomes the Government’s commitment to these reforms to prepare the economy for recovery, including the significant steps taken to end the moratorium on agricultural land sales, and to bolster benefits for the vulnerable elderly population,” Arup Banerji, incoming World Bank Country Director for Belarus, Moldova, and Ukraine, said.
This DPL is the first of two planned operations, with the second DPL expected to support the additional important land reform legislation and further strengthen pension benefits for the elderly population.
The development policy loan is part of the World Bank’s stepped-up support to Ukraine to address the impacts of COVID-19 and complements the approval of additional financing of $135 million for the Serving People, Improving Health Project and $150 million for the Social Safety Nets Modernization Project.
Additional support to directly cushion the most vulnerable population from the impact of the pandemic is also under preparation.
Since Ukraine joined the World Bank in 1992, the Bank’s commitments to the country have totaled about $14 billion for more than 80 projects and programs.
