The level of the shadow economy in Ukraine in January-September 2020 amounted to 31% of GDP, which is 3 percentage points (p.p.) more compared to the same period in 2019, according to an analytical report of the Economy Ministry.
“The spread of the pandemic and the complication of the conditions for economic activity, formed as a result of the introduction of forced restrictive measures, led to the growth of the shadow economy in Ukraine. According to preliminary calculations of the Economy Ministry, the level of ‘shadow’ in January-September 2020 amounted to 31% of the volume of official GDP, which is 3 p.p. more than January-September 2019,” according to the repot posted on the ministry’s website on Wednesday.
At the same time, the ministry said that different methods show different dynamics of the level of the “shadow” in the economy, which indicates the atypical nature of the coronavirus crisis in comparison with other crisis periods.
So, of the four methods used to assess the “shadow”, the growth of its share over the nine months of last year compared to January-September 2019 was shown only by the method of unprofitability of enterprises – by 12 p.p., to 32% of GDP, according to the materials of the Economy Ministry.
Two more methods showed a reduction in the share of the shadow economy in Ukraine over the specified period: by 1 p.p., to 23% of GDP – according to the method of population expenditures – retail trade and services, and by 1 p.p., to 25% of GDP – according to the electric method.
“Considering the reasons that led to a reduction in the shadow economy by these methods, it is worth noting the presence of objective factors caused by the coronavirus crisis that limited the channels for carrying out shadow activities. In particular, in trade there was a limited possibility of selling goods on unorganized sites,” the ministry said.
As for the result of the assessment using the electric method, the decline in production due to the contraction of the world economy and the investment pause affected this, so that the reduction of the “shadow” according to this method is a purely mathematical result, the Economy Ministry said.
At the same time, according to the monetary method, the dynamics of the shadow economy in January-September 2020 remained unchanged – 31% of GDP.
As noted in the analytical report, most types of economic activity showed a tendency towards an increase in the level of the shadow economy.
In the sectoral context, the highest level of “shadow” in the past year was recorded in the sector of transport, warehousing, postal and courier activities – 54% of the gross value added of the industry, which is by 22 p.p. more than the indicator for the nine months of 2019.
In the mining industry, according to the ministry’s estimates, the level of the shadow economy increased to 39% and in real estate transactions by 14 p.p. up to 44%.
In financial and insurance activities and agriculture, the ministry recorded a decrease in the share of the “shadow” in January-September 2020 by 4 p.p., to 27% and by 2 p.p., to 30%, respectively.
Among the factors that affect the shadowing of the economy, the ministry named a low level of protection of property rights, a poor judicial system, a high level of corruption, as well as the presence of territories which are not controlled by the government.
Zaporizhia Metallurgical Plant Zaporizhstal, a member of Metinvest Group, reduced its net loss by 15.1% in 2020 compared to the previous year, to UAH 3.678 billion.
According to the company’s report, the consolidated net loss for this period decreased by 19%, to UAH 3.142 billion.
The negative financial result before tax in 2020 decreased by 9%, to UAH 4.500 billion, the consolidated pre-tax loss – by 11.8%, to UAH 3.965 billion.
At the same time, net income decreased by 1.9%, to UAH 45.631 billion, consolidated net income – by 1.8%, to UAH 45.376 billion.
Retained earnings by the end of last year amounted to UAH 13.073 billion, consolidated retained earnings – UAH 16.788 billion.
Zaporizhstal is one of the largest industrial enterprises in Ukraine, whose products are in great demand among consumers both in the domestic market and in many countries of the world. The plant specializes in high-quality hot-rolled steel coils, hot-rolled sheets, cold-rolled sheets, cold-rolled coils made of carbon and low-alloy steels, as well as steel strip, black plate, bent sections.
The main consumers of the products are manufacturers of welded pipes, enterprises of automobile, transport, agricultural engineering, manufacturers of household appliances.
Consignors – which can only be Gazprom – have not been interested by offers of additional capacities for gas transportation through Ukraine for May from Gas Transmission System Operator of Ukraine (GTSOU).
Gazprom has a long-term reservation of Ukrainian capacities in the volume of 40 billion cubic meters for 2021, which is equal to 109 million cubic meters per day. The company additionally booked 15 million cubic meters (mcm) at an auction on April 19, giving a total of 124 mcm per day.
GTSOU offered an additional 63.7 mcm per day at the monthly auction on Tuesday; however, there were no bids for this.
Gazprom is pumping 124 mcm per day on average through Ukraine in April, fully using the volume booked.
If Gazprom had accepted the offer to use additional transit capacities, it would have meant a return to transportation volumes through Ukraine of 2019, before the new transit contract and payment of $3 billion to Naftogaz in line with a Stockholm arbitration ruling.
Europe is currently dramatically increasing gas consumption. Global supplies of liquefied natural gas and pipeline gas from Russia are at their highest levels, but for now, this does not make it possible to start mass pumping of gas into underground storage facilities to prepare for next winter.
In January 2021, Gazprom transported 124.51 mcm per day on average through Ukraine, in February – 104 mcm, and in March – 119.5 mcm.
The State Regional Development Fund will finance 297 investment programs and projects worth UAH 4.3 billion in 2021, according to the decision of the Cabinet of Ministers.
The resolution of April 12 was published on the government’s website.
According to the document, the largest number of projects is planned to be financed in Ternopil region – 24 projects for UAH 142 million, Luhansk region – 19 projects for UAH 177 million, Cherkasy region – 19 projects for UAH 95 million, and Donetsk region – 17 projects for UAH 561 million.
In Kyiv, it is planned to finance four projects worth UAH 256 million, including UAH 175.8 million allocated for the first phase of the construction of Bortnychi aeration station, as well as the reconstruction of its pumping station.
According to the resolution, in general, Kyiv region will receive UAH 154 million for the implementation of 11 projects.
Earlier, the government changed the procedure for selecting investment projects of the fund, in particular, it changed the deadlines for some stages in the current edition, the assessment and preliminary selection of investment programs and projects should be completed no later than August 1 of the year, which comes before the planned one, instead of May 1.
According to experts of Kyiv School of Economics (KSE), this will make it possible to better predict the situation both in terms of budgeting and for competitors who will be able to better understand their needs and opportunities in future budget periods.
In addition, for large construction projects worth over UAH 100 million, the implementation period was allowed to be extended from four to five years. For such projects, the lower cost limit is also doubled up to UAH 10 million.
“This will provide for more flexibility in planning the budget for long-term projects and reduce the number of potential long-term construction projects,” the KSE said on its Telegram channel.
However, the government did not make amendments regarding the requirements for the timing of the publication of the protocols after the meeting of the commissions or broadcasting of such meetings, the KSE said.
“Lack of publicity and transparency, on the one hand, does not contribute to trust in this tool, and this increases the likelihood of losing motivation for the authors of potentially good projects. On the other hand, it creates threats to influence the final list of objects and the amount of funding,” the KSE said.
MAIN TRADE PARTNERS OF UKRAINE IN % FROM TOTAL VOLUME (IMPORT FROM OTHER COUNTRIES TO UKRAINE) IN Jan 2021
Transit of oil through the territory of Ukraine by pipelines to European countries and Belarus in January-March 2021 decreased by 14.2% (by 488,300 tonnes) compared to the same period in 2020, to 2.959 million tonnes, according to the data of JSC Ukrtransnafta.
In particular, transit in the direction of Budkovce (Slovakia) amounted to 1.986 million tonnes (less by 13.4% compared to January-March 2020), Fenyeslitke (Hungary) – 702,300 tonnes (less by 21.3%), Mozyr (Belarus) – 270,600 tonnes (more by 3.5%).
The volume of oil transportation to refineries of Ukraine in the first quarter of this year amounted to 526,000 tonnes, which is 11.2% (66,100 tonnes) less than in January-March 2020. In particular, oil transportation along the Odesa-Kremenchuk route amounted to 197,900 tonnes (less by 13.9%).
Thus, in 2020, the total transportation of oil through the company’s pipelines amounted to 3.485 million tonnes (less by 13.7%). The share of transit volume in it is 84.9%, pumping to the country’s refineries – 15.1%.
In March 2021, oil transit through Ukraine by pipelines fell by 35.3% (by 492,800 tonnes) compared to the same month in 2020, to 903,000 tonnes.
Pumping to Ukrainian refineries last month decreased by 0.5% (by 900 tonnes), to 195,400 tonnes.
Ukrtransnafta said among the factors that influenced the total volume of oil transportation in the first quarter of 2021 were a decrease in oil demand among European consumers due to quarantine measures and the withdrawal of an oil refinery in Hungary for scheduled repairs.
