Capital investment in Ukraine’s economy fell 28% yoy last year, to $15 billion, reports the State Statistics Service. Investment in industry and agriculture fell by 34%; in construction by 36%; in retail by 29.5%; in real estate transactions by 29%. Investment in computers and telecom grew by 1.2%.
Two thirds of capital investments came from company funds. State budget funds accounted for 9%. Foreign investors accounted for only 0.4%. The drop in 2020 came after an 11% increase in 2019. During 2020, the drop deepened with every quarter, finishing with a 43% drop in the fourth quarter of 2020, compared to the same quarter of 2019.
Directing infrastructure investments into Luhansk, Ukraine’s easternmost region, Ukravtodor plans to pave three key road sections this year, totaling 176 km. By comparison, from 2014 to 2019, a total of 30 km of roads were repaired in the region, Alexander Kubrakov, CEO of the state highway agency, said Wednesday at the Ukraine 30 Infrastructure Forum. The World Bank and the European Investment Bank are helping to fund this year’s road work. Kubrakov said: “We will try to expand this project to the Donetsk region, our international partners are interested in this.”
As medical teams started vaccinating yesterday in all 24 regions, the Health Ministry reported a 40% spike in the daily toll of detected cases – 8,147. By March 31, Ukraine is to receive 2 million doses of of the Oxford/AstraZeneca vaccine, enough to vaccinate 1 million people, Health Minister Maksym Stepanov said on TV Ukraina yesterday.
President Zelenskiy has appointed former finance minister Oksana Markarova as ambassador to the United States. The president’s office said Thursday: “Oksana Markarova will set an example in the development of economic diplomacy: in attracting foreign direct investment in Ukraine, in promoting Ukrainian exports and defending the interests of Ukrainian business.”
Ukroboronprom and Pakistan have signed an $85.6 million contract for the repair of the main battle tanks that Ukraine sold to Pakistan between 1997 and 2002. The Soviet-design T-80UD tanks were manufactured in Kharkiv at the Malyeshev Factory. After an initial shipment in 1997, Russia protested that Ukraine did not have export rights and withheld key components. Ukraine filled part of the order from stocks, then fabricated parts to complete the full order for 320 tanks.
The maintenance contract with Pakistan was signed at IDEX-2021, the week-long international arms exhibition that ended yesterday in Abu Dhabi. “The Ukrainian delegation reached a number of preliminary agreements with the UAE, Saudi Arabia and Jordan in the areas of high-precision weapons, unmanned platforms, space technologies, and aircraft engine repair,” Interfax-Ukraine reports. Strategic Industries Minister Oleh Urusky headed Ukraine’s mission and wrote on Facebook that he met with Brazil’s Deputy Defense Minister Marcus Pontis.
Ukraine accuses Russian hackers of trying to disseminate malicious documents through a web-based system on which government documents are circulated. The aim was to contaminate information resources on the System of Electronic Interaction of Executive Bodies, Ukraine’s National Security and Defense Council said. “The methods and means of carrying out this cyber attack allow (us) to connect it with one of the hacker spy groups from the Russian Federation,” the council said. Separately, on Monday, Kyiv accused Russian internet networks of attacks on Ukrainian security and defense websites.
Microsoft President Brad Smith told the Senate Intelligence Committee in Washington Tuesday. Smith said: “We’ve seen substantial evidence that points to the Russian foreign intelligence agency, and we have found no evidence that leads us anywhere else.” At least nine government agencies and 100 private companies were breached. White House press secretary Jen Psaki said Tuesday it will be “weeks, not months,” before the U.S. responds to Russia.
Ukrainians spend $4.2 billion on imports of new and used vehicles last year, reports Ukravtoprom, the car industry association. Car imports were down by 11%, to 486,300, or $3.5 billion. Almost 100,000 cars were imported from Germany, making it the top source. As restrictions on diesel cars spread in Germany, prices on late model diesels have dropped, making them attractive to Ukrainian buyers. Sales of trucks and vans dropped by 16%, to 43,500. Germany was also the top supplier.
Over the next five years, up to $500 million will be invested to develop a year round resort in mountains around the century-old Carpathian resort of Slavske, Lviv region. Phase one will include 20 km of ski trails and hotels and ski-in ski-out condos, that Vasyl Danyliak, first vice president of OKKO Group, the lead investor. Danyliak and Oleksandr Shevchenko,co-owner of Bukovel, signed an agreement Wednesday with Ukravtodor on development of roads to support Carpathian mountain tourism.
The tourist flow and spending has not changed this winter at Bukovel, Shevchenko told Interfax-Ukraine at the Infrastructure Forum. Tourist spending averages €150 per day. Many skiers and snowboarders bought their passes last summer at a 50% discount. Shevchenko said that $15 million was invested in Bukovel last year. Looking ahead, he said the resort owners would like to invest in storing the terminal at Ivano-Frankivsk airport, if the Infrastructure Ministry rebuilds the old Soviet runway.
HBO, the US pay TV network, is negotiating with Ukraine to create an “offline attraction” in the Chornobyl Zone, deputy presidential chief of staff Kyrylo Tymoshenko, told the Infrastructure Forum. “It will not be an amusement park…it will attract many foreign tourists,” he said of the decommissioned nuclear plant, a 2-hour drive north of Kyiv. In 2019, millions of viewers around the world watched HBO’s 5-part Chernobyl miniseries. This April 26, the 35th anniversary of the nuclear disaster, marks the start of a program to memorialize the area, says Ukraine’s Culture and Information Policy Minister Oleksandr Tkachenko.
To prepare for boat tours as early as this year from Kyiv to Chornobyl, the Pripyat River was dredged last year by the Ukrainian Sea Ports Authority. To allow the passage of a boat with a maximum draft of 1.6 meters, the Authority dredged 130,000 cubic meters from the 64 km section of the river between the Kyiv Sea and the Belarus border. Environmentalists warned that dredging in the exclusion zone would stir up radioactive sediments from the 1986 nuclear plant fire. Environmental Protection Minister Roman Abramovsky responded last summer that radioactivity was monitored daily and that no river sediment was thrown ashore.
With clouds hanging over Ukraine’s deal with the IMF, President Zelenskiy is bringing back into his government two US-trained economists he let go last March – his former Finance Minister and his former Economy Minister.
Oksana Markarova, the former Finance Minister, has been nominated to serve as Ukraine’s next Ambassador to the United States. Trained in public finance at Indiana University, Markarova worked in the Finance Ministry for five years until she was let go in the mass cabinet shakeup of March 4. As Finance Minister for two years, she saw interest rates on foreign currency bonds fall to record lows for Ukraine — 2.22% in euros and 3.4% in dollars. Last January, Ukraine borrowed €1.25 billion for 10 years with a 4.73% interest rate, once again a record low rate.
A fluent English speaker, Markarova has participated in numerous negotiations with the IMF, World Bank and other foreign financial institutions. Foreign Minister Dmytro Kuleba reacted to press speculation that she was chosen to go to Washington to deal with the IMF, writing on Facebook: “The idea that Markarova is sent only to extort money from the IMF is a delusion.”
Tymofiy Mylovanov, the former Economy Minister, has been appointed as a “non-staff” adviser to Andriy Yermak, Zelensky’s chief of staff. After resigning from the Cabinet in March, Mylovanov has served as president of the Kyiv School of Economics and a Professor at the University of Pittsburgh.
Mylovanov, a University of Wisconsin-Madison graduate, is known for advocating forceful, generally free market policies. Two weeks ago on the Svoboda Slova program he advocated a hard lockdown to slow down coronavirus epidemic, saying: “We should close businesses and provide them with financing. But we don’t have enough funding now. So in essence, we need to print money.” Yermak, who is recovering from coronavirus, is seen as behind the purge of pro-Western reformers since March.
In another personnel change, the Cabinet fired on Friday Olha Buslavets, the acting Energy Minister, replacing her with Yuriy Boyko, her deputy at the Ministry. Buslavets had served as acting minister for the last seven months as the government did not have the votes to win parliamentary approval. Some media outlets and some Rada members accused her of acting in favor of Rinat Akhmetov, owner of several coal mines and electricity generation companies. Boyko, a longterm state employee previously was deputy director of Energorynok, the state-owned company that intermediated between energy producers and energy distributing companies, or oblenergos.
In a black eye for Ukraine’s investment image, a pioneer Canadian renewables investor is accusing Igor Kolomoisky and his business partners of trying steal a 10.5 MW solar plant. Built by Calgary’s TIU Canada, the plant was inaugurated in January 2018 and hailed as the first investment under the new Canada Ukraine Free Trade Agreement. Built largely to feed Kolomoisky’s Nikopol Ferroalloy Plant, the solar plant’s substation is on the Ferroalloy plant grounds. The Ferroalloy plant controls road access to the solar plant.
In the summer of 2019, Kolomoisky stopped paying the green tariff for solar and wind electricity nationwide. On March 1st, the Ferroalloy plant cut off TIU Canada from the substation. Later, in face to face talks with TIU Canada, Kolomoisky offered to buy the plant he had closed. CEO Michael Yurkovich says in a press release sent Thursday’s to Canada’s financial press: “This is a clear case of oligarchs pressuring a foreign investor and trying to steal assets.” Noting that the cutoff has cost his company €1.5 million since March, he said: “We are mustering our resources and will fight this case in Ukraine, Canada, or any jurisdiction needed to win.”
The TIU Canada plant in Nikopol is one of several completed solar plants around Ukraine that are not functioning because of problems connecting with power grids, Artem Semenyshyn, Executive Director of the Solar Energy Association of Ukraine, told Interfax Ukraine Friday. He said: “It is very bad when we lose the already built “green” generation facilities, which are now idle and do not increase the share of clean electricity.” If the government does not work to hook up these completed plants, the portion of solar power in the nation’s energy mix could start to fall, he warned.
TIU Canada’s Vita Solar is one of several dozen small renewable companies that are suing for nearly $18 million from the Guaranteed Buyer, the state company that is obliged to buy power from renewable developers. By the end of next year, the Guaranteed Buyer is to pay almost $1 billion in overdue electricity bills. Two weeks ago the Rada passed at first reading a bill to extend state guarantees to ‘green bonds’ that the government would launch to cover the debt.
President-elect Biden will be well-positioned to help President Zelenskiy fight against corruption in Ukraine, The Washington Post wrote last week in an editorial titled: “Ukraine’s anti-corruption push is stalled. Biden can help get it going again.” “Mr. Biden…has been one of Ukraine’s best American friends, visiting the country five times while Vice President and strongly supporting its battles against Russian aggression and domestic corruption,” writes the Post. “A Biden Justice Department could also renew efforts to pursue criminal corruption cases against key Ukrainian oligarchs, including Dmytro Firtash and Ihor Kolomoisky, who have been instrumental in blocking reforms and in promoting Russian interests in Ukraine.”
Ukraine averaged 14,500 new coronavirus infections on Friday and Saturday – double the level of one month earlier. Starting Saturday, police have the right to fine people not wearing masks in public places – mass transit, underground passageways, stores, and public buildings. The fines range from $6 to $9. On sidewalks, masks are encouraged, but not obligatory.
Under the current regime of weekend quarantines, 17,000 to 33,000 people could die of coronavirus in Ukraine over the next five weeks, according to a forecast by the Kyiv School of Economics. As of yesterday morning, 10,951 deaths in Ukraine are attributed to coronavirus this year.
Nationwide Ukraine, an average of 27% of PCR tests for Covid are showing positive results. “Uncontrolled outbreak” is how Pavlo Kovtonyuk, head of the School’s Center for Health Economics, described the situation in Kyiv City and nine regions: Zaporizhia, Sumy, Kyiv, Volyn, Rivne, Ivano-Frankivsk, Zhytomyr, Khmelnytsky, and Chernivtsi. In, Kyiv Mayor Klitschko reported a record 1,213 new cases on Saturday morning.