The world Bank has improved the forecast of development of the Ukrainian economy, the Cabinet has updated the plan of implementation of the Association Agreement with the European Union, and thousands of residents of Lviv region met with the arrival of cold weather with no heating – these are the main economic news this week.
This week one of the key creditors of Ukraine – the world Bank announced updated projections of economic development of our country. In particular, the Bank improved the forecast of real GDP growth this year to 3.6%, with inflation at year-end 6.4% and understated the budget deficit to 2 percent of GDP. Next year the Bank expects economic growth of our country is almost at the level of the current year, and in 2021 acceleration of growth to 4.2 per cent.
Economic growth in the first nine months of this year, the world Bank estimated at 3.7-3.8 percent, calling the main drivers behind the record harvest of grains and oilseeds, trade and the financial sector. Statistical indicators in these areas while encouraging.
This week the State statistics service released data on the growth of retail turnover in Ukraine in January-October by ten percent, and national Bank reported another record profit figures of banks for the period 52 billion hryvnias. At the same time, the decline in industrial production in October in annual terms accelerated to 5 percent after falling 1 percent in September.
Meanwhile, it is obvious that Ukraine is steadily increasing its capacity in the agricultural sector. That is why the world Bank is pinning great hopes on launched in our country, land reform, waiting for its implementation additional 0.5-1.5 percent economic growth annually over five years.
According to estimates by the lender, the agriculture of Ukraine has good prospects, but the moratorium on sale of agricultural land was the main obstacle for attracting investments in this sector. Therefore, according to the world Bank, adopted by the Verkhovna Rada in November in the first reading the draft law on turnover of lands should be enacted at the earliest opportunity together with the laws about public access to data of the land cadastre, the procedures for transfer of land plots, management on the local level and conducting compulsory electronic auctions.
The world Bank considers it important step in ensuring access to financing for small farmers and the provision of state subsidies for farmers to boost productivity, growing production with greater added value and the use of new technologies.
New impetus of European integration
This week the Cabinet of Ministers has updated the action plan for the implementation of the Association Agreement between Ukraine and the European Union. As explained in the government, the new plan takes into account the deepening of bilateral relations and is aimed at achieving compliance with the European criteria for accession to the EU.
Updated tasks affect the customs and fiscal policies, taxation, entrepreneurship, financial services and competition, as well as of justice, social and humanitarian Affairs, transport, energy, and energy efficiency, the digital sphere, science, technology and innovation, environmental management.
The Cabinet believes that the update of the plan will allow “pereproshit software operating system” of the European integration of Ukraine and accelerate its movement in the EU, in parallel with making such a move more transparent and governments accountable to citizens.
In this regard, Deputy Prime Minister for European and Euro-Atlantic integration Dmitry Kuleba presented the system for monitoring “the pulse of the agreement,” which allows you to track the progress of the action plan in real time and show from whom at a particular moment depends on the implementation of each task.
In the system outlined specific objectives in the areas of public life covered by the Association Agreement. Complete the volume of tasks exceeds two thousand, and for their implementation more than seventy artists are required to bring about seven and a half thousand events.
And while the government is addressing global challenges, several thousand citizens of our country with the arrival of the November frosts remained without heating.
Hardly abated the story of the city of Smila in Cherkasy region, where from year to year breaks the start of the heating season, as there are new trouble spots. Due to mismanagement of a private Trustee networks of a heat supply in jeopardy the heating season in the cities of Novoyavorivsk or Yavoriv and Novyi Rozdil, Lviv region, with a population of almost 60 thousand inhabitants.
The essence of the story is that the owners Novorjazanskoe and Novoyavorovskoe CHP suspected misappropriation of more than 300 million cubic meters of natural gas of the National joint stock company “Naftogaz of Ukraine” for the sum more than 1,4 billion hryvnias. The investigation is ongoing, and the related assets transferred to the management of the National Agency for management of assets of corrupt officials (ARMA).
October’s competition results, ARMA has entered into a management agreement with the heating company “Garant Energo M”. But the company with their responsibilities failed, and therefore, this week ARMA terminated the contract.
On Wednesday licenses for the production of thermal and electric energy for freezing of the cities received the company “Naftogaz Heat”, part of “Naftogaz of Ukraine”, and on Thursday began the supply of heat.
As for the guilty officials, the Cabinet has responded quite sharply. “The government is attracted to a disciplinary responsibility of the user of ARMA for the admission of the disruption of the heating season in the region and suspended her from duty,” said Prime Minister Alexey Goncharuk.
On the eve of the incident, the government reversed the decision on establishing the maximum tariffs for heat. We are talking about the decision of the government of Vladimir Groisman on the limitation of the tariff for heat in Ukraine at the level of 1400 UAH per Gcal in the presence of a counter and 35 hryvnia per square meter – the meter that is below the weighted average rate in the country.
Commenting on the step taken, the Prime Minister assured that this will not affect the real price of district heating for the citizens, because the decision was initially illegal, and some local authorities are not going to implement it and wanted to challenge in court. Moreover, Goncharuk said that the Cabinet together with the President’s team working on the reduction of tariffs.
According to the Minister of energy and environmental protection Alexey Argelia, consumers from January will be offered “insurance price” of gas, which will be about seven thousand hryvnias per thousand cubic meters without the shipping costs.
“People will offer a insurance the price of gas, they can choose to end the heating season. It will be even less than the price for the first quarter of 2019. This so-called market instrument called “contracts for the future,” he said.
The Minister explained that the new tool is essentially hedged against the sharp rise in prices and the proposed price will be stable until the end of the heating season will be lower than the prices of January-March this year.
By the way, the issue of gas prices for the population should be consistent with the conditions of the new program of cooperation of Ukraine with the International monetary Fund.
Negotiations with the IMF
This week, the IMF mission arrived in Kyiv on 14 November to discuss a new cooperation program, terminates. A statement on the results of the mission are not yet available…
Commenting on the talks, the Prime Minister did not name the specific timing of the launch of the new program and its parameters, offering to wait for the results of the mission.
“I believe that in working with the International monetary Fund tremendous progress over the past two months. We much better understand each other and made a lot of steps forward. I see tremendous progress and expect that this work will yield results in the near future,” – said Goncharuk.
The decision of the lender will find not only in Ukraine. This week the ambassadors of the countries “the Big seven” (USA, UK, Canada, France, Italy, Germany and Japan) stated that the new program with the IMF is crucial for the macroeconomic stability of Ukraine.
Understand this and the authorities. “The continuation of cooperation with the IMF is now one of the priorities of Ukrainian authorities”, – said the head of the NBU Yakov Smoliy during the meeting with the interim attorney of the USA in Kiev William Taylor.
Most likely, the details of agreements of Ukraine with the lender will be a key event in the economy next week.