HomeAnalyticsDaily Highlights: 22/12/2014

Daily Highlights: 22/12/2014

Kazakhstan will supply coal to Ukraine. Budget 2015 will be adopted on Thursday. The National Reform Council is established. The government failed to cut off all social benefits. Volleys of cannonade is thundering again in Donets’k.

Key Events In Ukraine

  • Kazakhstan’s President Nazarbayev visited Kiev with an official visit. He urged the Russian Federation to preserve the territorial integrity of Ukraine, however, he called the military action in the Donbass “civil war.” Agreement to supply coal to Ukraine and the further development of military-technical cooperation have been reached.

  • The leaders of Ukraine, Russia, France and Germany have agreed to resume the negotiations of the Minsk contact group to settle the crisis in the Donbass on December 24 and 26.

  • Verkhovna Rada plans to review and adopt the state budget of 2015 under an accelerated procedure and to work without winter holidays.
    The bill to abolish the non-aligned status will be considered during this week.

  • The changes in the Tax Code criticized by the business community is planned to be cancelled. Also tax rates for big business will be increased.

  • President Poroshenko approved the personalities in the National Reform Council. It includes the country’s leaders, ministers experts and civil activists. The Board will monitor the implementation of key reforms and perform collective decision-making on important economic issues for the country.

  • The government intends to gradually reduce the unified social tax down to 15% until 2017. The bill to abolish the 18 types of licenses and permits was introduced.
    The increase of retirement age is not planned. Scholarships for students will not be canceled.

  • Minister of Economic Development and Trading Abromyavichus said that the government intent to sell 900 state-owned objects out of 1500 available in 2015. Privatization of 300 enterprises will be banned.

  • The Ministry of Defence confirmed that the benefits for the servicemens will not be reduced in 2015. The concept of army supply reform prepared by volunteers has been approved. The international auditing firm KPMG will conduct audit of the ministry for free.

  • According to the President Poroshenko, up to 20% of the industry of the country is located on the occupied territory of Donbass, half of it is destroyed.

  • Association of metallurgical enterprises of Ukraine reported the increase of industry losses by almost 50% compared to 2013 up to 14.5 billion hrivnya, sales fell by 15%.

  • Poland supplied 250 tons of food and military uniforms as an aid to Ukraine.

  • National Bank continues to gradually reduce the official hryvnia FX rate: 15.85 UAH / USD (+0.08 UAH), 19.47 USD / EUR (+0,10 UAH), 2.61 UAH / 10 RUR (-0.04 UAH).

War in Ukraine

  • Militant assaults on the Ukrainian positions does not stop. Shelling of Dones’k resumed after the arrival of the next “humanitarian convoy” from Russia. Peski and Avdiyivka were shelled by militants’ “Grad” rocket launchers. The activity of sabotage groups near Mariupil has increased.

  • NSDC Secretary Turchinov declined the joint patrolling of the line of fighting in the Donbass by Ukrainian and Russian soldiers which OCSE mission have announced in its report earlier.

  • In response to the blackouts imposed by UkrEnergo, the Crimean authorities have announced restrictions of power supply to make energy system sustainable.

Ukraine and the World

  • Russian President Putin said that the outflow of capital from the country for the last year amounted to $120-130 billion. 50% of it is a Russian citizens’ exchange transactions.

  • Russian Prime Minister Medvedev commenting on the introduction of the draft law to cancel the non-aligned status and joining NATO to the Verkhovna Rada said that the decision turns Ukraine into a potential military enemy of Russia.

  • European Commission President Juncker confirmed the EU’s readiness to provide a third package of macro-financial assistance of € 2 billion in early 2015.

  • Finland stepped up its patroling of the waters of the Baltic Sea due to increased presence of the Russian Navy.

  • The report of the US Trade Representative on implementing of the WTO Agreement refers to the unreasonable restrictions imposed by the Russian Federation against the other members of the organization. Earlier in August, the EU announced plans to appeal the Russian trade embargo imposed in response to the sanctions of the West against the largest Russian companies.

  • Moscow court upheld the arrest of Ukrainian pilot Ms Savchenko, which the Russian authorities accused of the murder of two journalists in the Luhansk region. Ms Savchenko went on a hunger strike demanding her recognition as a POW.

Trends

  • According to experts, the situation on the Ukrainian FX market will stabilize before the Christmas and New year holidays, but the trend could not be maintained if Kiev does not receive the promised tranches of financial assistance from the EU and the US.

  • Presidents of Kazakhstan and Belorussia visits to Kiev demonstrate the internal contradictions within the Customs Union and the desire of its members to conduct their own policy because of sanctions against Russia which was imposed by the EU and the US.

     

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