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15 July 1998
For immediate release
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PRESIDENT KUCHMA SIGNS A PACKAGE OF ECONOMICS-RELATED DECREES
On July 11, President Leonid Kuchma signed several decrees on economics, in particular, a decree on external loan bonds, which specifies procedures for issuance and circulation of these bonds. Mr. Kuchma also signed decrees on charges involving public notaries' services and on peculiarities of privatization involving property of liquor factories.
NBU PLANNING HRYVNIA DEVALUATION TO BELOW 2.15 HRYVNIA/DOLLAR
The National Bank of Ukraine plans to continue intensive devaluation of the hryvnia to the established "resistance level," a Cabinet of Ministers representative told Ukrainian News. "This resistance level is below 2.15 (i.e. 2.1000-2.1400 hryvnia/dollar). The National Bank's plans, as far as I know, involve a short-term intensification of devaluation," he said. Traders expect the official exchange rate to reach the NBU-established resistance level between the middle and the end of this week. Last week, the National Bank of Ukraine sharply stepped up the pace of devaluation of the hryvnia and devaluation expectations rose among market participants. The National Bank lowered the official exchange rate 320 points last week from 2.0681 to 2.1001 hryvnia/dollar (an average of 64 points per week); the interbank rate dropped by approximately 400 points.
PRESIDENT KUCHMA DECREES NEW RULES FOR FOREIGN BORROWING
Ukrainian President signed a decree regulating foreign bond issues by the Ukrainian government, the deputy head of the presidential administration, Pavlo Haydutsky, told a news briefing on July 13. The state could now only issue foreign bonds within the limits of the approved state budget, he said. The Ukrainian parliament would have to approve any borrowings above these limits. Ukraine has issued $1.1 billion in foreign debt so far this year, but postponed further issues planned for June until July or August due to continued turmoil on international markets. The decree will take effect in 30 days if the parliament does not veto it.
The decree "On State External Loan Bonds" determines a procedure of issuing and circulation of such bonds orienting them towards international and foreign stock markets, said Pavlo Haydutsky. In his words, this process has been unregulated so far. Actually, Ukraine had no direct access to international stock markets, and had to solve the majority of issues relating to foreign borrowings through international monetary funds, the World Bank, and so on, Mr. Haydutsky stressed. The president's decree lifts these restrictions and considerably broadens Ukraine's financial opportunities on the world stock market, in particular, in attracting investments to the Ukrainian economy through the mechanism of state external loan bonds.
GOVT ENDORSES REGULATIONS ON PROCEDURES FOR LICENSING BUSINESSES
The Ukrainian Government has adopted a resolution to endorse The Regulations on Procedures for Licensing Business Activity, which provide for creating an integral and transparent mechanism for licensing business activities, and coordinating relevant government bodies' work in this area. The document contains a list of governmental bodies authorized to issue licenses for specific types of business activity. Under The Regulations, licensing committees are to be instituted composed of both government officers and independent experts with a view of avoiding biased decision making.
PRESIDENTIAL DECREE ORDERS SECURITIES TRADERS TO SET UP INVESTOR PROTECTION FUND
A July 8 presidential decree ordered securities traders to create a fund for protecting investors. Contributors into the fund will be securities traders and banks licensed to issue and circulate securities by the State Commission for Securities and the Stock Market. Traders are required to register with the fund no later than 60 days upon obtaining the license. Otherwise, their licenses may be suspended or revoked. The fund's resources are to be created from contributions paid by participants when registering: 100 nontaxable minimum incomes (presently 17 hryvnia), participants' quarterly contributions (0.2% of their proceeds from implementing contracts with investors), fines paid by participants for nonpayment or late payment of contributions (0.2% of the unpaid sum for each day of delay), proceeds from investing the fund's resources, donations, and money received via international assistance programs. When advertising their services, securities traders are required to state that the July 8 presidential decree created a fund for protecting citizen-investors on the stock market to reduce the risk of citizen-investors losing money. The fund's resources are to be used to compensate citizen-investors' losses following liquidation or bankruptcy but a single citizen may not receive more than 100 minimum nontaxable incomes. The fund may invest in government securities and deposit funds with banks for two years without violating National Bank of Ukraine norms. The decree will go into force after 30 days if Parliament does not adopt or reject the relevant draft law.
RUSSIA EXPRESSES CONCERN OVER DROP IN TRADE TURNOVER WITH UKRAINE
The Ukrainian-Russian leaders' summit scheduled for Kharkiv on September 18-19, "will be interesting," Russian President Boris Yeltsin's press secretary Sergei Yastrezhembsky said in Moscow. Mr. Yastrezhembsky told journalists that Russia was concerned over the drop in its trade turnover with Ukraine. In this connection, implementation of the Ukrainian-Russian economic cooperation program will be discussed during the summit, he said. According to him, Kharkiv was selected to host the summit because of its "economic, spiritual, and humanitarian proximity to Russian border regions, and because these relations determine the rhythm and content of economic relations between the two countries."