UKRAINIANECONOMIC AND FINANCIAL DEVELOPMENTS

FOR THE WEEKENDING JANUARY 21.

 

27 JANUARY2000

SOURCE: USEMBASSY KIEV

 

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SUMMARY

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1. THIS CABLESUMMARIZES UKRAINIAN ECONOMIC AND

FINANCIALDEVELOPMENTS WRITTEN ABOUT IN THE PRESS

DURING THE WEEKENDING JANUARY 21.  THE PRESIDENT

APPOINTEDTHREE DEPUTY ECONOMIC MINISTERS. THE IMF

MISSIONDEPARTED WITHOUT RECOMMENDING A RESUMPTION OF

EFFDISBURSEMENT TO UKRAINE. THE GOU BEGAN CONTACTING

FOREIGN BONDHOLDERS ABOUT DEBT RESTRUCTURING. SOME

CURRENCYRESTRICTIONS WERE LIFTED. PARLIAMENT

APPROVEDVOLODYMYR STELMAKH AS NBU GOVERNOR, BUT THE

VOTE MAY BECHALLENGED.  THE NBU STATED ITWOULD NOT

CONDUCTMONETARY POLICY TO SUPPORT THE EXCHANGE RATE.

PARLIAMENTAMENDED LAND COST INDEXING PROCEDURES. END

SUMMARY.

 

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RESIDENTAPPOINTS DEPUTY ECONOMIC MINISTERS

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2. PRESIDENTKUCHMA RE-APPOINTED VIKTOR KALNYK AS

FIRST DEPUTYECONOMICS MINISTER AND BOTH IHOR SHUMYLO

AND ANDRIYHONCHARUK (FORMER MINISTER OF FOREIGN

ECONOMICRELATIONS AND TRADE) AS DEPUTY ECONOMICS

MINISTERS,THE PRESIDENTIAL PRESS SERVICE REPORTED.

 

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IMF MISSIONPOSTPONES DECISION TO RENEW DISBURSEMENTS

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3. WHILEVISITING KIEV JANUARY 11-22, INTERNATIONAL

MONETARY FUND(IMF) MISSION HEAD MOHAMMED SHADMAN-

VALAVI SAIDTHAT HE WOULD NOT RECOMMEND THE IMF BOARD

OF DIRECTORSRENEW DISBURSEMENTS TO UKRAINE UNDER ITS

EXTENDEDFUNDING FACILITY (EFF) PROGRAM THIS MONTH.

THE IMFSUSPENDED THE PROGRAM IN SEPTEMBER BECAUSE THE

GOU FAILED TOIMPLEMENT REQUIRED REFORMS.

 

4. ACCORDINGTO SHADMAN-VALAVI, THE VISITING IMF

MISSIONAPPROVED THE GOU'S REFORM PROGRAM AND FOREIGN

DEBTREPAYMENT PLANS, BUT WOULD NOT CONSIDER RENEWING

CREDIT TOUKRAINE UNDER ITS USD 2.2 BILLION EFF

PROGRAM UNTILAFTER PARLIAMENT RATIFIED THE 2000 STATE

BUDGET.  ACCORDING TO PRIME MINISTER YUSHCHENKO,THE

GOU NOWEXPECTED TO SUBMIT A CORRECTED DRAFT 2000

BUDGET TOPARLIAMENT IN EARLY FEBRUARY.

 

5. LAST YEAR,UKRAINE REPAID MORE TO THE IMF THAN IT

RECEIVED.  UKRAINE REPAID LOANS WORTH USD 558.5

MILLION, PLUSAN ADDITIONAL USD 109 MILLION IN

INTEREST.  UKRAINE RECEIVED LOANS WORTH USD 446.6

MILLION IN1999.

 

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GOUNEGOTIATES DEBT RESCHEDULING

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6. THE GOUDID NOT MAKE PAYMENTS ON USD 18 MILLION

WORTH OFBONDS MATURING ON JANUARY 20, ACCORDING TO

INTERFAX-UKRAINE.  THE BONDS, WHICH WERE ISSUED BY

CHASEMANHATTAN BANK LUXEMBOURG S.A., WERE ORIGINALLY

RESCHEDULED18 MONTHS AGO.  ACCORDING TO PRIME

MINISTERYUSHCHENKO, THE GOU WAS CONDUCTING

NEGOTIATIONSAND WOULD AVOID DEFAULT.  ACCORDINGTO

ING BARINGS,THE INVESTMENT BANK CHOSEN BY THE GOU TO

MANAGE THERESCHEDULING OF UKRAINE'S FOREIGN DEBT, THE

FINANCEMINISTRY COMPLETED PREPARATIONS FOR AN

EXCHANGEOFFER ON UKRAINE'S FOREIGN COMMERCIAL DEBT

COMMITMENTSAND WILL MAKE THE OFFER TO ITS CREDITORS

FORMALLY INEARLY FEBRUARY.  THE GOU PLANNED TO

RESCHEDULEBONDS WORTH USD 1.9 BILLION MATURING IN

2000 AND2001, ACCORDING TO AN ING BARINGS' PRESS

RELEASE.

 

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SOME FOREIGNEXCHANGE RESTRICTIONS LIFTED

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7. ON JANUARY20, AN NBU RESOLUTION ALLOWING BANKS TO

ISSUE FOREIGNCURRENCY LOANS TO UKRAINIAN COMPANIES

CAME INTOEFFECT.  THE RESOLUTION ALSO LIFTEDTHE BAN

ON THEPURCHASE OF FOREIGN CURRENCY AT THE DOMESTIC

MARKET TOREPAY FOREIGN CURRENCY LOANS.

 

8. ANOTHERNBU RESOLUTION, SCHEDULED TO COME INTO

EFFECTJANUARY 28, WILL ALLOW COMPANIES WITH FOREIGN

CAPITAL THATWERE CREATED BETWEEN 1992-1996, TO CHOOSE

WHAT TO DOWITH THEIR FOREIGN CURRENCY REVENUES.

THESE JOINTVENTURES WERE PREVIOUSLY OBLIGED TO SELL

THEIR FOREIGNCURRENCY REVENUES AT THE INTERBANK

MARKET.  A SIMILAR PROVISION HAD BEEN INCLUDEDIN THE

LAW "ONFOREIGN INVESTMENT," WHICH IS NO LONGER IN

EFFECT.  THE RESOLUTION ALSO ALLOWED OTHERECONOMIC

ENTITIES  (I.E., UKRAINIAN COMPANIES, OR FOREIGN

COMPANIESREGISTERED LATER THAN 1996) TO ASK THE NBU

THAT THEREQUIREMENT TO SELL FOREIGN CURRENCY REVENUES

BE WAIVED ONAN INDIVIDUAL BASIS.  THE TWOMEASURES

WERE INTENDEDTO LIBERALIZE CURRENCY REGULATIONS AND

ENCOURAGEBANKS TO LEND TO COMPANIES.

 

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RADA MAJORITYAPPROVES STELMAKH AS AN NBU GOVERNOR

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9. ON JANUARY21, 239 PARLIAMENTARIANS APPROVED

VOLODYMYRSTELMAKH'S APPOINTMENT TO THE POSITION OF

NBUGOVERNOR.  ALTHOUGH A MAJORITY OFPARLIAMENTARIANS

APPROVED THEAPPOINTMENT, THE VOTE MAY BE CHALLENGED

BECAUSE OFPARLIAMENT'S SPLIT INTO RIVAL ASSEMBLIES

AND THEREFUSAL OF PARLIAMENT SPEAKER TKACHENKO TO

SIGN THEDECISION.

 

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HREBENYK: NBUNOT TO LIMIT HRYVNIA SUPPLY

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10. THE NBUWILL NO LONGER MANIPULATE THE HRYVNIA

MONEY SUPPLYTO MAINTAIN EXCHANGE RATE STABILITY, NBU

MONETARYDEPARTMENT HEAD HREBENYK ANNOUNCED JANUARY

20.  SHE SAID THAT THE MONETARY SITUATIONHAD CHANGED

SINCE THE ENDOF 1999, WHEN EXPANSION OF THE MONEY

SUPPLYRESULTING FROM LARGE SOCIAL PAYMENTS MADE PRIOR

TO THEPRESIDENTIAL ELECTIONS WEAKENED THE HRYVNIA'S

STABILITY.  HREBENYK CHARACTERIZED THE CURRENTMARKET

SITUATION AS"NORMAL" AND SAID THAT THE MONETARY

SUPPLY LEVELWAS "WELL REGULATED." HREBENYK

IDENTIFIEDINTEREST RATE REDUCTION AND INCREASED BANK

LENDING ASPRIORITIES OF THE CURRENT NBU POLICY.

 

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PARLIAMENTINTRODUCES LAND COST INDEXING

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11. ONDECEMBER 22, PARLIAMENT AMENDED THE LAND FEE

PAYMENT LAWTO INTRODUCE A PROCESS BY WHICH LAND

VALUES CAN BEADJUSTED.  EVERY YEAR ON JANUARY 1,A

COEFFICIENTDETERMINED BY THE CABINET OF MINISTERS

WILL BE USEDTO REASSESS LAND VALUE.  BECAUSELAND

ASSESSMENTSWERE NOT PREVIOUSLY INDEXED, DEVALUATION

DECREASED THEAMOUNT OF FEES THAT WERE COLLECTED BASED

ON LANDVALUE.  LAND VALUES ARE USED TOCALCULATE LAND

RENT, FEESFOR REGISTRATION OF LAND RENT CONTRACTS,

AND FOR LANDPRICE DETERMINATION FOR SELLING PURPOSES.

 

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EXCHANGERATES

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12.HRYVNIA/DOLLAR EXCHANGE RATES WERE AS FOLLOWS:

 

                01/17  01/18  01/19  01/20  01/21

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OFFICIALRATE    5.4253 5.46045.5191 5.5253 5.5227

INTERBANKRATE   5.5800 5.5843 5.57565.5463 5.5271

KIEV CASHRATE   5.6205 5.6365 5.65385.6594 5.6545

MOSCOW CASHRATE 5.6880 5.6480 5.6500 5.6420 5.6520

 

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UICEXPRECIOUS METAL TRADING

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13. TRADINGIN PRECIOUS METALS AT THE UICEX FOR THE

WEEK WAS ASFOLLOWS:

 

SILVER    UAH   47.89 PER ONE TROY OUNCE

GOLD      UAH 1913.89 PERONE TROY OUNCE

PLATINUM  UAH 2480.23 PER ONE TROY OUNCE

PALLADIUM UAH2057.27 PER ONE TROY OUNCE

 

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MAIN STOCKINDICES

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14. RESULTSOF UKRAINE'S MAIN STOCK INDICES FOR THE

WEEK WERE ASFOLLOWS (AS OF JANUARY 20):

 

                   WEEKLY CHANGE, PCT

INDEX          POINTS    IN UAH    IN USD

-----          ------    ------    ------

WOOD-15       1160      8.43     5.22

PFTS          43.14     4.10     N/A

 

 

15. KEYINTEREST RATES FOR THE WEEK WERE AS FOLLOWS

(AS OFJANUARY 20, 1999):

 

NBU DISCOUNTRATE:  45 PCT (SINCE 24 MAY 1999)

NBU LOMBARDRATE:   50 PCT (SINCE 24 MAY1999)

 

KIEVINTERBANK     AVG. ANNUAL   CHANGEFROM

   RATES              PCT      LAST WEEK,PCT

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  ONE-DAY             23.6           10.9

  SEVEN-DAY            34.5           2.4

  14-DAY              45.0           -1.6

  30-DAY              59.5          -6.7

  60-DAY              55.0         -22.5

  90-DAY              55.0         -25.0