Dragon Capital Investment Group has revised its forecast for the average annual hryvnia exchange rate in 2024 from 37.3 UAH/$1 to 40 UAH/$1, and the exchange rate at the end of the year from 39.0 UAH/$1 to 42.0 UAH/$1, but maintained its GDP growth forecast at 4.0%.
“We expect the hryvnia to continue to weaken against the US dollar in a controlled manner. We have revised our forecast due to the change in the National Bank’s approach to managing the exchange rate in early 2024,” the group said in a press release on Tuesday.
According to Dragon Capital’s updated estimates, external financial support for Ukraine’s budget from partners this year will amount to $37 billion and will support the economy’s resilience.
“Although the approval of the support packages has been significantly delayed and the total amount of funding will be slightly less than we expected ($40 billion), these funds will be sufficient to keep the NBU reserves at current record levels around the current record $43 billion (previous forecast – $45 billion) and to finance the budget deficit without issuing,” the release says.
However, the investment group adds, the budget situation remains tense and will require mobilization of internal resources. The law on the state budget for 2024 needs to be significantly revised, as the defense and security expenditures envisaged in it are clearly not enough to adequately finance the army throughout the year.
“The updated law should also take into account the impact of increased mobilization, which, according to our estimates, will cost the budget of all levels $1.5-2.0 billion (including the indirect impact on revenues). In general, military spending in the general fund of the state budget will need to be increased by at least $9 billion to keep it at the level of last year,” Dragon Capital believes.
At the same time, the company believes that this increase can be partially financed by reducing non-military expenditures (for example, to service external commercial debt after its restructuring) and additional revenues (tax on unexpected bank profits, increased transfers from the NBU, and increased excise rates on fuel).
In general, the investment group expects the government to slightly reduce the public administration budget deficit this year to about UAH 1.6 trillion from UAH 1.7 trillion last year (excluding grants) due to an organic increase in tax revenues from economic growth, additional measures to fill the budget revenue side and a restrained approach to non-defense spending.
“The hryvnia depreciation will not have a decisive impact on the budget deficit dynamics, as part of the military spending is directed to the purchase of imported goods and compensates for tax revenues that depend on the hryvnia exchange rate. However, a weaker hryvnia helps to reduce the need to finance the budget deficit with domestic borrowing, as it increases the hryvnia equivalent of international aid,” the press release said.
At the same time, the revision of the exchange rate forecast led to a decrease in estimates of Ukraine’s nominal GDP this year to $190 billion from $201 billion and an increase in the forecast of public debt at the end of the year from 85% of GDP to 92% of GDP, although in absolute terms the forecast was raised slightly – from $164 billion to $166 billion.
Dragon Capital assumes that the NBU will change its approach to managing the exchange rate in accordance with its own assessment of the balance of risks to financial stability. At the same time, the record level of international reserves will allow the central bank to continue to keep the situation in the foreign exchange market under control and avoid uncontrolled devaluation, provided that domestic economic policy is aimed at maintaining macroeconomic stability and international partners continue to provide financial support in the minimum necessary amounts, the investment group emphasized.
Given the slowdown in inflation and stable inflation expectations, moderate devaluation does not pose risks to macrofinancial stability, but supports export competitiveness, helps the budget by reducing funding needs, and reduces the loss of reserves from the initial effects of currency liberalization, Dragon Capital believes.
“We expect that the NBU will take a balanced approach to determining the further dynamics of the hryvnia exchange rate, as the population’s sentiment remains vulnerable in the context of the war, and it is unlikely to determine the equilibrium level of the exchange rate using standard methods given the specifics of the balance of payments structure caused by the war,” the press release said.
According to it, the inflation forecast for 2024 has been improved from 8% to 7.6%, and the discount rate at the end of the year has been reduced to 13% from 15%.
The investment group explained that the forecast of GDP growth in 2024 by 4.0% was maintained by the recovery of exports by seaports and the development of the military-industrial complex, which will be the main drivers of economic growth this year and will outweigh the negative impact of increased mobilization and electricity shortages, assuming that the authorities will be able to organize mobilization in such a way as to limit the negative impact on business.
“According to our estimates, given the existing capacity of the power grid and current import opportunities, the electricity shortage will be quite moderate in summer and autumn, which will allow enterprises in most industries to maintain production volumes at levels close to current levels and therefore increase them compared to 2023,” the investment group believes. The growth will be especially noticeable in sectors that were depressed due to the lack of maritime exports, namely ore production, metallurgy, and cargo transportation, Dragon Capital added.
The company also predicts that thanks to the resumption of seaports and a larger-than-expected agricultural harvest last year, exports of major commodities will grow by 35% to 109 million tons this year, which will help keep the foreign trade deficit from widening further (its estimate has been reduced to $29.0 billion from $32.9 billion), despite rising imports and lower global agricultural prices.
In January-March 2024, lifecell mobile operator’s revenue increased by 16.1% compared to the same period in 2023, to UAH 3.12 billion.
According to the report of the parent company Turkcell, lifecell’s net profit for the first quarter increased by 13% to UAH 582.7 million.
Lifecell’s EBITDA for the period increased by 5.7% to UAH 1.69 billion. At the same time, the EBITDA margin decreased by 5.3 percentage points to 54.4%.
The company’s capital investments in the first quarter increased by 58% to UAH 1.008 billion.
“Three years ago, we developed our medium-term strategy. The name of the strategy was 20-24! It meant 20% market share in 2024! The great lifecell team has done it! The best team in history has increased our market share by 5 percentage points in terms of revenue; from 15.5% to 20.2% for a long time!” Ismet Yazici, CEO of lifecell, commented on the results on Facebook.
He reminded that the company had to work with the challenges of the COVID pandemic, a full-scale war in Ukraine, and unfair regulatory conditions.
Yazidi said that in the first quarter of 2024, lifecell’s subscriber base grew by 12.8%, without specifying the absolute figure.
Turkcell’s report says that the Ukrainian assets of Lifecell LLC, Global Bilgi LLC and Ukrtower LLC, which the Turkish company has owned since July 10, 2015, have been allocated to the disposal group in connection with the agreement to transfer all shares, as well as all rights and debts of these companies to French NJJ. The agreement with the company of French billionaire Xavier Niel was signed on December 29, 2023.
Turkcell CEO Ali Taha Koç, answering investors’ questions at a conference on the first quarter results, said that the deal to sell Ukrainian assets to DVL Telecom, a member of French billionaire Xavier Niel’s NJJ group, would be closed by the end of 2024. According to him, after the Ukrainian court lifted the seizure of some of the assets, the company is awaiting approval from the Antimonopoly Committee, which is the last step to close the deal.
Large language models (LLM), on which ChatGPT and other generative (content-creating) artificial intelligence (AI) tools are based, will never reach the level of human intelligence, believes Jan Lekun, chief scientist of the American Meta in the field of AI.
In his opinion, such models have a very limited understanding of logic and will not be able to reason and plan like a human. In addition, they “do not understand the physical world, do not have permanent memory, are unable to reason in any reasonable sense of the word, and cannot plan … hierarchically,” he said in an interview with the Financial Times.
Lecun argued against relying on LLM development in an effort to create human-level intelligence, as these models can only accurately respond to queries if trained on correct data, and are therefore insecure.
Instead, the expert is developing an entirely new generation of AI systems that he hopes will endow machines with “human” intelligence. However, this task could take a decade to complete, he explained.
Lecun leads a team of about 500 people at Meta’s basic AI research lab. They are working on creating an artificial intelligence that can develop a sense of common sense and study the structure of the world in a similar way to humans. This approach is called “world modeling.”
Import changes in % to previous period in 2023-2024
Source: Open4Business.com.ua and experts.news
The Cabinet of Ministers has identified critical facilities that should be provided with priority power supply during power restrictions.
The initiative was enshrined in Resolution No. 600 of May 24 “On Approval of the Procedure for Determining and Applying Limit Values for Electric Power Consumption,” published on the government portal on Monday.
According to the resolution, these facilities include critical infrastructure facilities of the fuel and energy sector and the life support sector listed in the Register of Critical Infrastructure Facilities. In addition, these are healthcare facilities of state or municipal ownership, military units and territorial centers for manning and social support (including facilities used for the territorial community under martial law), enterprises of the defense sector of Ukraine, including those that perform mobilization tasks (orders) for the creation, production, repair and supply of weapons, ammunition, military equipment, special components, as well as railway transport enterprises.
At the same time, the priority energy supply facilities include enterprises whose activities are important for ensuring the country’s food, economic and/or energy security, enterprises with a continuous production cycle, electronic communication networks, and public authorities (the Verkhovna Rada, the Cabinet of Ministers, central executive authorities, law enforcement agencies, namely the Ministry of Internal Affairs, the Prosecutor’s Office, the Security Service of Ukraine, and the State Emergency Service).
The lists of critical facilities are approved by the regional and Kyiv city state administrations (military administration) after consultations with local governments, distribution system operators (DSOs) and the State Agency for State Regulation of Energy and Energy Efficiency on the expediency of including the facility in the list, the permissible minimum load levels, the power supply schemes of the specified consumer, the sub-consumers on the same line that need to be disconnected, etc.
It is noted that the DSO is obliged to ensure a fair and uniform order of distribution of the maximum capacity among other consumers not included in this list.
At the same time, when applying the maximum capacity (limits) to them, critical infrastructure facilities must ensure their compliance. In addition, they must disconnect sub-consumers that do not affect their operation, otherwise they may be included in the schedules of hourly outages.
In the event of an emergency in the power system and/or exceeding the maximum capacity, the transmission system operator may decide to additionally apply emergency outage schedules by the DSO.
As reported, at a meeting on May 24, the Cabinet of Ministers approved the procedure for determining the maximum power consumption limits.
It defines the procedure for interaction between the Ministry of Energy, the State Agency for State Energy Supervision, the data transmission system operator (TSO), distribution system operators (DSO), as well as consumers in the process of determining and applying the maximum values of electricity consumption. The Procedure is mandatory for TSOs, DSOs and consumers regardless of their form of ownership.
On May 23 in Kyiv, as part of the celebration of the 100th anniversary of the formation of the Kara-Kyrgyz Autonomous Oblast, the Embassy organized a scientific and practical conference “Manas – Intangible Cultural Heritage of Humanity”.
The diplomatic event was attended by the Minister of Culture of Ukraine R. Karandeev, 13 deputies of the Verkhovna Rada of Ukraine, representatives of the diplomatic corps, political and public figures, Ukrainian scientists in the field of Turkology/philology, representatives of universities in Kiev, representatives of the Kyrgyz diaspora. Also from the Kyrgyz side via videoconference took part the president of the State Institution “National Academy ‘Manas’ T.Bakchiev, the translator of the book – chairman of the Ukrainian Society ‘Bereginya’ in Kyrgyzstan V.Narozia and artist Z.Ilipov.
The conference was held in Kyrgyz-Ukrainian-English and discussed the influence of Manas on world culture. The participants were shown a video “Manas”, and there was also a presentation of Sayakbai Karalaev’s book “Kyrgyz Folk Epic Yer-Toshtyuk”, recently published in Ukrainian, which was published with funds from Ukrainian sponsors. The new book was presented to each conference participant as a gift.
Speakers discussed the influence of Kyrgyz culture on world literature and noted the importance of such an event for deepening Kyrgyz-Ukrainian cultural and humanitarian cooperation.
The diplomatic event was held at a high level and received a positive response from the participants.
The new books will be donated to universities and libraries in Ukraine.
The Kyrgyz Republic recognized the independence of Ukraine on December 20, 1991. On September 19, 1992 diplomatic relations were established. In 1993 the Embassy of the Kyrgyz Republic was opened in Kiev, and in 2000 the Embassy of Ukraine in Kyrgyzstan.
