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Social payments (pension and other social fund contributions paid by employers) advanced 26.1% y/y to UAH19.1bn. Evgeniya Akhtyrko: The government improved its VAT reimbursement in January after underpayments in December. As for customs collections, uneven month-to-month revenue is a usual event reflecting the Ukrainian practice of “manual” management, as well as high corruption in this realm. So the poor customs performance in January is likely to be compensated by a better “performance” the next month.
6.1.2 Budget dynamics - funding
Ukraine’s Finance Ministry is planning to attract UAH17.6bn (over $600mn) from international borrowing in February that will be secured by a guarantee of the World Bank, the ministry reported on Feb. 1. Initially, the ministry planned to raise funds in January. But instead, it reported that it replaced it with $587mn and EUR 33mn from the placement of local Eurobonds in January. Of the raised amount, the biggest portion was drawn from bonds maturing on Feb. 21 ($287mn in par value). Recall, the World Bank provided a $750mn loan guarantee to Ukraine on Dec. 18. Ukraine’s MinFin used half of the guarantee to attract EUR 349mn in loans in late December.
U kraine on February 28 raised a loan of €529mn from Deutsche Bank under the guarantee of the International Bank for Reconstruction and Development (IBRD, the World Bank Group), according to the website of the Ministry of Finance. The funds were received in two tranches: an A tranche in the amount of EUR240mn with maturity in four years and a B tranche in the amount of EUR289mn with a final maturity in ten years (four years and six months after raising the funds, the loan is subject to gradual repayment with certain amounts every half a year). The second part of the guarantee in the amount of $375mn in the euro equivalent of the total amount of the World Bank guarantees of $750mn was used for the loan. As reported, the World Bank Board of Executive Directors on December 18, 2018 approved the provision of guarantees to Ukraine in the amount of $750mn in support of state policy.
Within two months, Ukraine hopes to win the second tranche of EU €500mn macro financial aid , Finance Minister Oksana Markarova told reporters at Dragon. At the same time, she is negotiating a new loan guarantee with the World Bank and new low interest loans with G7 countries. In December, the World Bank extended a $750mn guarantee, enough for the government to borrow $1bn at low rates. “Our priority is concessional lending,” Markarova said. She aims to use low interest loans to help Ukraine lower its indebtedness to 50% of GDP by 2021.
President Trump has signed bills that increase aid to Ukraine to nearly $700mn, Ukraine’s Embassy in Washington writes on Facebook. In February, USAID launched an $85mn program by TetraTech, a US-based engineering firm, to help implement free market changes and incentives to promote natural gas production, energy conservation, and renewable energy investment.
6.1.3 Budget dynamics - privatization
Ukraine’s State Property Fund announced on January 28 that it lost its appeal against a court ruling that prohibits the fund from signing contracts with financial advisers selected to help arrange the privatization of five large
42 UKRAINE Country Report March 2019 www.intellinews.com