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16 September 1998
For immediate release
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Government and NBU Issue Joint Decree on Anti-Crisis Measures

On September 10, the Cabinet of Ministers and the National Bank of Ukraine issued a joint decree on anti-crisis measures aimed at stabilizing the country's finances. The measures, 73 in all, are in essence a list of legislative acts expected to be adopted before the end of this year. The measures are divided into five sections:

  • measures requiring immediate adoption, mainly decrees adopted by the National Bank of Ukraine on September 4-7: the decree on the margin between currency selling and buying rates, the decree on paying for imports in Ukrainian currency, the decree on upholding the liquidity of banks. The measures also provide for introducing a price regulation mechanism "if necessary;"

  • measures to stimulate exports and reduce imports: provide for simplifying the procedures for registering foreign trade contracts; reducing the list export goods for which indicative prices are set; suspending the ban on export of goods to CIS countries via barter contracts; approving a list of export goods for which the deadline for returning foreign-currency proceeds from them may not be extended; adopting a law canceling duties and indicative prices on cattle and hide exports; amending the law "On Taxation of Enterprises' Profits" to cancel taxes on down payments (prepayments) on export contracts and foreign investments; adopting an antidumping code to protect Ukrainian producers from the dumping of foreign goods; optimizing the list of critical imports; negotiating with Russia on cancellation of the 3% import duty imposed on Ukrainian goods on July 17 and lowering the price at which Ukraine imports natural gas;

  • measures to boost state budget revenues and cut budget spending: adoption of a law on taxation of enterprises' assets; adopting a law on privatization of Ukrtelecom; reviewing the mechanism for boosting state budget revenues from the sale of enterprises for privatization certificates; drafting procedures for informing the State Tax Service about the movement of funds in residents' foreign bank accounts opened with the NBU's approval; reducing tax preferences; holding tenders under procedures guaranteeing floatation of shares in power generating enterprises; reducing the nomenclature of material values in the state reserve and reducing their volumes to a required minimum;

  • measures to provide social assistance to the people: facilitating indexation of the population's incomes; raising the import duty on light petroleum products by ECU 0.01 per kg and using the proceeds thus generated to pay back wages; increasing the responsibility for timely and full payment of social charges;

  • other measures: reducing the volume of barter operations; drafting amendments to the law "On Taxation of Enterprises' Profits" with the goal of exempting from taxation funds generated from issuance of shares in enterprises; meeting the conditions (privatization of 8,500 enterprises) for the second tranche of a loan for development of enterprises; drafting a loan agreement with the European Union for a loan of ECU 150 million to uphold the country's balance of payments.

    President Kuchma Orders National Bank and Government to Create Insurance Fund for Citizens' Deposits

    The National Bank of Ukraine and the Cabinet of Ministers are to set up a fund to insure citizens' deposits with commercial banks, a September 10 presidential decree stated. The National Bank of Ukraine is to pay the government's contribution into the insurance fund and take measures to set up an administrative council for the fund," the presidential decree stated. According to the decree, the fund's resources will guarantee refund of any loss of physical entity's deposits but no more than 500 hryvnia. The government and commercial banks are to pay contributions into the fund. The presidential decree did not state the size of the fund's resources. The decree states that banks' contributions into the fund are to be classified as gross expenditures, i.e., not to be paid from profits.

    WB Board of Directors Endorses $ 949.6 Million Credit Package for Ukraine

    On September 15, the World Bank's Board of Directors endorsed a credit package for Ukraine to the tune of 949.6 million US dollars. A ceremony was held at the WB Headquarters in the US capital city to sign important credit agreement, under which Ukraine will get a 300 million dollar loan to adjust its financial sector and a 16.4 million dollar loan to improve the national treasury system. A second adjustment loan tranche to the tune of $ 300 million is earmarked for developing small and medium-sized businesses. The Ukrainian Ambassador to the USA, Yuri Shcherbak, and WB Regional Director Paul Siegelbaum also signed amendments to the December 12, 1996 Agreement on funding the Ukrainian coal-mining industry's adjustment which provides for a $ 160 million credit to Ukraine. In addition to these documents, an agreement was signed between Ukraine and the World Bank under which the latter undertakes to pose as the founder in the World Ecological Fund's grant to Ukraine to the tune of 23.2 million US dollars, which is meant for financing Ukraine's projects to replace ozone-depleting chemical substances with environmentally-friendly chemicals.

    Finance Minister Mityukov States Govt's Efforts to Improve Situation on Ukraine's Financial Market

    The Ukrainian government has made vigorous steps to improve the situation on the nation's financial market, Finance Minister Ihor Mityukov said speaking in the Ukrainian parliament, Verkhovna Rada, on September 16. As Mr. Mityukov had to admit, the overall financial situation in Ukraine remains complicated in terms of mounting wage/pension debts. He stated the aggregate wage/pension indebtedness at HR 3.6 billion, as of September 1. The Verkhovna Rada adopted a resolution under which the Cabinet of Ministers will have to submit its report on September 29. The decision followed Finance Minister Ihor Mityukov's account and VR Chairman Oleksandr Tkachenko's motion to this effect.

    Parliament Overrules Presidential Veto on Law Banning Higher Prices and Tariffs on Housing and Public Services

    The Ukrainian parliament has rejected President Kuchma's proposed amendments to the law "On Temporary Ban on Increases in Prices and Tariffs for Housing, Communal, and Transportation Services." The parliament voted by an overwhelming majority to overrule President Kuchma's veto on the law. Only eight members of Parliament opposed the motion to overrule the veto. "The law actually protects the social status of citizens," said Yevhen Marchuk, head of the Parliamentary Committee for Social Policies and Labor. "It is inappropriate to raise prices at a time when even wages are not paid. The pace at which housing tariffs rise in Ukraine is the fastest in Europe. Tariffs for gas, telephone, and housing were last raised in the April-June quarter." Mr. Marchuk called for a review of transport privileges, adding that 17 million people presently do not pay for public transport services.

    Ukrainian Ministry for Industrial Policies Launches Long-Term Project to Construct Wind Power Plants

    The Ministry for Industrial Policies has launched a long-term comprehensive program for constructing a network of wind power plants in Ukraine. As many as 99 industrial enterprises and organizations are participating in the program's implementation which is expected to be completed by the year 2010. The giant Southern Engineering Plant is supposed to make up to 200 aerogenerators a year with the joint-stock company "Osnastka" (Novovolynsk) chosen as the second largest wind generator manufacturer. Early pilot wind power plants will be commissioned in Evpatoriya (Crimea), Saky (Crimea), Novoazovsk, Truskavets (West Ukraine).

    Economics Ministry Proposing State Regulation of Basic Food Prices

    The Economics Ministry has submitted for government consideration a draft Cabinet of Ministers’ decree stipulating state regulation of the prices of basic foodstuffs. "We have proposed to the government state regulation of the prices of the 22 basic types of foodstuffs that constitutes the consumer basket, particularly meat, bread, milk, potatoes, and vegetable," a specialist with the Economics Ministry told Ukrainian News. The ministry did not disclose the proposed price regulation mechanism. "We will take special measures to ensure that local administrations do not abuse their power to regulation prices," said a specialist with the Economics Ministry. Having studied the situation on the domestic market, the Economics Ministry concluded that the price rises in the late August-early September did not correspond to the degree of devaluation of the hryvnia. "Traders set prices as they like," said a source in the ministry.

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