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19 August 1998
Economy Update
For immediate release
[Press Releases Home]
Prime Minister Orders Re-Privatization Of Tax Debtors' Assets
Stock in enterprises with tax debts will be seized by the state to pay taxes, Prime Minister Valerii Pustovoitenko decreed August 12. The Premier ordered the State Tax Administration to draw up a list of the enterprises concerned. "Wherever new owners have shown their inability to develop production and settle with the budget and Pension Fund, the previous decision of the State Property Fund must be reconsidered and new, more effective owners must be found for the enterprises," Pustovoitenko said.
The Prime Minister issued a warning to debtors to the Pension Fund, saying that if their debts are not cleared, the assets of the enterprises will be inventoried and seized in bankruptcy proceedings.
According to State Tax Administration First Deputy Chairman Fiodor Yaroshenko, around 105,000 enterprises now owe tax debts totaling 8.5 billion hryvnia to the budget and Pension and Chornobyl funds, including 6.2 billion hryvnia owed the budget.
Executive directors of debtor enterprises were called up for Civil Defense exercises on August 12 in a maneuver to gather them in one place and compel them to pay their tax debts to the budget and state funds.
Finance Ministry Repays Nomura Loan
The Finance Ministry on August 11 repaid the loan it obtained from Japan's Nomura, a reliable source in the Finance Ministry told Ukrainian News.
"The payment was made today as stipulated by the terms of the agreement with the company," the source said.
The source did not state the sum of money paid. However, he did say that the Finance Ministry purchased 406 million dollars from the National Bank of Ukraine towards repaying the loan.
"The sum obtained from ING was lower than expected, therefore, a large portion of the money used to repay the loan was obtained by converting hryvnia into dollars through the NBU," the source said.
Under the terms of the loan, the Finance Ministry should pay Nomura 450 million dollars.
Earlier, the Finance Ministry had planned to repay the Nomura loan by obtaining a private loan from ING Barings and persuading Nomura to reinvest a portion of the outstanding loan.
On August 8, the government obtained a loan from ING Barings, the volume of which has not yet been disclosed.
Nomura provided a loan of 396 million dollars in August last year at 12% per annum in dollar terms; Nomura issued bond derivatives, a large portion of which was sold to other investors during the year.
The NBU's currency reserves amounted to about 1,500 million dollars as of early August.
The More Efforts Government Is Making To Stabilize Economy, The Stronger Shadow Economy's Resistance Is, Says Prime Minister Valeriy Pustovoitenko
Measures the government has been taking of late logically continue actions initiated a year ago, stated Prime Minister Valeriy Pustovoitenko upon completion of the Civil Defense CPX on August 13. According to the premier, the Cabinet's efforts to extinguish debts accumulated for years are aimed at improving the situation relating to revenues to the budget, the Pension and Chornobyl Funds, and, finally, at preventing financial crisis. But, as Valeriy Pustovoitenko stressed, the more efforts the government is making to stabilize economy, the stronger the shadow economy's resistance is. Without overcoming shadow economic schemes, which frequently are criminal ones, it is impossible to expect considerable positive changes, said the premier. Therefore, within the framework of active laws the government intends to apply the tax pledge mechanism to tax evaders and defaulters to the full extent. Deliberate tax defaulters will be forced to undergo the bankruptcy procedure, stressed the head of government. Besides, actions will be taken against heads of debtor-enterprises.
Premier Pustovoitenko reminded about the decision of the Cabinet's August 5 extended session to ensure an effective work of the Commission in charge of timely and complete payment of taxes and back wages, pensions, stipends and other social benefits.
Pension Fund Replenished By 100 Million Hryvnias
As of August 13 noon, heads of debtor-enterprises, who attended the Cabinet's August 5 extended session and pledged to pay off their debts, have transferred over 99.8 million hryvnias to the Pension Fund, which amounts to 46 percent of the debt payment target in August. Over 22.5 million hryvnias have been transferred in the monetary form, and 77.3 million in the natural form. These figures were cited by Pension Fund Chairman Borys Zaichuk during a conference summing up the results of the two-day Civil Defense CPX on August 13.
As disclosed by Borys Zaichuk, out of 409 participants in the Civil Defense command-post exercises near Pereyaslav-Khmelnytsky, 396 have signed payment obligations. 12 enterprises have completely extinguished their indebtedness. The Pension Fund chairman singled out the situation evolved in the coal-mining industry, whose enterprises' debts have exceeded 700 million hryvnias, with over 78 million hryvnias in the current year. Referring to the coal-mining industry's economic situation, most managers speak about impossibility to pay off 30-percent debts in the near future.
Facilities And Automobiles Heads Of Debtor-Enteprises To Be Deprived Of Office
In pursuance of the directive by Prime Minister Valeriy Pustovoitenko on defining movables to be realized as a tax pledge, heads of debtor-enterprises will be deprived of office facilities and automobiles, reported DINAU's correspondent on August 13. As disclosed at a conference within the Civil Defense CPX near Pereyaslav-Khmelnytsky, over 11 thousand automobiles belonging to debtor-enterprises have been distrained [sic], with 97 automobiles to the amount of 900 thousand hryvnias confiscated. Tax police officers have drawn up administrative reports to the penalty sum of 3.7 million hryvnias. Over two days of the Pereyaslav-Khmelnytsky exercises, seven proceedings against tax evaders have been instituted, with two million hryvnias confiscated.
President Leonid Kuchma Initiates Amendments To Taxation Laws
As the presidential press service reported on Friday, August 14, President Leonid Kuchma has sent a draft law on making amendments to certain tax-related laws to the Ukrainian Parliament, Verkhovna Rada, by way of legislative initiative and in keeping with the Constitution's Interim Provisions.
Deputy Head of the State Taxation Administration Oleksiy Shytrya is supposed to present the draft law to the Verkhovna Rada's plenary session.
President's Decrees Improve Ukraine's Taxation System Through Eliminating Its Flaws And Filling Existent Gaps, Deputy Head Of State Taxation Administration Oleksiy Shytrya Says
According to DINAU's Kyivan correspondent Lyudmyla Shershel, on Friday, August 14 Deputy Head of the State Taxation Administration Oleksiy Shytrya held a briefing for journalists in Kyiv to comment on President Kuchma's recent tax-related decrees as aimed at improving the imperfect taxation system of Ukraine through eliminating its inherent flaws and filling its numerous gaps, which used to stem the influx of budgetary revenues.
As Mr. Shytrya said, the presidential decree on the excise duty alone is expected to increase budgetary revenues by 200 million to 250 million hryvnias a year.
Mr. Kuchma's decree on making certain amendments to taxation will increase profits of enterprises by almost 2.6 billion hryvnias a year allowing them to repay about 50 percent of their aggregate wage indebtedness, Mr. Shytrya went on.
According to him, within the relatively brief period, President Leonid Kuchma issued about two scores of decrees involving Ukraine's taxation legislation, of which 21 have come into effect.
As the State Taxation Administration Deputy Head said, President Kuchma believes that following these enactments' enforcement, a moratorium should be imposed on making further tax-related amendments.
Government To Solve Luhansk Coal Miners' Socio-Economic Problems, Says Prime Minister Pustovoitenko
Prime Minister Valerii Pustovoitenko said on August 18 that government attaches priority to solving the socio-economic problems facing miners in the Luhansk region. "The government has no greater priority than providing support for miners," Mr. Pustovoitenko said during a one-day visit to the region.
The Ukrainian prime minister expressed regret that the Cabinet of Ministers is presently not in a position to meet all the miners' requirements He, however, promised that the government will do everything possible to ensure socio-economic growth and financial recovery in Ukrainian regions, particularly coal mining regions. He also promised to ensure timely payment of miners' wages. According to him, the government has, since August, been paying 100% of all the state budget funds allocated to the coal sector.
regarding the closure of unprofitable mines, the prime minister said they would be closed only after creation of new jobs. He disclosed that a new, modern mine with better working conditions will soon be opened in the Luhansk region. Similar mines will be opened throughout the sector, Mr. Pustovoitenko added.
Mr. Pustovoitenko again stressed that all the Cabinet of Ministers' efforts are presently focused on resolving miners' problems.
National Bank Of Ukraine Raises Lombard Rate To 92% Per Annum
The National bank of Ukraine raised its Lombard rate from the 82 percent to 92 percent per annum, effective from Tuesday, August 18, National Bank of Ukraine's Chairman Viktor Yushchenko told a news conference on August 18.
The previous rate was fixed on July 7.
Mr. Yushchenko said the move was psychological in nature and said he wanted to make clear that "the situation on Ukrainian financial markets is substantially different to that of Russia's.''
Mr. Yushchenko said no serious changes to the bank's monetary policy were planned, adding that upholding the currency corridor of 1.80-2.25 hryvnia per dollar established till the end of this year would depend on Russia. ``If the situation in Russia worsens, it will mean Ukraine will have to make new decisions,'' Mr. Yushchenko said.
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