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January 30, 1998
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UKRAINIAN AMBASSADOR TO US YURY SHCHERBAK MEETS WITH FIRST LADY HILLARY CLINTON
Additional headlines and news follow below
Ambassador Yury Shcherbak met with Hillary Clinton, the US President's spouse, in the White House on January 23. Mrs.Clinton stressed that, as American democracy's 200-year-old experience suggests, future prosperity can be attained only through reforms. The First Lady also voiced a hope for the Ukrainian electorate making the right choice in the March 29 elections. The meeting's atmosphere was warm and friendly with the interlocutors focusing on the need to promote non-government contacts between American and Ukrainian citizens and NGOs in keeping with the Charter on Friendship, Partnership and Cooperation the two nations signed in 1994. The Ukrainian envoy and Mrs.Clinton also discussed US humanitarian aid to Ukraine through non-government channels including hospital-to-hospital contacts. The host party voiced support for setting up a US-Ukrainian Center for training managers in politics, economics and trading. The two parties ventilated recent suggestions to convene an international conference on preventing and combating illegal trafficking in women. The Ukrainian diplomat conveyed a personal message and gift to the US First Lady from her Ukrainian counterpart, Lyudmyla Kuchma.
UKRAINIAN GOVERNMENT DELEGATION WIND UP THEIR VISIT TO US
Ukraine has been and will remain America's strategic partner, US government officials have repeatedly accentuated in the course of their meetings with members of a Ukrainian governmental delegation Deputy Premier Serhiy Tyhypko led to the USA. The US officials who met in Washington with the Ukrainian delegation included Undersecretary of State Steward Eizenstat and Undersecretary of Treasure David Lipton. They all reassured the Ukrainian delegation that the US Administration will continue rendering aid to Ukraine in carrying out economic reforms and promoting cooperation with international financial institutions. The Ukrainian delegation and the host party have reached an agreement on continued activities within the framework of the Kuchma-Gore Binational Commission and preparation for US Secretary of State Madelaine Albright's official visit to Kiev.
JOINT STATEMENT BY CABINET OF MINISTERS AND NATIONAL BANK
In recent years, the Cabinet of Ministers and the National Bank of Ukraine have been consistently implementing measures aimed at implementing the radical economic reforms declared by President Kuchma. Significant successes were achieved in curbing inflation, strengthening the national currency, lowing the rate of decline of GDP and industrial production, financing the state budget deficit, reforming the taxation system in line with international standards, and reducing the tax burden on the national economy. Macroeconomic stability created a favorable condition for investment in the Ukrainian economy in the second half of 1997. However, a radical breakthrough in restoring economic growth was not achieved. The reasons for this were lack of actual steps towards structural reform, the slow pace of administrative reform, too many administrative restrictions on the operations of small and medium businesses, a large amount of barter operations in the economic sector, and an increase in the volume of mutual debt settlements between the state budget and taxpayers. A lack of comprehensive macroeconomic reform, restrictions on privatization of state assets, and delay in changing to a method of privatization of state assets for money have eroded the confidence of both domestic and foreign investors in further market reforms and resulted in an outflow of capital.
The effect of these facts has been increased by the crises on international financial markets, which have resulted in unforeseen movement of capital among countries. This has increased the pressure on the hryvnia. Continuation of this situation threatens implementation of the 1998 state budget, the hryvnia's stability, and improvement of the social and economic situation in the country. The existing situation demands adoption of cardinal measures to block the negative tendencies on financial markets so as to prevent the inflation spiral from unfolding, prevent a decline in economic operations, and prevent a further decline of the living standard in the country. The president of Ukraine has signed a decree stipulating urgent measures aimed at improving the current situation. The efforts of the Cabinet of Ministers and the National Bank of Ukraine will be concentrated on important issues, resolution of which will prevent the nation's economy and finances from declining to a critical level. Most importantly, these efforts will be directed at reducing the size of the civil service, reducing expenditures on the operations of government organs, enforcing strict collection of state budget revenues, exercising strict control over the use of budget funds, abolishing mutual settlement of debts, exercising strict control over the management of budget funds by commercial enterprises, preventing accumulation of new budget debts, increasing revenues from privatization of state assets for money, establishing order within the network of state- financed organizations and reducing their work force, drafting measures to retain the budget deficit at 2.5% of GDP, eliminating the administrative hurdles hindering the development of small and medium businesses, and eliminating the devaluation pressure on the hryvnia. Strict economy of budget funds and encouragement of entrepreneurship should be the priority of all government organs.
Considering the need to continue implementing consistent reforms, the Cabinet of Ministers and the National Bank of Ukraine will not spare efforts to implement such budgetary, monetary, and credit policies that will ensure the stability of the national currency. With the aim of flexibly reacting to the negative aftereffects of the crisis on international financial markets and establishing effective control over the domestic monetary and credit markets, the Cabinet of Minister and the National Bank of Ukraine have considered it necessary to establish an exchange rate corridor of 1.8-2.25 hryvnia/US dollar for this year. The Cabinet of Ministers and the National Bank of Ukraine are convinced that implementation of the above-stated measures ,will provide an opportunity for improving government finances, restoring investment and industrial activity, and creating the necessary conditions for commencement of economic growth. Support for these measures by the population, members of the business community, and political parties will enhance early achievement of these goals.
PROGRAM OF DEVELOPMENT OF UKRAINE'S STATE EXPORT CONTROL IN 1998- 2000 APPROVED
The Board of the State Export Control Administration approved the Program of development of Ukraine's state export control for the period of 1998-2000. The Program provides for the creation and improvement of such a system, which would ensure an efficient interaction between the export control bodies, executive branch's central bodies and entities involved in entrepreneurship activities. The measures singled out by the Program will favor a more efficient ensuring of the State's national security, observance of Ukraine's international obligations in the field of conventional arms' non- proliferation and international transfer.
CABINET HOLDS SESSION IN CRIMEA
The outing session of the Cabinet of Ministers of Ukraine, held in Crimea on January 27, and chaired by Prime Minister V.Pustovoitenko, focused on performance of Crimea's industrial and agricultural sectors in 1997, as well as on measures to be taken for improving the socioeconomic situation in the Autonomous Republic. The session harshly criticized activities by the Crimean Cabinet of Ministers. As it was noted, over 1997, especially its second semester, the social and economic situation in the Autonomy remained critical, with volumes of output and investment activity decreasing and problems involving back wages, pensions and stipends remaining unsolved. In 1997 Crimean industrial enterprises' output was 24 percent lower than in 1996, with the pace of industrial recession being the highest among Ukrainian regions. The most critical drop in production was registered at enterprises producing construction materials, of light industry, engineering, metal-working and other industries. Despite a considerable governmental backing, the Crimean Cabinet of Ministers failed to exercise its powers to a full extent in order to create conditions for stabilization of agroindustrial production and improvement of the socioeconomic situation in the countryside. According to figures cited at the session, every second enterprise was unprofitable in 1997, while the wage debt in Crimea, as of January 10, 1998, was 172.3 million hryvnias, or has increased by 30 percent since the beginning of 1997. The session spoke up for the necessity to create free economic zones. The Prime Minister of Ukraine gave a high appraisal of the first-ever leasing service/technological station established in Crimea, which, according to him, could set an example for other regions of Ukraine.
Mr.Pustovoitenko instructed Anatoliy Franchuk, Head of Government of Crimea, to draw up a schedule of paying off debts involving social benefits. As stressed by the Premier, starting with 1998 the Crimean Autonomous Republic will be subsidized with a view of extinguishing social benefit indebtedness. The session of the Cabinet of Ministers of Ukraine discussed a draft resolution on measures aimed at stabilizing economic situation in Crimea.
CABINET OF MINISTERS RESOLVES ON SANCTIONS AGAINST INSOLVENT DEBTORS INVOLVING FOREIGN CREDITS AGAINST GOVT'S GUARANTEES
The Cabinet of Minister has adopted a resolution on additional steps to reimburse the national budget's expenditures involving the Government's guaranties covering foreign credits to state-run enterprises. The resolution instructs the Finance Ministry in conjunction with the Export-Import Bank of Ukraine to evaluate the credit debts following which the National Taxation Administration will institute legal proceedings against the debtors by March 1, 1998, with a view of declaring them bankrupt. Within the January, 1992 - October 1, 1997 period, 13 foreign credit lines to Ukraine brought a total of 2.45 b. US dollars against the Ukrainian Government's guarantees, of which 1.79 b.USD was used. The national budget's credit burden amassed to 893 million dollars of which 268 million was reimbursed as of November 1, 1997. Only 3 out of 14 major debtors succeeded in reimbursing their credit debts. The Makiivka Metallurgical Works (45.2 million dollars), "Rele I Avtomatyka" company (22.2 million dollars), the Kryvy Rih Steel Works (19.7 million dollars), "UkrAgroTekhServis" concern (15.1 million dollars) were stated among the major debtors. The resolution also instructs the Finance Ministry to revise its agreement with the notorious "Zemlya I Lyudy" ("Land and People") agroindustrial association toward shortening the term within which it was scheduled to repay its 57.8 million dollar indebtedness involving foreign credits.
INDEPENDENT EXPERT JURY REPORTED ON GUARD TO PROTECT INTERESTS OF FOREIGN INVESTORS IN UKRAINE
As informed by the National Agency for Reconstruction and Development, first two disputes have been brought to the Independent Experts Chamber's jury in Kiev, involving the "Regina Business Center" JV's complaint against the Kiev City Hall's decision to oust it from its office building, and the "Mykolaiv Potassium Terminal" closed-type joint-stock company's appeal against the Regional Foreign Economic Relations Agency's refusal to officialize the company's contract with the Sea Traffic firm and the Irish company Sandypool, Ltd.
NEW OFFICIAL FORECAST OF 1998 INFLATION: 17.8%
According to Prime Minister V.Pustovoitenko, the level of inflation forecast by the government for 1998 is 17.8%. The government earlier planned an inflation level of 10% for the year.
In National Bank Chairman Viktor Yuschenko's words, "inflation of monetary emissions" will not differ significantly from last year's: "the monetary and credit policy we plan for 1998 and the planned growth in the money base are capable of having an inflationary effect at last year's level, 10-12%, and the liberalization of utilities prices for the population will add about 6-7% to the annual figure." Currently, about 20% of the cost of utilities is subsidized by the state budget. The government plans to discontinue the subsidies in the first half of 1998. The NBU based its calculation of the new parameters of the currency band, hryvnia 1.8-2.25/dollars, on the changed prognosis of the yearly level of inflation, Mr.Yuschenko said.
PRESIDENT KUCHMA DISCUSSES WITH CHAIRMAN OF COORDINATING COMMITTEE FOR FIGHTING CORRUPTION AND ORGANIZED CRIME CURRENT CRIMINOGENIC SITUATION IN UKRAINE
On January 26, President Kuchma met with Head of the Coordinating Committee for Fighting Corruption and Organised Crime Vasyl Durdynets. The meeting focused on the current criminogenic situation in Ukraine, activities of law enforcement bodies, in particular, of special teams for outrooting criminal groups. As Vasyl Durdynets informed, 110 armed gangs and over 1,000 criminal groups were rendered harmless in 1997. He reported to the President about concrete measures being drafted now by the Committee together with the Ministry of Internal Affairs, Security Service and Prosecutor-General's Office, aimed at implementing a wide-scale anti-crime and anti- corruption program.
VR CHAIRMAN INVITES NEWLY APPOINTED US AMBASSADOR TO UKRAINE TO ATTEND HIS MEETINGS WITH ELECTORATE IN THE PROVINCES
VR Chairperson Oleksandr Moroz invited newly appointed US Ambassador to Ukraine Stephen Peifer to attend his meetings with electorate in the provinces. According to Mr Moroz, it would allow the American diplomat to get a better understanding of all aspects of the Ukrainian society's life. With such an informal invitation the Ukrainian Parliament Speaker opened his meeting with the US Ambassador in Kiev on January 26. Mr Moroz added that the US envoy's attendance of those meetings could be of a cognitive nature rather than appraised as a canvass. He voiced hope for further cooperation between the US Embassy and the Verkhovna Rada, and assured Amb.S.Peifer of his all-round support. The progress of democratic reforms in Ukraine depend to a large extent on cooperation between Ukraine and the US, stressed Mr Moroz. In turn, the US diplomat noted that he considers his attention to the Ukrainian parliament's activities and analysis of political processes in Ukraine to be an important constituent part of his diplomatic work. He expressed his country's interest in cooperation with all branches of power in Ukraine.
COUNCIL OF EUROPE'S PARLIAMENTARY ASSEMBLY APPROVES UKRAINIAN DELEGATION'S PARTICIPATION IN ITS SESSIONS
The Ukrainian delegation to the Council of Europe's Parliamentary Assembly succeeded in overcoming a serious barrier on January 27, in Strasbourg. The Parliamentary Assembly approved the Ukrainian delegation's further participation in its sessions. During discussions on imposition of a moratorium on implementation of the death sentence and abolition of the death penalty in Ukraine, the Parliamentary Assembly confirmed that the moratorium was imposed in March 1997. However, the Parliamentary Assembly is to impose stricter control on abolition of the death penalty. During the Parliamentary Assembly's April 1998 session, the Ukrainian delegation will be required to report on the measures being taken by the Ukrainian parliament to abolish the death penalty. Addressing the Parliamentary Assembly's session on January 27, the head of the Ukrainian delegation, Borys Oleynyk, said Ukraine was "on the verge of legislatively abolishing the death penalty."
UKRAINE SIGNS PROTOCOLS TO CONVENTION ON PREVENTION OF TORTURES
On January 26, Justice Minister of Ukraine Syuzanna Stanyk signed in Strasbourg Protocols No.1 and No.2 to the Convention on Prevention of Tortures and Inhuman of Humiliating Treatment or Punishment, with EuroCouncil Secretary General Daniel Tarschys attending the signing ceremony. Syuzanna Stanyk said that the signed documents do not comprise those Ukraine is bound to ratify. On the same day the Ukrainian Justice Minister was to meet with CEPA President Leni Fischer and heads of a number of EuroCouncil's committees.
KYIV HOSTS FIRST ALL-UKRAINIAN CONFERENCE ON PROTECTION OF MOTHERHOOD AND CHILDHOOD
On January 28, the first all-Ukrainian research and applied conference on problems involving protection of motherhood and childhood in Ukraine opened in Kiev, with Vice-Premier Valeriy Smoliy stating its objective as appraising Ukraine's current condition from this angle which he called the integral index of a nation's status. As recent sociological surveys suggest, 70% of the Ukrainian population are anything but happy about their living standards, which widespread sentiments could not but have had a most deleterious effect on Ukraine's demographic situation. Medical screening surveys additionally suggest Ukrainian females' deteriorating health standards, partly because of the Chornobyl aftermath. Other statistical data which were aired at the conference, stated the number of births in Ukraine at 9.1 per thousand of the population, a 31.6 percent drop versus 1989, and the Ukrainian population shrinking at an averaged annual rate of 1,600,000. The all-Ukrainian conference was attended by MPs, Cabinet members, officials of the Health Ministry, Ministry for Family and Youth, Ministry for Labor and Social Policies, functionaries of the National Academy of Sciences, Academy of Medical Sciences, officials of other organizations and public groups. The conference has been jointly sponsored by UN's Development Program, UNISEF, WHO, the World Bank and the World Population Foundation.