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6 January 1999
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Parliament Adopts 1999 Budget
The Ukrainian parliament approved the 1999 state budget on December 31, 1998. Following article-by-article voting on proposals agreed by the parliament's Budget Committee and the Cabinet of Ministers, Parliament approved budget expenditures totaling 25,135,260,000 hryvnia and budget revenues totaling 23.895 billion hryvnia. Deputies approved a budget deficit of 1.240 billion hryvnia (1% of GDP), which will be covered by 630 million hryvnia in external borrowing and by 610 million hryvnia from domestic financial sources. 226 deputies voted for the budget's adoption.
Finance Minister: 1998 Budget Revenues Expected To Total 27 Billion Hryvnia
The 1998 consolidated budget revenues are expected to total 27 billion hryvnia, Finance Minister Ihor Mitiukov told a parliamentary session on December 25, 1998. Consolidated budget revenues in January-November totaled 24.2 billion hryvnia or 90% of the projected consolidated budget revenues for the January-November period or 81% of the projected annual revenues. State budget revenues in the January-November period totaled 12.9 billion hryvnia or 70% of the projected state budget revenues for that period or 63% of the projected annual revenues. Local budget revenues totaled 11.3 billion hryvnia or 122% of the projected annual revenues. The projected 1998 revenues were 21,101 million hryvnia.
President Kuchma Signs Decree Creating Special Economic Zone In Reni
President Leonid Kuchma on December 29, 1998 signed a decree creating a special economic zone in the port city of Reni. "Provide support for the Odessa regional administration's initiative on creating the Reni special economic zone," the decree stipulated. The Cabinet of Ministers has been directed to draft, within two months, the documents necessary for creation of the Reni special economic zone. The Danube port of Reni presently handles about 2.5 million tons of cargo per year: mainly Russian petroleum-product exports to Moldova and the Balkan states. The Reni port has an annual capacity of 15 million tons. In 1998, the governments of Ukraine, Romania, and Moldova held negotiations on creation of a free economic zone at the Danube's estuary, covering Reni, Galati (Romania), and Jurjulesti (Moldova).
Prime Minister Pustovoitenko Discloses Cabinet's Restructuring Scheme
Speaking at cabinet deliberations in Kyiv on January 4, 1999 Prime Minister Valeriy Pustovoitenko said that as a result of the ongoing administrative reform and in conformity with the Constitution of Ukraine, the nation's executive branch will be topped by the Head of Government, First Vice Prime Minister and three Deputy Premiers, who will be in charge of the combined social-financial-economic block of affairs, production and the agro-industrial complex domain with utilization of natural resources, regional development, and the humanitarian field. Under the administrative reform's scheme, the post of Minister of Cabinet will be canceled. Instead the post of State Secretary will be introduced who, in accordance with the organic law, is not allowed to be a Government member. Prime Minister voiced strong doubts as to this innovation's expediency saying the Minister of Cabinet has a lot to do in managing the government's apparatus and drafting piles of documents. Mr. Pustovoitenko also criticized plans to merge the ministries for coal-mining and for power industry though he raised no objections to a plan providing for subordinating the State Committee for oil and gas to the Economics Ministry.
Government To Tighten Control Over Management Of State Assets
"Implementation of the concept of sharing management of state assets between central and local executive organs of government is an extremely important issue for our country," Prime Minister Valeriy Pustovoitenko told the Cabinet of Ministers on January 5, 1999. He added that the issue is particularly important now because the government has practically lost control over state assets. The concept was adopted by the government in October last year and formed the basis for reformation of management of state assets, he said. According to him, the measures stipulated in the concept are aimed at improving management of the government's corporate rights. Mr. Pustovoitenko told the Cabinet of Ministers meeting that the government adopted decree On Management of the Government's issues.
Deadline For Using Privatization And Compensation Certificates Extended Till February 15
On December 31, 1998 Ukrainian Parliament extended until February 15 the deadline for selling privatization and compensation certificates. The 1998 State Privatization Program provided for using privatization and compensation certificates until December 31, 1998. Privatization is expected to be effected exclusively for cash in 1999. Deputies' decision to extended the deadline was influenced by citizens' rush to certificate auction centers, which was unable to place unsold certificates before the end of the year.
President Kuchma Approves 1999 Privatization Program
President Leonid Kuchma has signed a decree approving the 1999 State Privatization Program. The document defines the basic goals, priorities, tasks, and methods of privatization of state, and municipal assets as well as measures for implementing the program.
President Kuchma Signs Decree Improving Customs Operations
Ukraine's President Leonid Kuchma has signed the decree On Improving Customs Services Involving Goods and Other Items Under Customs Inspection. The decree is aimed at strengthening control over goods and other items being exported from Ukraine or imported into Ukraine as well as to prevent unsanctioned access to such goods and other items under customs inspection.
Government Tightens Control Over Importation Of Precious Metals
According to the Cabinet's press service in Kyiv, the Government has issued a directive to the State Custom Committee to submit monthly reports to the Hall-Mark Chamber about Ukraine's importers of precious metals, both institutions and private citizens, and the amounts of precious metals thus imported. The move is aimed at precluding smuggling of precious metals into Ukraine and their illegal marketing.
NBU Will Not Change Hryvnia Exchange Rate In First Half Of January
The National Bank of Ukraine intends to uphold the hryvnia's current exchange rate in the first half of January, Serhiy Yaremenko, director of the NBU's Currency Regulation Department, told Ukrainian News on December 28, 1998. The NBU has upheld the hryvnia's exchange at 3.4270 hryvnia/dollar since November 6. Mr. Yaremenko said the NBU intended to devalue the hryvnia slowly in 1999. "In principle, we plan to devalue the currency at a pace slower than the pace of the rise of inflation," he said. The government forecasts a 19% annual inflation rate for next year. The hryvnia fell 80.5% in 1998, including a 60% fall in the August-September period. NBU Chairman Viktor Yushchenko said on December 25, 1998 that the hryvnia would be devalued by no more than 7-9% in 1999. However, he added that a mandatory condition for this was adoption and implementation of a low-deficit budget that would enable the NBU to conduct a relatively healthy monetary policy. The 1999 state budget is based on an average exchange rate of 4.0000 hryvnia/dollar, rising to a high of 4.2000 hryvnia/dollar towards the end of the year. Mr. Yushchenko said that the exchange rate policy for next year would be formulated and announced next year after adoption of the 1999 state budget. According to him, the NBU intends to retain the existing principle of determining the hryvnia's exchange rate. NBU Deputy Chairman Oleksandr Kireyev said on December 23, 1998 that Ukraine needed to continue in 1999 the practice of setting exchange rate corridors for a full year or for six months.
NBU Lowers Mandatory Reservation Requirements And Lombard Rate To 70%
The National Bank of Ukraine has lowered the mandatory currency reservation norms for commercial banks to 15%, effective January 1.
The NBU also has lowered its Lombard rate from 92 to 70% per annum, Dmytro Rikberg, the NBU's press secretary, told Ukrainian News on December 25, 1998. The new Lombard rate is effective from December 21. Commenting on the lowering of the Lombard rate, NBU Chairman Viktor Yushchenko said that the NBU acted in accordance with its principle of upholding a 10% difference between the discount and Lombard rates. The NBU's board lowered the bank's refinancing rate from 82 to 60% on December 18, 1998 but kept the Lombard rate at 92% per annum. The refinancing rate has been reviewed six times this year and the Lombard rate seven times. The refinancing rate was raised from 35 to 44% on February, lowered to 41% on March 18, raised to 45% on May 21, 51% on May 29, and 82% on July 7 and lowered to 60% on December 21. The Lombard rate was raised from 45 to 48.5% on February 6, lowered to 45% on March 18, raised to 50% on May 21, to 56% on May 29, to 82% on July 7 and to 92% on August 18, and lowered to 70% on December 21, 1998.
The NBU's currency reserves presently stand at about 1.05 billion dollars, NBU Chairman Viktor Yushchenko told a press conference on December 25, 1998. A press release circulated at the press conference stated that the NBU's currency reserves totaled 979 million dollars as of December 16. Mr. Yushchenko said he hoped that the currency reserves would rise further in 1999 but said that this would be possible only if loans were obtained from international financial organizations. The NBU held $ 2,341 million in currency reserves at the start of this year.
Crimean Prime Minister Notes Improvements In Crimean Economy
Crimean Prime Minister Sergey Kunitsin has said that the Crimean economy showed improvements toward the end of 1998. Addressing journalists in Simferopol, Mr. Kunitsin said that his seven-month-old government succeeded in managing the prices of foodstuffs and in generating funds to pay teachers' wages at the height of the financial crisis in August. According to the Crimean prime minister, the most important task for the Crimean government is to revive industrial production. He disclosed that a strategy has been drafted to achieve this goal. He also stated his intention to pay particular importance to developing the power sector and the tourist industry. He, however, noted that full recovery in the tourist industry will take several years. Industrial output in the Crimean grew 2.35% in 1998 compared with a fall of 27% in 1997, he noted and expressed confidence that his government will be able to at least maintain this level of growth in 1999.
Ukraine Creates Shipping Security Organ
The Ukrainian government has signed decree creating a shipping security organ in implementation of Ukraine's international agreements. The organ, named the Main State Inspection of Ukraine for Shipping Security (Derzhflotinspectsiya), is charged with raising the level of transportation in Ukrainian rivers and seas and creating conditions for the operation and development of international transport corridors. Ships flying the Ukrainian flag have been included on the list of ships with poor security conditions under the Paris Memorandum on inspection of ships, according to DINAU reports. The government decree also transferred maintenance of Ukrainian waterways and canals to government enterprises controlled by the Transport Ministry.