Page 14 - UKRRptFeb20
P. 14
4.3 Fixed investment
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Investments in fixed capital,
chg yoy 1.6% -50.5% 3.9% 7.1% 0.9% -6.7% -23.0% -9.3% 6.0% 12.0%
Industrial output, chg yoy -5.2% -21.9% 11.2% 8.0% -0.7% -4.3% -10.1% -13.0% 2.1% -0.1%
The new government has only been on the job for half a year so it is too early to judge on its investment track record. However, raising and spending money it the most important challenge facing the government as Ukraine remains badly under invested.
In late January the government kicked off its first big investment programme with plans for the most road building the country has every seen, which will also act as a Keynesian kick start for economic growth and has the added bonus of being an economic multiplier.
The poor roads have been the source of complaint for a long time and there is political capital to be made from road works. The government plans to build 4,000km in 2020 alone to connect the main cites. The construction will either be financed by the budget’s state road fund or using state backed financial guarantees.
Seaports is another area that the government is focusing on and in January announced the winner of first seaport concession tender: Risoil-Kherson LLC was declared the winner of concession tender of Kherson Sea Port, according to the Ministry of Infrastructure said in a press release.
According to the tender results, the winner takes the seaport in concession for 30 years and commits to investing UAH300mn (about $12mn) within 4 years into the seaport and UAH18mn (about $0.5mln) in local infrastructure. The company will also make annual concession payments consisting of UAH12mn fixed amount (about $0.74mn) and an additional 7% of net revenue from concession operations. Risoil-Kherson LLC is a consortium of Petro Oil and Chemicals LLC (a Georgian company).
In the railway sphere Deutsche Bahn has been signed up to advise the reform of Ukrzaliznytsia (Ukrainian Railway) that has managed to raise $650mn in Eurobond issues last year to pay for new equipment.
But the cash strapped state doesn't have the money to do much tradition fixed investment, but it rather at this stage looking to do big infrastructure deals to give the economy a boost and create the platform on which regular business can function.
14 UKRAINE Country Report February 2020 www.intellinews.com
