BUSINESS NEWS OF JULY

Ukraine among Top 3 agri-exporters to EU, after U.S. and Brazil

Ukraine entered the top three countries that exported agricultural products to the EU between May 2018 and April 2019. The European Commission published the relevant data in the report “Monitoring EU Agri-Food Trade: Development until April 2019.“ The most important origins for EU agri-food imports over the past 12 months (EUR billion) are the USA (12.9) that overtook Brazil (11.7), followed by Ukraine (6.3) This increase allowed Ukraine to climb from fifth to the third position among the EU’s primary foodstuffs partners, as the free trade component of the EU-Ukraine Association Agreement continues to bear fruit, and China (5.9),” the report says. On a year-on-year basis, the value of agri-food imports (in EUR billion, % change) continued to grow impressively from the USA (+2.4; +23%) and Ukraine (+0.8, +14%).

NBU Lifts Surrender Requirement on Foreign Currency Proceeds

To further facilitate business activities in Ukraine, the National Bank of Ukraine (NBU) lifts the surrender requirement of a share of foreign currency proceeds.

The requirement that obliges entrepreneurs to sell 30% of their foreign currency proceeds in the interbank FX market will no longer be effective starting from 20 June 2019. The proceeds of businesses that will be credited to their distribution accounts on 19 June will not be subject to the obligatory sale. This loosening measure will not have any adverse impact on the macroeconomic stability. According to the statistics of recent years, both when the surrender requirement was at 50% and when it was reduced down to 30%, businesses sold over 90% of foreign currency in total. This year, the NBU cancelled and loosened more than 30 currency restrictions. Lifting the surrender requirement on foreign currency proceeds is another step to the free movement of capital, which is one of the NBU’s strategic goals.

The 21st EU-Ukraine Summit took place in Kyiv on Monday, July 8.

The European Union has reiterated its unwavering support and commitment to the independence, sovereignty and territorial integrity of Ukraine within its internationally recognized borders, according to a joint statement issued by Ukrainian President Volodymyr Zelensky, President of the European Council Donald Tusk and President of the European Commission Jean-Claude Juncker.

The participants in the 21st EU-Ukraine Summit also reaffirmed their "continued commitment to strengthening the political association and economic integration of Ukraine with the European Union, on the basis of the Association Agreement and its Deep and Comprehensive Free Trade Area." The parties agreed to exploit fully the potential of the agreement and stressed the importance of Ukraine continuing to implement its commitments to that end. Zelensky said at a joint press conference with Tusk and Juncker that he hoped Ukraine might not need the holding of the 22nd summit with the EU, because the state will already be an integral part of Europe.

Head of Ukraine's Mission to the EU Ambassador Mykola Tochytskyi,

in an interview for "Agence Europe" on Ukraine-EU summit:

✔️ Developing economic, energy and digital cooperation with the EU are among our priorities.

✔️ We must continue with democratic economic reforms and reforms of our armed forces, not only to use this prosperity and security of EU and NATO countries, but also to bring this security to Europe.

✔️ are not looking for something from the EU. We want to be a reliable partner, the one who will create the conditions for a stable and prosperous Union.

Ukrainian parliament ratifies Free Trade Agreement with Israel

The Verkhovna Rada of Ukraine has adopted the Law "On Ratification of the Free Trade Agreement between the Cabinet of Ministers of Ukraine and the Government of the State of Israel." A total of 230 MPs voted for the bill at a parliament meeting on Thursday, July 11. At least 226 votes were required to pass the bill, according to an Ukrinform correspondent. The ratified agreement will liberalise trade in goods between Ukraine and the State of Israel. According to the explanatory note to the bill, its adoption will contribute to the further development of bilateral trade and economic cooperation between the countries, allow Ukrainian producers to benefit from the liberalization of Israel’s goods market, open up opportunities for Ukrainian businessmen to expand markets and to develop and modernise their own production.

Ukraine’s international reserves to increase up to USD 23 bln in 2021

Further cooperation with the International Monetary Fund will provide Ukraine with additional sources of funding and, as a result, will increase international reserves up to $23 billion in 2021."The main assumption of the macroeconomic forecast is the continued cooperation with the International Monetary Fund, which will allow Ukraine to receive another official financing, improve conditions for access to international capital markets, and support investors' interest in Ukrainian assets. The corresponding attracting loans will enable the Government to make significant payments to service external debt. It will also allow the private sector to attract foreign investment. As a result, the international reserves will increase up to $23 billion in 2021," Governor of the National Bank of Ukraine Yakiv Smolii said at a press conference, an Ukrinform correspondent reports.As of July 1, 2019, the international reserves of Ukraine, according to preliminary data, totalled $20,638,900 million (in equivalent). In June, they grew by 6.4%, primarily, due to the Government's placement of Eurobonds and the National Bank’s purchase of currency in the interbank market.

Ukrainian seaports handle 13% more freight in first half of 2019. 

The seaports of southern Ukraine processed 72 million tons of freight during the January-June 2019 period representing a 13.2% year-on-year increase, according to the Ukrainian Sea Ports Authority. The biggest gains came in the agriculture sector, with grain transshipments up by 34.7% for the period to reach a new total of 24.5 million tons as the country's ports felt the effect of Ukraine's record 70 million ton 2018 grain harvest. Meanwhile, vegetable oil freight rose by 12.4% to reach 3.2 million tons. These half-year figures leave Ukraine's seaports on track to surpass the 2018 annual total volume of 135 million tons of freight, which was itself a 2.4 million ton improvement on the figure achieved the previous year.  

EU4BUSINESS IN UKRAINE

SMEs provide work for more than 4 million people in Ukraine, generate about 20% of the country’s GDP and make up the majority of the country’s companies.  The business environment in Ukraine is highly regulated but standards, support services for SMEs, innovation policy and assistance for women entrepreneurs need to be improved to allow SMEs to really thrive. EU4Business aims to improve the country’s business climate. It makes it easier for SMEs to get finance and provides training and targeted support for businesses led by women and those working in the green economy. SMEs also get technical support to help them align with EU standards, increase exports and benefit from the free trade deal between Ukraine and EU. Looking for support? Read more

CEC counts 100 percent of vote in Ukraine's parliamentary elections

The Central Election Commission (CEC) of Ukraine has processed 100% of electronic voting protocols in multi-member constituency in Ukraine's snap parliamentary elections.
According to the data on the CEC’s website, the Servant of the People party garnered 43.16% of the vote, the Opposition Platform - For Life - 13.05%, the Batkivshchyna All-Ukrainian Association – 8.18%, the European Solidarity party - 8.10%, the Holos party - 5.82%. Other parties do not overcome the 5% electoral threshold. In particular, Oleh Liashko's Radical Party received 4.01% of the vote, the Strength and Honor party – 3.82%, the Opposition Bloc - 3.03%. 

Snap parliamentary elections were held in Ukraine on July 21. The Central Election Commission has to establish and announce the voting results in multi-member constituency and single-member constituencies no later than fifteen days after the election day.

 President of Ukraine Volodymyr Zelensky invited foreign investors to visit Ukraine and invest in its economy, and promised to contribute to their work.

Zelensky posted the corresponding video on his Facebook page.

“I invite you, investors from any part of the world, to join the opportunity [to invest in the Ukrainian economy] early and enjoy getting amazing returns on your investments. Your success will be our success. And that is why me and my team will stand for every and each foreign investor, for every new job you will create and for every dollar you pay as taxes,“ the president stressed.

Zelensky noted that he wanted Ukraine to become one of the fast-growing countries in Europe. “My vision is to have Ukraine as one of the fastest growing emerging economies in Europe. I lead this vision and my new professional and technocratic government will execute accordingly. Welcome to the country of freedom. Welcome to Ukraine,” he said.

According to the president, Ukraine has many investment opportunities, as it is ideally located geographically and has a large population. “Me and my team in the new government and parliament want to inject economic growth into the country’s DNA. We need to change a lot here, fire nonprofessionals and hire professional ones, deregulate industries, simplify rules, improve the infrastructure and many other things,“ he stressed.

Zelensky noted that changes took time. “Once we get there most of markets and opportunities will be taken by someone else,“ he said.

Ukraine to lift moratorium on farmland sale by year-end – Presidential Office

Ukraine plans to lift a moratorium on farmland sales and launch the land market by the end of 2019, Deputy Head of the Presidential Office Oleksiy Honcharuk has said in an interview with Bloomberg. "There's an understanding in the team that if it's not done this year, it will be quite difficult," Honcharuk said, adding that the Presidential Office is looking for the "least painful but most efficient version" of opening the land market.

According to him, discussions with the World Bank will determine whether to allow purchases by foreigners or limit the size of sales. The most liberal version could boost gross domestic product by more than 3 percentage points a year and the most conservative by 0.5 percentage point, he said. A ban on farmland sales was introduced in Ukraine back in 2001 in order to regulate land relations and create infrastructure for the land market. The parliament has extended the moratorium since then. In December 2018, the Verkhovna Rada extended the moratorium on agricultural land sales until January 1, 2020.

Ukraine's Presidential Office planning large-scale privatisation

Ukraine's Presidential Office has announced large-scale privatization targeting, first and foremost, banks so as to attract large foreign financial and banking groups to the country, Deputy Head of the Presidential Office Oleksiy Honcharuk has said.

"The banks should be sold first. I want 10 big systemic banks to enter Ukraine," Honcharuk said in an interview with Bloomberg. To do so, Ukraine needs to demonstrate economic growth, the independence of the National Bank of Ukraine and organize the work of the judicial system, he said.

According to Honcharuk, the future Ukrainian government will have to allow large and comprehensive privatization that would affect even Ukrzaliznytsia and Ukrposhta.

According to the plan on the privatization of four state-owned Ukrainian banks announced last year, all of them should be sold by 2022. They currently include Oschadbank, Ukreximbank, Ukrgasbank and PrivatBank (the latter was nationalized in 2016).

The National Bank of Ukraine said earlier that almost 70% of the loan portfolio of government banks are non-performing loans under which no payments are made. Their lion's share is concentrated in PrivatBank.

Ukrainian farmers thresh nearly 32 mln tonnes of grain of new harvest

Ukrainian farmers harvested about 32 million tonnes of grain crops from an area of 8 million hectares, the Ministry of Agrarian Policy and Food of Ukraine has reported.

"As of July 31, Ukrainian farmers harvested 31.9 million tonnes of grain crops of the new harvest from an area of 8.4 million hectares, or 84% of the target," the report says.

In particular, Ukrainian farmers threshed 23.4 million tonnes of wheat from an area of 5.8 million hectares (85%); 7.6 million tonnes of barley from 2.3 million hectares (87%); 576,000 tonnes of peas from 251,000 hectares (96%); 175,000 tonnes of rye from 64,000 hectares (54%); and 108,000 tonnes of oats from 41,000 hectares (23%).

Also, 3.0 million tonnes of winter rape were gathered from an area of 1.2 million hectares (97%), with a yield of 24.5 centners per hectare.

The sowing campaign 2019 began a month earlier than last year. The total area under agricultural crops in all categories of farms for the 2019 harvest is about 27.7 million hectares. 

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