HomeAnalyticsDaily Highlights: 23/12/2014

Daily Highlights: 23/12/2014

The Parliament have abolished the non-aligned status of Ukraine . The government introduced a draft budget and legislation package as its foundation in the Parliament  Terrorist threat increased in Ukraine.

Key Events In Ukraine

●      The Cabinet of Ministers submitted a draft of the state budget and a legislation package on which it is based to the Parliament. Minister of economy Mrs Yaresko presented the main provisions of the budget and planned changes to the tax and budget codes to the MP’s. According to her, the proposed innovations will lead to real decentralization of state financial management, reduce the number of taxes and ease the tax burden, eliminate of offshore schemes and deshadow economy. Natinonal currency hryvnya (UAH) FX  rate on which the budget was calculated is 17 UAH / USD. Third of the budget will be spent on defense and debt repayments.
Minister of Economic Development and Trade Abromavicius introduced a bill on simplification of the business environment which reduces a number of licenses and permits to Verkhovna Rada.
Prime Minister Yatsenyuk urged the representatives of the parliamentary majority to demonstrate political responsibility. The majority has to take part in revision of the government legislation pakage and the budget and approve them. Verkhovna Rada adopted the decision to consider the government bills and the budget as a package to vote the budget on Tuesday, Dec. 30.
●      Verkhovna Rada canceled neutral status of Ukraine by an overwhelming majority. It  opens the way for the country to join the NATO.
The bill expanding the powers of the National Security Council has not received the required number of votes and will be voted up again on December 25 after the changes will be done.
The first session of the parliament will be held without vacation and ends on the first day of the next session, February 3.
●      The Government approved the macro economy forecast for 2015 based on two models of the situation development. Both scenarios involve the fall in real GDP and real wages, a decrease in productivity and a fall in exports and imports of goods and services.
●      Defense Minister Poltorak announced the principles of the next stage of mobilization, which will begin January 20, 2015. Reserve officers will be called first and study additional courses in military academies. The privates will be trained at the training centers.
●      Ukraine buys gas in Norway almost one and a half times cheaper than from “Gazprom”.
“Naftogaz” paid the second part of the debt to “Gazprom” in the amount of $1.65 billion.
●      NBU Council has decided to oblige the National Bank to coordinate its monetary policy decision and called NBU decissions ineffective.
●      The official FX rate of hryvnia was slightly strengthened: 15.66 UAH / USD (-0.19 UAH), 19.20 UAH / EUR (-0,27 UAH),  2.77 UAH / 10 RUR. (+0.16 UAH)

War in Ukraine

●      According to the Minister of Defence Poltorak, in the combat zone in the Donbass Ukrainian army fighting against the troops of about 30 thousand people, about 8000 of them are a Russian regular units. He consider the situation as occupation.
●      The headquarters of the antiterrorist operation reports that the situation in areas of military clashes did not change significantly, the militants continued shelling and attacks Ukrainian positions and residental localities.
●      The situation with food supply in the occupied territories of the Luhans’k region becomes catastrophic, with militants stoling most humanitarian aid from Russia.
●      Terrorist threat increasing in Ukraine. Explosion happened in Odessa near the office of Euromaydan activists. Sabotage group blew up a railway bridge in Mariupol (Donets’k region), the explosions on two bridges were prevented.
●      Donets’k and Luhans’k “republics”’ representatives went to Minsk to take part in the contact group negotiatons to resolve the situation in Eastern Ukraine without an invitation.
●      The number of temporary displaced people registered with the Ministry of Social Policy has reached 730,000 people.

Ukraine and the World

●      US State Department spokesman Mrs. Harf said the United States fully supports the policy of “open doors” for the NATO. All applicants will be considered by all members of the Alliance.
●     Russian President Putin signed a law which will ban federal and regional officials, employees of the central bank and large state owned companies to have accounts in foreign banks since January, 1, 2015.
●      Moscow has threatened that the Verkhovna Rada’s decision to abolish the non-aligned status will have severe consequences for the resolving of Ukrainian crisis.
●      According to the Minister of Foreign Affairs Mr. Klimkin, Ukraine and the NATO are already working on a new cooperation program for 2015, taking into account the planned reforms of the Ukrainian legislation.
●      International rating agency Moody’s lowered the credit rating of “Gazprom” and is preparing to review the ratings of the largest Russian companies.
Russian Prime Minister Medvedev predicts deep recession in the economy. Standard & Poor’s agency is preparing to reduce Russia’s credit rating for borrowing in a foreign currency.
●      Arms Trade Treaty  took effect  after 60 countries have ratified it. It defines standards for trade of conventional weapons – firearms, artillery and armored vehicles.


●      Temporary special commission will check the activities of 197 judges who have delivering their verdicts against the activists of the Maydan at the request of the General Prosecutor’s Office. Existing High Qualification Commission continues its work due to the legal loophole in the law “On the recovery of a trust in the judicial system.”
●      The inclusion of pro-Russian politician Medvedchuk, which is the godfather of Russian President Putin, into the group for the release of POW’s has been taken as a treason by operating and retired officers of the security services.
●      Experts of banking sector believe that the head of the NBU Gontareva held its chair only due to close personal ties with the Deputy Governor of the IMF Lagarde and complete loyalty to the President Poroshenko.
●      Economists predict changes in the budget and its sequestration immediately after its adoption due to the lack of time to prepare the draft budget and unreal figures of expenditure and income, on which it based.
●      Activists of “Credit Maidan” held a meeting near Verkhovna Rada. They protested against the rise of the dollar exchange rate which was triggered by the National Bank activity. As a result people who have taken their loans in a foreign currency went broke. Parliament Speaker Groisman instructed profile committees of the Parliament to help solve the problems of borrowers.
●      Parliament is working on a bill that would grant the status of combatants to volunteer fighters. Status has been already received by more than 6100 people.
●      The real economy players are urging the government to abandon the lengthy power outage of working enterprises,  because of this may lead to stop their work and drastically reduce budget revenue.


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