Direct budgetary funding for Ukrzaliznytsia (UZ) in 2023 will amount to UAH 5 billion, of which UAH 3.5 billion has already been allocated over 10 months, and the government provides state guarantees for another UAH 6 billion for loans that the company takes out from international financial institutions, the Ministry of Finance of Ukraine has reported.
In particular, according to the Ministry of Finance, it is UAH 3.9 billion from the European Investment Bank (EIB) and UAH 2.1 billion from the European Bank for Reconstruction and Development (EBRD).
It is specified that out of the UAH 3.5 billion already allocated this year, almost UAH 3 billion has been allocated for the purchase of new passenger railcars, including the completion of payment for 100 passenger railcars ordered in 2021 and 44 railcars in 2023.
“The prepayment for the purchase of 44 new passenger cars was made on October 28 this year, including the supply of 9 new reserved seats. These will be the first new second-class cars purchased over the past 15 years and the first Ukrainian-made second-class cars,” Deputy Finance Minister Oleksandr Kava said in a release. He recalled that Russian second-class cars were previously purchased.
According to the Ministry of Finance, work is also underway to implement international projects aimed at restoring railway infrastructure: attracting a loan from the EBRD of up to EUR 200 million under the Emergency Support to Ukrainian Railways Project, a $25 million World Bank grant under the Restoration of Critical Infrastructure and Network Connectivity (RELINC) project, a EUR 37.6 million loan from France, and grant assistance from Switzerland for CHF 14 million.
As reported, this fall UZ signed a contract with Kryukiv Carriage Works (KVSZ, Poltava region) for the manufacture of 44 passenger railcars for UAH 1.951 billion with delivery by December 31, 2025.
By the spring of 2023, KVSZ had completed fulfilling Ukrzaliznytsia’s order for 100 passenger railcars under the contract signed in 2021 for more than UAH 3 billion, but pointed to late payment.
In January-September this year, Metinvest Mining and Metallurgical Group, including its associates and joint ventures, paid almost UAH 11 billion in taxes and duties to the budgets of all levels in Ukraine.
According to the company’s press release on Thursday, despite Russia’s full-scale invasion of Ukraine, Rinat Akhmetov’s Metinvest remains the backbone of the country’s economy.
Metinvest’s Ukrainian enterprises paid UAH 2.8 billion in income tax, UAH 2.4 billion in unified social tax and UAH 2.3 billion in personal income tax in January-September this year. At the same time, Metinvest increased its land payments by 4% year-on-year to UAH 893 million in the first nine months of the year, up to UAH 1.5 billion.
Subsoil use fees (UAH 1.5 billion) and environmental tax (UAH 449 million) became significant sources of revenues for the state and local budgets of Ukraine.
In the third quarter of 2023, the Group transferred UAH 4.6 billion to the Ukrainian budget, which is 15% more than in the same period last year.
In particular, in July-September, Metinvest’s enterprises increased their income tax payments by 28% compared to July-September 2022, to UAH 1.7 billion. Over the same period, unified social tax payments increased by 8% compared to the third quarter of 2022, to UAH 847 million. And the payment of personal income tax increased by 12% compared to July-September 2022 to UAH 818 million.
In addition, in the third quarter of 2023, the group’s companies paid UAH 618 million for subsoil use, up 2% year-on-year. At the same time, land payments for July-September this year increased by 9% to UAH 304 million compared to the same period in 2022, and environmental tax increased by 24% to UAH 146 million.
Yuriy Ryzhenkov, CEO of Metinvest, noted that at the beginning of the great war, Metinvest faced serious challenges, which the group continues to overcome.
“We had to rebuild our business, create new supply chains for exporting products and change our operating model. All these steps helped the company to survive and remain one of the largest taxpayers in Ukraine. We want to help Ukrainians, the country and the army, just as we have taken care of our employees and residents of the regions where we operate. That is why we continue to work for victory in all areas,” the top manager was quoted as saying.
As reported earlier, Metinvest, including its associates and joint ventures, paid more than UAH 2.5 billion in taxes and fees to the budgets of all levels in Ukraine in January-March 2023, more than UAH 6.3 billion in the first half of 2023, and UAH 20.5 billion in 2022.
“Metinvest is a vertically integrated group of steel and mining companies. The Group’s enterprises are mainly located in Donetsk, Luhansk, Zaporizhzhia and Dnipro regions.
The main shareholders of the holding are SCM Group (71.24%) and Smart Holding (23.76%), which jointly manage it.
Metinvest Holding LLC is the management company of Metinvest Group.
A year after the resumption of small-scale privatization of state property, the state budget received UAH 3.974 billion, including UAH 3.6 billion for objects sold at online auctions in the state electronic trading system Prozorro.Sale.
According to the system’s press release on Thursday, another UAH 74 million was made up of guarantee fees from bidders who refused to conclude deals following the auctions, and about UAH 300 million was paid in VAT.
It is noted that 405 state-owned small-scale privatization objects have found new owners since the first auction after the pause, and the largest sales were: Hermitage Hotel – UAH 311 million, Ukroboronresursy – UAH 211 million, Rivnotorf – UAH 205 million, Ust-Dunaysky Port – UAH 201 million, Lviv Jewelry Factory – UAH 185 million, and Marilovsky Distillery – UAH 150 million.
“Prozorro.Sale clarified that the privatization of another 27 objects based on the results of online auctions is at the stage of concluding contracts. As a result of these agreements, the state budget is expected to receive another UAH 200 million.
According to the system, the majority of successful privatization auctions (83%) are held with a step-by-step price increase, i.e., like English auctions, and the starting price of objects increases threefold on average as a result of the auction.
According to Prozorro.Sale, three out of five state-owned facilities are sold at its auctions on the first try, while the remaining assets are sold at repeated auctions, which are required by law.
It is noted that a year after the restart of privatization, more than 2.4 thousand participants, or an average of four bidders per auction, competed for the right to purchase state property at e-auctions, while before the war there were an average of three.
The greatest competition was for non-residential premises with a total area of almost 310 square meters in Uzhhorod – about fifty bidders, 39 people competed for the Hermitage Hotel, and 29 for certain property of Ukrspirt in Ternopil region.
“The results of the year of state property privatization that we see in the system today confirm that the online auction tool allows the state and communities to effectively manage their property and businesses to find the right objects,” summarized CEO of ProZorro.Sale Sergiy But.
ProZorro.Sale, which is the administrator of the online auction system, adds that small-scale privatization of municipal property since the beginning of the full-scale war on February 24 has brought communities more than UAH 613 million through the sale of 515 objects.
As reported, on September 19, 2022, the first online auction for the sale of state property took place after a pause at the beginning of the war in accordance with Law No. 2468-IX, which unblocked and simplified the privatization of state property during martial law.
Since 2018 and until recently, the State Property Fund of Ukraine and companies have been putting up small-scale privatization objects with a book value of up to UAH 250 million for online auctions on Prozorro.Sale. However, the Verkhovna Rada recently unblocked large-scale privatization by allowing it to be conducted through Prozorro.Sale.
In January-August 2023, Ukrgasvydobuvannya JSC (UGV) paid almost UAH 16 billion in rent payments, the company’s press service said on Tuesday.
According to the press service, UAH 792.1 million, or 5%, of this amount went to the budgets of the local and regional levels where the company operates.
From January to August 2023, the budgets of Kharkiv and Poltava regions received the largest payments – UAH 385.67 million and UAH 332.72 million, respectively.
The amount of rent payments is calculated in accordance with the sale price of Ukrgasvydobuvannya’s natural gas in favor of Naftogaz of Ukraine.
As reported earlier, Ukrgasvydobuvannya aims to increase natural gas production by 1 bcm in 2023 to 13.5 bcm. In 2022, UGV produced 12.5 bcm of natural gas (commercial), which is 3% less than in 2021.
NJSC Naftogaz of Ukraine owns 100% of Ukrgasvydobuvannya shares.
According to the Ministry of Economy, the average annual exchange rate of the hryvnia to the US dollar in 2023 is expected to be 37.5 UAH/$1 in the draft state budget for 2024, compared to 32.3 UAH/$1 last year.
For 2024, the draft state budget provides for an average annual exchange rate of 41.4 UAH/$1.
As reported, the average annual exchange rate for this year during the adoption of the state budget for 2023 last fall was expected to be 42.2 UAH/$1, and the exchange rate at the end of 2023 was 45.8 UAH/$1.
At the same time, the National Bank has kept the official hryvnia exchange rate fixed at 36.57 UAH/$1 since the end of July 2022. On the cash market, the exchange rate has stabilized at around 38 UAH/$1 this year, while last year it was falling to 39 UAH/$1 and even more.
Over the past week, following the announcement by Finance Minister Sergii Marchenko of the forecast for the average annual exchange rate for 2024, the hryvnia has fallen to 38.3 UAH/$1 on the cash market.
In a September survey, members of the European Business Association predicted an average annual exchange rate of 41 UAH/$1 for 2024, while a year ago they expected 43 UAH/$1 for 2023.
The National Bank of Ukraine (NBU) proposes to raise the corporate income tax rate from 18% to 38% in 2023-2024, NBU Governor Andriy Pyshnyi said.
“Our forecast is that additional budget revenues if the current rate is raised to 38% will total more than UAH 20 billion this year and next year,” he wrote on Facebook.
According to him, such a tax design will have a limited impact on macrofinancial stability and at the same time support Ukraine’s defense capabilities.
The NBU governor, citing the monitoring of the financial condition and the results of the assessment of the banks’ stability, believes that financial institutions are quite capable of making additional payments in the current environment. According to the regulator, the tax rate increase will have a limited impact on lending and deposit rates, given the banks’ sufficient margins.
As reported, the National Bank considers additional taxation of banks to be a justified temporary step in view of the war, seeing financial and legal grounds for this, but proposes to increase the tax rate on banks’ profits instead of taxing net interest income as proposed by MPs.
According to Pyshnyi, this is the version the NBU will discuss with the Parliamentary Committee on Finance, Taxation and Customs Policy in the near future.
He also said that the market participants with whom the central bank communicated were sympathetic to this position.
According to the NBU, the net profit of 64 operating Ukrainian banks in the first seven months of this year amounted to UAH 83.2 billion, while the income tax was UAH 14.4 billion, including UAH 34.4 billion and UAH 7.9 billion for PrivatBank, and UAH 18.8 billion and UAH 0.1 billion for four other state-owned banks.
In late August, MPs submitted to the Rada a bill to tax banks’ net interest income at a rate of 5% in 2024-2026 (in addition to corporate income tax), which could bring in about UAH 10 billion to the state budget next year, according to their estimates. In the first half of 2023, banks’ interest income reached UAH 141 billion, including UAH 73.5 billion from transactions with government securities, and net interest income for the same period amounted to UAH 93.6 billion, up 75% compared to the pre-war period of 2021.
