Business news from Ukraine

UKRAINE TO MAKE ALL HEATING TARIFFS MARKET-BASED BY LATE AUG 2020 – IMF

Ukraine in the memorandum to the International Monetary Fund (IMF) under the new Stand-By Arrangement has undertook by the end of August to review and approve all heating tariffs, linking them to the cost of gas and associated costs, including capital investments.
“We have eliminated the cap on household heating tariffs by revoking cabinet resolution No. 560 of June 26, 2019. We will ensure that, by the end of August 2020, all heating tariffs under the jurisdiction of both the NEURC (the National Energy and Utilities Regulatory Commission of Ukraine) and local authorities are reviewed and officially enacted to fully reflect gas and non-gas costs (including capex),” the document says.
“Starting with the 2020/2021 heating season, heating tariffs will be reviewed and set at least once per year before the start of the heating season to ensure that changes in gas and non-gas costs (including capex) are adequately reflected in heating tariffs. To that end, prior to the start of the 2020/2021 heating season, we will rescind cabinet resolution No. 1082 of December 24, 2019, which allows for the asymmetric changes in heating bills without the need to address heating tariffs when the price of input gas changes. In order to mitigate the risk of future arrears we will develop in consultation with the World Bank mechanisms to provide buffers for district heating companies to deal with the volatility in the wholesale gas price,” according to the report.
“By the end of June we will legislate an October 1, 2020 deadline for all new utility service contracts incorporating the revised heating tariffs to be concluded,” it says.

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FIRST DISBURSEMENT OF $2.1 BLN BY INTERNATIONAL MONETARY FUND SENT TO UKRAINE

The first disbursement of $2.1 billion by the International Monetary Fund (IMF) has been sent to Ukraine, Vladyslav Rashkovan, the representative of Ukraine in the IMF, has said.
“The first disbursement of $ 2.1 billion has already been sent to Ukraine. It will reach the accounts of the government, taking into account the time difference and the speed of funds flow in international payment systems,” he wrote on Facebook on Wednesday.

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UKRAINE EXPECTS FIRST IMF TRANCHE OF $1.9 BLN ON JUNE 5-6, $1.6 BLN IN AUTUMN, $1.5 BLN NEXT YEAR

Prime Minister of Ukraine Denys Shmyhal notes that Ukraine expects the IMF Executive Board to approve the first tranche of the agreed Stand-By Arrangement for the next 18 months on June 5.
“We have completed negotiations with the IMF, the president also had a telephone conversation with the IMF leader, and on June 5 we expect the signing of the agreement and the receipt of the first tranche. The program is for 18 months, a loan for 5 years, the amount is $5 billion. And this is a Stand-By Arrangement with rather simplified conditions, which will enable us to move calmly in overcoming the consequences of the coronavirus crisis that already exist,” he said on the air of the Savik Shuster Freedom of Speech program on Ukraine TV Channel.
Shmyhal pointed out that the first tranche from the IMF will be $1.9 billion, which Ukraine expects on June 5-6, another $1.6 billion will be in autumn, and $1.5 billion next year.

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CHANCES TO SIGN NEW PROGRAM WITH IMF HIGH – NBU

Ukraine has all chances to sign a new financial agreement with the International Monetary Fund (IMF), but it is the Verkhovna Rada is to do the final step, First Deputy Governor of the National Bank of Ukraine (NBU) Kateryna Rozhkova has said.
“Ukraine as a state today continues negotiating on attracting IMF assistance… The chances are great, but the last step is ours, in fact, it is the Verkhovna Rada, which must adopt two bills, which are the so-called prior actions. This is the land bill and the bill about banks,” Rozhkova said during a press briefing on Friday.
She also said that the IMF is ready to increase the scope of the Extended Fund Facility (EFF) compared with the previously agreed $5.5 billion.
“We are optimists. If the EFF is approved, Ukraine will be able to go through difficult times to combat the virus,” Deputy Governor of the central bank Oleh Churiy said.

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INTERNATIONAL MONETARY FUND, WORLD BANK, EBRD READY TO HELP UKRAINE

President of Ukraine Volodymyr Zelensky has emphasized that the International Monetary Fund (IMF), the World Bank, the European Bank for Reconstruction and Development (EBRD) and other financial organizations were ready to help Ukraine amid the coronavirus pandemic. “Yesterday I had a conversation with IMF Managing Director Kristalina Georgieva. Our international financial partners, including the IMF, the World Bank, the EBRD assured us of their readiness to support and help Ukraine,” he said in an appeal to Ukrainians on Monday, March 23.

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UKRAINE AND IMF AGREE ON NEW COOPERATION PROGRAM

Ukraine and the International Monetary Fund (IMF) have reached agreement on a new cooperation program in a telephone conversation between Ukrainian leader Volodymyr Zelensky and IMF Managing Director and Chair of the Executive Board Kristalina Georgieva, the press service of the head of state reported on Sunday.
“The IMF head praised the new [Ukrainian] administration’s economic achievements and the progress in the introduction of reforms made by the government led by Prime Minister Oleksiy Honcharuk. The sides noted following the discussion that Ukraine and the IMF had come to the Staff Level Agreement on a new cooperation program,” the press service said.
Zelensky said that he and Georgieva had a very constructive discussion.
“I am glad that we have reached full understanding and our turbo-mode has been praised by the IMF. I am grateful to the Parliament, the Government and our entire team for their tireless work for the sake of Ukraine. The new program of cooperation with the International Monetary Fund aims to accelerate economic growth, actively eradicate corruption and improve well-being of every Ukrainian,” the president’s press service quoted Zelensky as saying.
The head of state said that Ukraine is not satisfied with the current rate of economic growth, therefore, in order to accelerate economic growth, “we, together with our international partners, will continue reforms to catch up with our neighbors in terms of economic development and prosperity.”
According to the press service, Georgieva said that she commended the extraordinary progress that Zelensky and his government have made over the past few months in promoting reforms and continuing reasonable economic policy.
“I assured the President of the IMF’s readiness to support the political plan of the government for macroeconomic stability and boosting the economy to higher, sustainable and comprehensive growth, among other things, with new IMF support. IMF staff has reached an agreement with the authorities on a policy of supporting a new three-year arrangement in the amount of four billion Special Drawing Rights (SDRs) within the IMF Extended Fund Facility,” Georgieva said.
According to a statement of Georgieva on the website of the IMF, this agreement is subject to IMF management approval and to approval by the Executive Board.
“I was pleased to note that IMF staff has reached agreement with the authorities on the policies to underpin a new 3-year, SDR 4 billion (about $5.5 billion) arrangement under the Extended Fund Facility. This agreement is subject to IMF management approval and to approval by the Executive Board, and effectiveness of the arrangement will be conditional on the implementation of a set of prior actions,” she said.
She said that the Ukrainian President and she agreed that Ukraine’s economic success depends crucially on strengthening the rule of law, enhancing the integrity of the judiciary, and reducing the role of vested interests in the economy, and that it is paramount to safeguard the gains made in cleaning up the banking system and recover the large costs to the taxpayers from bank resolutions.

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