The Cabinet of Ministers announced reform of the “Ukroboronprom” and gave the state property Fund for privatization of two hundred state-owned enterprises, the economy Ministry announced revised macroeconomic forecast for the next three years, and the hryvnia strengthened slightly are the key economic news this week.
The Ministry of economic development, trade and agriculture this week announced a revised forecast for economic and social development of Ukraine for the years 2021-2023.
The Agency expects, according to the baseline scenario, recovery of the positive trend of development of the national economy after the significant losses caused by pandemic COVID-19, and predicts Ukraine’s GDP growth at 4.6 per cent in 2021, 4.3 percent in 2022 and 4.7 percent in 2023.
The consumer price index (December to December of the previous year) is expected at the level of 107.3% in 2021, to 106.2 percent in 2022 and to 105.3 percent in 2023.
Also, the Ministry of economy predicts an increase in real average monthly wages by 12.1% in 2021, 6 percent in 2022 and 5.1 percent in 2023. The unemployment rate in 2021 will amount to 9.2 percent in 2022 will be reduced to 8.5 percent, in 2023 – to 8 percent.
Forward-looking macro will be the basis in preparing the draft state budget of Ukraine for 2021.
The Ministry thus recognizes that the realization of this forecast will be possible in the case of a quick overcoming of the spread of coronavirus. However, only 10 percent, the economy Ministry experts believe that the risk of further waves of the pandemic in the world.
Alternative crisis scenario of development of economy of Ukraine is based on assumptions of deployment of subsequent waves of the pandemic, the need for additional quarantine measures and prolonged recession of the global economy.
“As a result, at the end of 2023 will not be able to reach dependency level of development… In this scenario, the projected fall in GDP in 2021 at the level of 4-5 percent, followed by moderate growth for the period 2022-2023 years at the level of 1.8 percent annually,” – said in the forecast of the Ministry.
By the way, this week the state statistics service reported that consumer inflation in Ukraine in July 2020 in annual terms, compared with July 2019 – amounted to 2.4%, as in June.
Compared with the previous month, consumer prices in July decreased by 0.6% and year – to-date rose 1.4%.
The next reform of the “Ukroboronprom”
This week, the Vice Prime Minister – Minister of strategic industries Oleg Urusky announced the government’s plans to transform the state concern “Ukroboronprom”. Reform are going to start with a change of management.
“In the form in which today there is concern, it will not exist. Management on it also change. As far as I know, in the near future should be a change of leadership of the group and the whole team that worked there last year,” said Urusky.
After this statement, questions arose whether the power of a clear plan for the development of the concern. After all, aivaras Abromavicius, who was appointed the General Director of “Ukroboronprom” August 30, 2019, said that initially went for the position to begin a financial and forensic audit (review of financial-economic activities of the company aimed at identifying fraud), to develop strategic documents and make a new team.
“For 11 months we got almost 70 people in the group of 260 people, that is all deputies of the General Director of all the new people and changed almost 30 heads of the largest enterprises. Now I’m 11 months in this position, and this three or four times more than I had planned, and what were the arrangements personally with the President”, – noted the General Director of “Ukroboronprom” at the end of July.
Then Abromavicius stressed that the new team will continue to work, and he can resign and take a seat in the Supervisory Board of the concern.
On this same week we hear about the government’s plans to change the leadership of the group and the whole team.
When the new management and reform “Ukroboronprom”, is unknown. One thing is clear that in the end, the concern will perform quite different functions.
“Ukroboronprom” will turn into a state holding company. It will be a management company with completely different functions that are available today in the group, with a minimum of intervention in the economic activity of holdings that will be in this company,” – said Urusky.
The extension of privatization
This week the Cabinet passed two hundred public facilities in the state property Fund for further privatization. In particular, the transmitted state enterprises and objects that are subordinate to the Ministry of economy, National Academy of Sciences, the state Reserve, Ministry of defense, Gospodarevskaya and other agencies.
It should be noted that during the meeting, Minister of economic development, trade and agriculture Igor Petrashko suggested for the privatization of 211 objects, but Ministers have been comments to the list of objects.
In particular, the proposal of the Minister of strategic industries Oleg Urusky from the list of “for further study of the feasibility of transferring the state property Fund” to exclude state-owned enterprises 19.
Also the acting Minister of energy Olga Bukovec noted that the listing of coal mines contrary to the law on the peculiarities of privatization. On her initiative from the list of eliminated the “lvovugol”, “Mine “Hope”, “lisichanskugol” and “Ukrenergobud”.
Meanwhile, the process of the transfer of enterprises for privatization is not satisfied with the head of the state property Fund Dmytro Sennichenko. Earlier, he lamented that the Cabinet five months to agree on a list of objects of small privatisation.
“Another portion of the transmission facilities to the Fund is “umpteenth” circle and five months of discussions, the list was reduced from 360 to 253 objects,” said Sennichenko.
In the future with alcohol
This week, the Cabinet approved a program of reforming the alcohol industry in 2020-2023 years.
The adopted resolution provides for the improvement of the state policy on development of the industry, the fight against the shadow market of alcohol, the share of which in Ukraine is 50 percent, creating conditions for a competitive market and the like.
It is expected that the program implementation will allow to increase volumes of production and sales: food grade ethyl alcohol at 20 per cent, ethyl alcohol denatured for technical needs – 20 per cent ethanol – 10 percent, distillates and alcoholic beverages – by 15 percent.
It is also expected to reduce the shadow market of alcohol and the creation of 500 jobs. These steps needs to attract investment in the modernization of the alcohol industry and increase the export potential of Ukraine.
In addition, the Cabinet approved investment plan of state-owned enterprises operating in the electricity market, “Guaranteed buyer” for the years 2020-2022.
In particular, it is planned to purchase the software to predict future production and the amount of electricity of electric energy by the “green” tariff, to create a website and state-owned communication system.
Another important decision of the government was the redistribution of 1.1 billion public subsidy for the reconstruction of objects of social infrastructure.
“The program is focused primarily on areas that had received the largest number of immigrants, so the funds are more directed to local budgets of Luhansk, Donetsk, Kharkiv, Dnipropetrovsk and other regions”, – said the Prime Minister Denis Shmyhal.
The strengthening of the hryvnia
This week, the hryvnia Ukrainians pleased with the slow but sure strengthening. So, Monday, August 10, the national currency appreciated by 28 cents. As of Friday, the national Bank set the official exchange rate of hryvnia to the dollar at the level of 27.41 UAH/USD. The exchange rate of hryvnia to the Euro on Friday was set at the level of 32.42 UAH/EUR, that is, the hryvnia strengthened against the Euro by 26 cents compared with Monday.
The positive trend gives grounds to believe in the stability of the national currency. So says the Minister of Finance, Sergei Marchenko, who said that now there are no preconditions to ensure that the rate fell to 30 UAH/USD.
“I see no prerequisites for the achievement of the course 30. And do not see the tools through which any one can affect the price movement in this direction,” he said.
According to him, given the quarantine, import volumes in Ukraine decreased by 18 percent, while exports fell only 6 percent.
“That’s actually equaled the balance of payments of the state. The outflow of currency from the country has decreased, and this reduces the pressure on the currency market”, – said the Minister.
According to Marchenko, the country the prospect of economic recovery, evidenced by growth in retail trade, i.e. consumer demand.
Next week promises to be busy economic events. On Wednesday, the Cabinet plans to consider the candidacy for the post of Chairman of the Board of “Ukrzaliznytsya” will also be a signed contract on concession of the port “ol” and farmers will continue to harvest, including watermelons, their volume is expected to surpass the previous year.