COVID‑19 is already inflicting harm on the Ukrainian economy, and the country has started to count the economic cost of the novel coronavirus – it’s not a pretty picture. Here is a comprehensive roundup of some of the economic effects so far, including how the state budget deficit and unemployment may increase, while GDP is likely to drop.
IMF head announces possible increase in program for Ukraine, conditional on banking and land market reform laws. The Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva has said that negotiations with Ukrainian authorities about the new EFF program are going well, and said there is a possibility of it being increased if laws on the land market and the regulation of banking activities (the so-called anti-Kolomoisky bill No. 3260) are passed.
President of Ukraine Volodymyr Zelensky, his government and the National Bank agreed with the IMF in early December 2019 on opening a new three-year program worth $5.5 billion. According to Interfax-Ukraine, Georgieva said: “This last week, very good progress has been made in the discussions with the Ukrainian authorities on the new Extended Fund Facility (EFF) arrangement. Adoption of legislation to improve the bank resolution framework and on land reform would allow moving forward quickly with finalizing the parameters of the new arrangement, with larger access than previously envisaged.”
A positive IMF decision will also allow the government to receive macro-financial assistance from the EU (500 million euros) and a loan from the World Bank (up to $1 billion).
Ukraine International Airlines has asked the state for a $60 million stabilization loan. The company says it’s spending $14.5 million per month on maintenance and urgently needs state support while it’s unable to operate normal commercial flights. Recently UIA and its low-cost competitor SkyUp have been evacuating Ukrainians home, while most usual flights are suspended.
The National Bank of Ukraine (NBU) is recommending repayment holidays on loans. It has sent a letter to Ukrainian banks with recommendations to work with borrowers during the COVID-19 quarantine period. It suggested restructuring working loans by the end of September this year as part of “repayment holidays,” according to a statement on the NBU website.
State-owned Oschadbank has introduced such repayment breaks for small and medium-sized enterprises (SME) for three months, the press service of the bank said. A few days earlier, PrivatBank took the same steps. “Entrepreneurs can take advantage of deferred payments on principal of the loan for three months in loans in the form of non-renewable credit line and a term loan,” the Oschadbank statement said.
The banks of Ukraine have no need for extra liquidity or capital right now, Kateryna Rozhkova, the deputy governor of the National Bank of Ukraine (NBU), has said in a briefing. “The banking sector is strong and stable today. It is able to support the economy and enterprises … Today, the banking system does not need liquidity and capital. But all our liquidity support instruments are available to the banks, and they can use them if necessary,” she said at a press briefing.
The Ukrzaliznytsia state railway has scheduled a Kyiv-Moscow-Kyiv evacuation train for March 28/29. Interfax-Ukraine reported that train No. 906 Kyiv-Moscow and back on March 27 is to return citizens of Ukraine and the Russian Federation to their countries who, because of restrictive quarantine measures, are not able to cross the border in another way.
Ukraine improved its position in the ranking of economic freedom, but remained the last in Europe. According to the results of 2019, Ukraine climbed 13 positions and took 134th place out of 180 in the Heritage Foundation’s Index of Economic Freedom.
Facebook will check the posts of Ukrainian users for veracity. The fact-checking organizations of VoxCheck and StopFake will help with this, Liga.net has reported. The two organizations will reportedly help fight misinformation in the Ukrainian sphere of the social network. They are reportedly certified by an independent International Fact Checking Network.
Ukraine increased its agricultural exports by 8% in Jan-Feb. Before the COVID-19 quarantine measures came into effect, Ukraine exported agricultural products worth $3.7 billion, 8% more than the same period last year, the Ukrainian Agribusiness Club (UCAB) has reported. According to its post on Facebook, imports of these products over the same period also increased 16%, to $1.1 billion. Ukrainian grain exports could be affected by the COVID-19 lockdown, and the looming global financial downturn.
In Ukraine, bread and bakery products may rise in price by 15-20% due to rising wheat prices, the All-Ukrainian Association of Bakers and the Association of Milling of Ukraine has said in a statement, reported by Liga.net. “For example, over the past ten days alone, the average price of wheat of the second and third grade has increased by 400-500 UAH / ton. Such a rise in price in the near future will lead to an increase in the price of flour of all varieties by 500-600 UAH / ton.”
