Arricano Real Estate Plc (Cyprus), the managing company and developer of some shopping and entertainment centers in Ukraine, has decided to postponed settlement of liabilities in the amount of $47.1 million to Retail Real Estate OÜ (RRE, Estonia), Barleypark Limited and one of its main constructors for the end of 2019.
According to a company report on the London Stock Exchange (LSE), the company has received written representations from Retail Real Estate OU and its affiliated company Bytenem Co Limited that lead the board to believe that the group will not be required to settle in 2019 outstanding accrued interest and other accounts payable in the amount of $21.360 million plus further interest accruing during the year ending December 31, 2019.
Arricano has received a letter from Barleypark Limited waiving its right to claim early repayment of the loan or any part thereof, including, but not limited to all or any part of the interest accrued, amounting in aggregate to $22.004 million until after 31 December 2019.
The group has also received a comfort letter from one of its main constructors, stating that it will not claim payment of invoices amounting to $3.772 until after December 31, 2019.
The surplus of Ukraine’s balance of payment in 2018 grew by 12.1% compared with the previous year, to $2.88 billion, according to preliminary data published by the National Bank of Ukraine (NBU). “The surplus of the balance of payments is recorded for the fourth year in a row. In particular, last year, primarily it was thanks to a significant inflow of capital in a financial account: obtaining official funding from international partners and borrowing on foreign markets,” the regulator said in a press release.
According to the NBU, in 2018, the current account deficit increased to $4.65 billion from $2.44 billion a year earlier due to the widening deficit of trade with goods. The favorable foreign economic situation for most of the year and the high harvest of grains and oilseeds in 2018 supported export growth, but the complication of transportation in the Sea of Azov and repairs at some enterprises held back its growth, the regulator said.
The NBU said that strong domestic demand and high energy prices have led to a high growth rate of imports of goods compared with exports.
According to the NBU, in 2018, exports of goods grew by 9.2%, to $43.34 billion, while imports by 14.0%, to $56.3 billion.
The central bank said that the sale of food products abroad increased by 4.8%, primarily thanks to an increase in sales of grain crops by 11.4% in monetary terms.
In addition, exports of ferrous and non-ferrous metals grew by 15.3% thanks to favorable pricing conditions.
The largest increase in exports, as the central bank said, occurred in the EU countries – by 15.5%, as a result of which the share of EU countries of total exports of goods increased to 37.6% from 35.6% in 2017. At the same time, the share of Asian countries decreased from 32.4% to 31.5% and Russia’s – to 7.0% from 8.5%.
As for imports, energy imports increased by 15.0%, primarily due to higher global energy prices, the NBU said.
The regulator said that non-energy imports grew by 13.7%, in particular, under the influence of strong domestic demand, imports of engineering products continued to grow at a high rate – by 17.8%, food and industrial goods – by 17.6% and 21%, respectively.
Last year, most of all, imports of goods from Asian countries increased – by 27.3%, as a result, their share increased to 22.4% from 20.1% in 2017. At the same time, despite the increase in imports from EU countries (by 12.4%), their share decreased to 36.6% from 37.2%. Russia’s share also declined – to 14.2% from 14.5%.
The National Bank links the growth of services exports over the past year by 10.6%, to $15.67 billion, primarily, with an increase in exports of services of the IT sector, processing of raw materials supplied by customers and the provision of services in the field of tourism. Imports of services increased 8.0%, to $14.2 billion thanks to an increase in the costs of Ukrainians going abroad and the increased demand for transport and other business services.
The National Bank estimated remittances to Ukraine from Ukrainians working abroad over the past year at $11.33 billion, which is 24.3% higher than the 2017 figure.
At the same time, nonresidents in 2018 withdrew revenues from previously invested funds in the amount of $8.54 billion from Ukraine, exceeding the similar volume of the previous year by 27%. Reverse flow amounted to $0.37 billion, or 90% more than in 2017.
According to the NBU, the net capital inflow on the financial account rose to $7.49 billion, which is almost 1.5 times higher than the 2017 figure. In general, at the end of the year, the inflow in the private sector prevailed, but at the end of the year, with the unblocking of cooperation with the IMF, the role of the public sector increased significantly. In particular, in the fourth quarter, the government placed $2 billion in eurobonds and attracted financing from the World Bank and the EU totaling $1 billion.
Net inflows of foreign direct investment (FDI) to Ukraine, according to NBU estimates, amounted to $2.36 billion in 2018, which is less than in 2017 ($2.59 billion). More than half of FDI – 58% – were sent to the real economy, while investment in the financial sector accounted for 42% of the total volume, almost half of them were banking sector operations for re-issuing debt into charter capital.
The NBU said that thanks to the surplus of the consolidated balance of payments and obtaining an IMF loan, Ukraine’s international reserves increased by 10.7% over the past year, to $20.8 billion or 3.4 months of Current External Payments (CXP) at the end of 2018.
Non-banking financial institutions of Ukraine in January-June 2018 paid profit tax in the amount of UAH 353.9 million to the national and local budgets, which is UAH 148.4 million or 72.2% more than a year ago, a member of the national commission for financial service markets regulation of Ukraine Oleksandr Zaletov has told Interfax-Ukraine.
“The aggregate amount of the paid profit tax by non-banking financial institutions, according to the Treasury, exceeded the similar indicator of banks by 8.7%, or UAH 28.2 million,” he said.
He also said that the upward pace of fiscal revenues is associated with the growth of services provided by non-banking financial institutions.
In the first quarter of 2018, the following financial services were most popular: third-party liability insurance (94.7% increase), financial leasing (76.2%), pension contributions to private pension funds from individuals (34%), life insurance (30.6%), tourist insurance (26.8%), contributions to the construction financing funds (23.3%), medical insurance (21.7%), car insurance (20.9%), deposits in credit unions (14.7%) and loans granted by credit unions (7.3%).
In Zaletov’s opinion, if several years ago the driver of growth in non-banking financial markets was financial risk insurance and factoring, now growth is primarily related to the activation of financial services oriented to the social needs of the population. The further development of this segment will depend on the adoption of bill No. 8415 dated May 25, 2018 amending some laws of Ukraine regarding state regulation of financial services markets aimed at creating a systemic basis for the recovery and development of non-banking financial services markets in modern conditions.