HomeAnalyticsDaily Highlights: 02/12/2014

Daily Highlights: 02/12/2014

The Parliament approved the new Cabinet. It will include foreigners who have been granted Ukrainian citizenship. Russian forces suffered heavy casualties while attacking Donetsk airport.

Ukraine

●      The Verkhovna Rada acepted resignations from MP’s that formed previous Cabinet of Ministers and appointed new ones. Most of the portfolios in the new line-up went to “Block Petro Poroshenko”. The chairs of Prime Minister, Ministers of the Interior and justice went to “People’s Front”. Ministers of Ecology, Youth and Sports as well as Agro-Industrial complex positions went to ” Self Reliance “. Among the new Cabinet Ministers, there are three that received Ukrainian citezenship by the Presidential Decree because same day. The Ministers of Defence and Foreign Affairs retained their posts.
●      Prime Minister Yatsenyuk promises to introduce a new budget code and essential changes to the tax code prior to the approval of the budget for the new 2015 fiscal year. The changes would reduce the uniform social tax, introduce progressive scale of taxation, reduce the number of taxes and change their basis.
●      Ukraine increased reverse gas deliveries from Europe by 6 percent despite a decrease of imports from Poland, provoked by Gazprom.
●      At a meeting of the NATO-Ukraine Commission, the Alliance was formally notified of Ukraine abandoning of the non-aligned status.
●      The Prosecutor General’s Office denied the withdrawal of funds from the accounts of former Prime Minister and head of the National Bank Arbuzov, which were unfrozen by Pechersk Court judge.
●      The National Bank again lowered the exchange rate of hryvnia: 15.1 UAH/$ (0.05 UAH), UAH/$ 18.84 (0.05 UAH), 2.92 UAH/10 RUR. (0.13 UAH). Limits on the withdrawal of currency from current and deposit accounts of 15 thousand UAH and foreign currency purchases of 3 thousand UAH were extended until March of 2015. The requirement to sell 75% of foreign exchange earnings except for charitable aid to the army remained unchanged. A new procedure for supervision of payment systems was approved. They are required to bring their accounting in line with the decree of the NBU within four months. Funds from correspondent accounts of unsolvent banks will be written off in an uncontested procedure. If there are insufficient funds, liens will be transferred into NBU ownership. NBU Deputy Head Shcherbakova, responsible for monetary and credit policy, has resigned.
●      The tender for the construction of 3G standard will be announced on December 9. The starting price of the license is 2.7 billion UAH.
●      Since the beginning of the year, production of steel and steel products decreased by 16%. Chark producetion declined by 20%.
●      The European Bank for Reconstruction and Development will grant a loan of 350 million euros for the construction of a new sarcophagus for Chernobyl Nuclear Reactor.

Kyiv

●      Kiev City Administration signed a contract with the company Fidomobile for the construction of a Wi-Fi network in the subway.

War in Ukraine

●      Donetsk airport again was subjected to powerful attacks by militants even after the cease-fire talks between the Russian and Ukrainian generals, who declared a new ceasefire. Russian forces and illegal armed groups sustained heavy losses. The airport remains under control of Ukrainian army.
●      Donetsk continues to be subjected to intensive attacks from the militia. The bombardment killed civilians in Trehizbenka, Schastya. Missiles from multiple rockeg launchers “Grad” damaged several apartment buildings and power lines.
●      The number of officially registered internally displaced refugees is at half a million people.
●      Food prices rose by almost 40% in the occupied Crimea compared with December of 2013. Utility prices rose by a quarter but they remain two to three times lower than in Russia.
●      The company “Cernomorskneftegaz”, expropriated by Russia, was re-registered in the Crimea. Ukraine will appeal to the Stockholm Arbitration Tribunal for the return of the company and compensation payment.

International

●      IMF Managing Director Lagarde called on donor countries to provide further financial assistance to Ukraine and said that the amount of monetary help will be determined in mid-December.
●      Cyprus joined the agreement on the tax information collection FATCA (The Foreign Account Tax Compliance Act) and will disclose the foreign assets of US taxpayers. EU and OECD (Organization for Economic Co-operation and Development) countries abandoned the bank deposit privacy in October.
●      Bulgarian and Romanian politicians claim that Russia supplies funding of anti-Government protests across their countries through “Orthodox church” organizations.
●      Russia, which is supplying grain to Iran in exchange for oil, could break the international embargo and became a subject of US sanctions.
●      In 2015, pensions in Russia will be frozen. Pension funds will be used current bill payments.
●      Vice President Biden pledged US support for the new Cabinet of Ministers of Ukraine.
●      According to the US Secretary of State Kerry, who came to Europe to discuss the increasing pressure on the Russian Federation, current sanctions have significant impact on Russia’s economy but they failed to stop the aggression in Ukraine.

Trends

●      According to Ukrainian and international experts, only decisive measures could save the country’s economy from collapse and default. The new government under Prime Minister Yatsenyuk has only two to three months for their implementation.
●      The public considers unacceptable the creation of a new Ministry for President Poroshenko’s godfather under the empty budget conditions.
 

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