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drafted an appropriate bill... The question is how it will be implemented. [...] The exit capital tax can successfully become corrupt in two or three years," the minister said more than a month ago, adding that the ministry was working on finding compensators.
At the same time, he also said that for this decision the position of the Finance Ministry is not enough, it should be taken at the level of the National Security and Defence Council (NSDC).
6.1.2 Budget dynamics - funding & privatization
Ukraine is planning to increase its borrowing in both the domestic and foreign currencies , acting finance minister Oksana Markarova said in an interview with Reuters. Ukraine has some $3bn of bond obligations to meet through to the end of 2018 rising to $7bn next year. But the country won’t be able to meet these payments without International Monetary Fund (IMF) help, unless it runs down its reserves to destabilisingly low levels. Markarova told Reuters that in addition to borrowing in dollars, Kyiv is looking at resuming bond issues in euros and may also issue debt in other currencies, such as the Chinese yuan. Doing so would help Ukraine reduce its vulnerability to changes in the dollar-hryvna exchange rate.
Ukraine's state-owned natural gas monopoly Naftogaz transferred UAH71.7bn ($2.7bn) in taxes and dividends to the national budget in January-June , the company said in a statement on June 10. The Naftogaz group accounted for 17.7% of total revenue of the national budget in the first six months of 2018. Last year, Naftogaz and its enterprises paid UAH107.3bn in taxes and dividends to the budget, according to Interfax news agency.
Ukraine’s Finance Ministry raised UAH5.0bn (in the equivalent) at its weekly local bond auction held on July 24 after UAH1.8bn was raised last week. About three-quarters of auction receipts were raised with the placement of $- and EUR-denominated bonds, while the rest came from the placement of 3M and 2Y UAH-denominated bonds. The government, hungry for foreign currency, offered a wide range of FCY-denominated local bonds for sale. The highest foreign currency receipts – €60.5mn – were brought by six bidders who bought 1Y euro-denominated bonds with a weighted average interest rate of 4.20%. The $auction receipts, which amounted to $71.5mn, came from the placement of 6M ($16.0mn at 5.10%), 9M ($29.9mn at 5.25%) and 18M ($25.6mn at 5.55%) bonds. Meanwhile, the MinFin refused to satisfy eight bids for 2Y bonds that demanded an interest rate of 6.00%. The government satisfied all 19 bids for 3M and three bids for 2Y UAH-denominated bonds, which were sold for UAH1.1bn and UAH60mn respectively. Interestingly, all bidders for UAH-denominated bonds demanded the same interest rates – 18.0% for 3M and 16.8% for 2Y. The thin receipts from the local Eurobond placement two weeks ago made the government diversify the offer of FCY-denominated bonds while the preliminary auction schedule prescribed the placement solely of 1.5Y $-denominated bonds. Higher FCY-receipts were needed to cover the July currency outflow related to repayments on local Eurobonds of $230mn in order to avoid a significant drop in gross foreign reserves given the lack of other sources for foreign currency inflow. The rates of 18.0% and 16.8% for UAH-denominated bonds are likely to be viewed as
39 UKRAINE Country Report August 2018 www.intellinews.com