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21 July 1998
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PRESIDENT KUCHMA HOLDS TELEPHONE CONVERSATION WITH WB PRESIDENT WOLFENSOHN
President Leonid Kuchma held a telephone conversation with World Bank President James Wolfensohn. The two officials discussed issues involving the implementation of the WB Ukrainian program. Mr. Wolfensohn reiterated the Bank's readiness to continue cooperation with Ukraine. As he disclosed, the Bank will take a decision on the program's implementation immediately after the IMF mission completes its work in Ukraine. The IMF mission was reported to arrive in Ukraine at the end of July.
PRESIDENT KUCHMA: PARLIAMENTARY LEADERS SHOWING WILLINGNESS TO SOLVE PROBLEMS
"I think the International Monetary Fund mission is coming to Ukraine in a good mood and with the wish to finally consider the draft Extended Fund Facility program and approve it," Ukraine's President Leonid Kuchma told DINAU on July 18. Mr. Kuchma said the mission's good mood was reflected in his last telephone conversation with World Bank President James Wolfensohn. The World Bank will grant Ukraine a loan of about one billion dollars this year upon receiving the relevant signal, Mr. Kuchma went on. He added that the money will be, in particular, used to reform the coal industry. Mr. Kuchma said the country cannot do without assistance from international financial institutions at a time of financial turmoil in many parts of the world, including neighboring Russia. According to him, the crisis has devalued operating capital in Ukraine. Mr. Kuchma said opening the IMF's Extended Fund Facility (EFF) loan program for Ukraine would be a signal to all other financial institutions and countries that it is safe to invest in Ukraine.
The Ukrainian leader expressed confidence that the government will be able to work with the parliament. "Considering our present relations with the parliament, I am confident that everything will be all right," Mr. Kuchma stressed, adding that the parliament's leaders have shown their willingness to solve problems, particularly amendments to FY 1998 state budget and the drafting of FY 1999 state budget. In any case, the Ukrainian Constitution grants the President the right to amend the state budget by decree if necessary.
UKRAINE HOPING TO MEET EFF STARTING CONDITIONS BEFORE ARRIVAL OF IMF's MISSION
Ukraine hopes to meet all prior actions of the IMF's Extended Fund Facility (EFF) loan program (under which $ 2.5 billion is expected to be provided over a three-year period) before the IMF's July mission arrives for a final inspection, Valeriy Lytvytskiy, the Ukrainian president's adviser, told journalists on July 15. "We need to approve budget amendments lowering the state budget deficit. The prospects of a positive IMF decision will be problematic if Parliament does not approve the amendments." Mr. Lytvytskiy said. "Moreover, the following must be approved before the mission's arrival: a presidential decree abolishing VAT exempts, a presidential decree introducing the concepts for administrative reform (merging the Economics Ministry and the Finance Ministry), and a Cabinet of Ministers resolution raising the rates of excise duty on alcohol and tobacco."
On July 8-11, an official Ukrainian delegation held negotiations with the IMF concerning an agreement on the EFF program. The delegation also negotiated with the World Bank provision of structural loans totaling approximately $ 800 million in addition to the $ 1,200 million that has already been provided. Ukraine's Deputy Prime Minister Serhiy Tyhypko, Finance Minister Ihor Mitiukov, and National Bank of Ukraine Governor Victor Yushchenko held additional consultations with the IMF regarding preparations for the EFF program. They also held negotiations with the World Bank regarding the possibility of obtaining loans before the end of this year. A mission consisting of IMF experts will visit Ukraine on July 23-30. The mission is expected to make final decision on Ukraine's readiness for the EFF program. "We have reasons to hope that the IMF mission will be the final one. We also hope that the mission will inform the World Bank that Ukraine's macroeconomic stability is in line with the preliminary agreement with the IMF. This will be a basis for the World Bank to lift its suspension on loan programs for Ukraine," Mr. Lytvytskiy said.
The World Bank suspended two loan programs for Ukraine in April 1998, when Ukrainian-IMF cooperation on the Standby program broke down. At that time, the World Bank said it would not resume its programs until Ukraine resumed cooperation with the IMF. National Bank of Ukraine Chairman Victor Yushchenko told journalists on July 14 that during last week's consultations in Washington, World Bank Director Paul Siegelbaum stated the Bank's readiness to grant Ukraine three credits totaling $ 700 million before the end of the year, provided that the IMF Executive Board decides to open an EFF loan program for Ukraine. The IMF's Executive Board is expected to consider granting Ukraine the EFF loan in late August. "If the mission's decision is positive, the IMF will decide between late August and early September on opening the EFF program," Mr. Lytvytskiy said.
O.RIABCHENKO ELECTED CHAIRMAN OF PARLIAMENTARY COMMITTEE FOR CONTROL OVER PRIVATIZATION
The Ukrainian parliament approved Oleksandr Riabchenko chairman of the VR Committee for Control Over Privatization. Riabchenko headed a similar committee in the Verkhovna Rada of previous convocation. This committee was not listed among the current 22 standing committees. "The first thing we will definitely do is to kick out the idea of holding Russia-style mortgage auctions, commencement of which the State Property Fund decided upon on July 13. After this, we will have to look into the agency for managing the state's corporate rights. I think the agency and the State Property Fund will not coexist, since they have almost equal powers: one can transfer government shares to a trust to manage them, the other can offer the same shares for sale. In this case, their decisions will inevitably contract one another. In my opinion, the agency should have the right to delegate management of shares only in enterprises are not subject to privatization. Such problems require legislative regulation." Riabchenko said.
PRESIDENTIAL DECREE EXPECTED TO SIMPLIFY PROCEDURES FOR RECOGNIZING INTERNATIONAL CERTIFICATES
The draft of the presidential decree "On Certain Issues Involving Deregulation of Business Activity" provides for excluding Ukrainian Standardization Agency, DerzhStandart, from the procedures for Ukrainian recognition of international certificates, Oleksandra Kuzhel, head of the State Committee for Business development, told journalists on July 16. Among other things, the draft decree provides for authorizing the Cabinet of Ministers to "recognize" international certificates for a period of up to five years without DerzhStandart's involvement, excluding cases of certification of foodstuffs. According to Kuzhel, DerzhStandart frequently abuses its right to certify products manufactured by foreign firms and unjustifiably cavils goods manufactured by leading foreign firms, in spite of their holding international certificates. Kuzhel said the draft decree has been agreed with First deputy Prime Minister Anatoliy Holubchenko and Deputy Prime Minister Serhiy Tyhypko. Meanwhile, several ministries categorically oppose the provisions of the draft decree.
UKRAINE'S EXTERNAL DEBT AMOUNTED TO $ 10,721 MILLION AS OF JUNE 1
Ukraine's external debts amounted to $ 10,721 million as of June 1, sources in the Cabinet of Ministers told Ukrainian News. The debt totaled $ 9,560 million as of January 1. In the first five months of 1998, Ukraine repaid external loans totaling $ 290 million, and obtained new loans totaling $1,070 million. The sum of Ukraine's debt to Russia that is formally included in its external debts is $1,896 million, the remainder of the debt of $3,074 million stated in a May 28, 1997 Ukrainian-Russian agreement. The mutual settlements conducted in 1998 have been subtracted from the $ 3,074 million. Ukraine and Russia agreed to offset Ukraine's debt against the Russian Navy's lease on a base in Sevastopol.
UNEMPLOYMENT RATE IN JANUARY-JUNE, 1998
According to the National Employment Center, the number of persons officially registered as jobless was rising during the January-June period of 1998, and reached the mark of 1,288,600. This was 1.6 times more than last year's figure, for the respective period (1,051,200). There were region-to-region fluctuations around the averaged unemployment rate of 2.91 percent of the able-bodied populace. In particular, unemployment rates varied from 4.72 percent to 5.46 percent in the Zhytomyr, Lviv, Volyn, Chernihiv and Ivano-Frankivsk Regions. As of July 1, there were 826,800 jobless applicants for 52,400 job openings, that is an average 16 contenders for one job. There were eleven blue collar applicants per job with the figures for white collars and unskilled laborforce stated at 27 and 28, respectively. The Transcarpathian, Volyn and Ivano-Frankivsk Regions were reported worst-hit by growing unemployment.
Ukrainian PLANT SHIPPING ITS ARC-WELDING EQUIPMENT TO US
As DINAU's correspondent in Kakhovka, Kherson Region, reported on July 20, the local factory for manufacturing of arc-welding equipment has begun shipping its rail-welding apparatus of the K-900 and K-1000 brands to customers in Austria and the USA. The factory's computer-assisted arc-welding equipment of this type is believed to have no analogues in other countries. Therefore it is expected to be readily marketed there.
SAN DIEGO AEROSPACE MUSEUM TO HONOR UKRAINIAN AIRCRAFT DESIGNER
The board of directors of the San Diego Aerospace Museum have decided to honor the memory of Ukraine's aircraft designer Oleg Antonov. The San Diego museum intends to induct Oleg Antonov into its Hall of Fame in recognition of his outstanding contributions to the development of the aerospace industry. The decision was made after the consultations with leading aerospace specialists in different countries. Oleg Antonov who was the founder and former director of the Antonov Aviation Center, becomes the sixth representative of the former Soviet Union to be honored in this way. Others include Konstantin Tsiolkovski, Yury Gagarin, Andrei Tupolev, Artem Mikoyan, and Ukraine's Sergei Korolev. Oleg Antonov's induction into the Hall of Fame is scheduled for March of next year. The museum plans to show a video-film about Oleg Antonov's life and achievements. It also plans to invite his relatives and representatives of the Antonov Aviation Center to attend the ceremony.