This is a curated list of the biggest economic news in Ukraine in the past week.
If there is one thing to gather from the past week it would be that Ukraine is at a crossroads. Naturally, a country jammed in between Russia and Europe; Europe and Asia and a country both rich and poor is always at a crossroads, but for this week the most interesting topic has been the duality in COVID 19 prognoses.
On one hand, Ukraine is really starting to do well with vaccinations. At the very least, it is going in the right direction with three million vaccinations in July. It more than doubled the total amount of vaccinated people in Ukraine and can only be seen as a step in the right direction.
On the other hand, the test and trace system in Ukraine is still lacking behind. Around one thousand new cases of the coronavirus are registered every day and an outbreak of the delta variant is expected in August. Still, there are almost no COVID19 related restrictions in place except for the mask requirement in public transport and other indoor places.
Ukraine did strengthen the requirements for travellers going to Ukraine, though, making PCR tests mandatory for every unvaccinated person wanting to enter Ukraine. There are tougher restrictions in place for people travelling from Russia and India.
Energy market is still shifty
The energy market of Ukraine is still a topic of interest for the government bodies. The National Security and Defense Council (NSDC) is threatening the energy companies with state control, if they monopolise the energy market.
The National Security and Defense Council of Ukraine is ready to introduce “temporary state administration” of the energy companies, should their monopolies threaten the energy market.
“We see signs of monopolization in this market,” NSDC Secretary Oleksiy Danilov said during a briefing according to Kyiv Post, “and in the event of a threat to national security under this decision, we are considering the introduction of temporary administration.”
As always, there would not be a week of news without something regarding the IMF. This week has been no exception. The Managing Director at International Monetary Fund, Kristalina Georgieva, praised Ukraine for its economic progress. She also agreed to visit Ukraine in September to continue the otherwise stalled talks with Ukraine.
“Very constructive call with President Zelensky on Ukraine’s sound economic progress made under the IMF program. Look forward to our productive engagement to advance our work on remaining issues during a mission in September,” Georgieva wrote on Twitter.
While Ukraine and IMF are struggling to come to an agreement regarding the last tranches of a 5 billion USD loan initially agreed upon last year, Ukraine has gotten a 2.7 billion USD injection. The money comes without strings attached and do not need to be repaid.
The money has been drawn from a special fund called the Special Drawing Rights, a reserve with 650 billion USD allocated to combat the effect of the pandemic. The money are not given in the form of a loan, but simply as a bag of money that does not need to be paid back and apparently is coming without conditions.
“This is a historic decision – the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis,” IMF Managing Director Kristalina Georgieva.’
On another but similar note, Ukraine’s borrowing from China has been heavily criticized in Kyiv Post, who wrote a lengthy in depth feature about the loan agreements with China and the possible negative outcomes, such deals might have for Ukraine.
In an ambitious move to privatize the state controlled parts of the Ukrainian economy, the “Bolshevik” machine building plant has been put up for auction in October. The starting price is 52 million USD.
The factory, located in Kyiv close to the Shuliavska metro station, spans over 35 hectares and could attract as much as 500 million USD in real estate investments, according to Ukraine Business News. However, buying the plant comes with some strings attached.
First and foremost, the 19 million USD debt of the plant has to be paid back, wages of the 315 employees needs to be backed and a 2 million USD investment in “preservation of basic activities” is also required. The factory is 140 years old and the most modern equipment dates back to the eighties.
The privatization process is an attempt to limit the possibilities of corruption while also selling off unprofitable companies that punch holes in the Ukrainian state budget. Ukraine also hopes that the new owners of the companies and properties will turn them into profitable business adventures, further helping out the Ukrainian economy.
According to UBN, Ukraine’s government “is on a borrowing spree” that might ruin hopes of future growth. Serhiy Verlanov, former head of the State Tax Service, wrote a piece about the debt saying:
“Ukraine’s debt shot up 18% over the past 25 months, an unprecedented increase, to fuel the government’s populist policies without undertaking serious economic reforms.”
Valanov was one of the appraised reformers who was pushed out in the March 2020 government shuffle, where several ministers and department heads were either fired or pushed out of sight.