Page 44 - UKRRptAug20

to about 0.1pp at the July 23 pricing, lower than 0.2-0.3pp previously, based on our calculations.
The Finance Ministry will use $846mn of the $2bn Eurobond placement to buy Eurobonds maturing in 2021 and 2022​, the Ministry reports. This about $100mn more than expected. With the settlement to take place Thursday, the $2bn Eurobonds carry a yield of 7.253%. The old bonds carried yields of 7.75%.
Ukraine and the E.U. signed on July 23 an agreement for a EUR 1.2bn macrofinancial loan​, the eurointegration.com.ua news site reported that day. The first EUR 600mn loan was granted immediately, while the second tranche will depend on fulfilling requirements in the spheres of judicial, tax and customs structural reform. In particular, the government is required to reset fully the High Qualifications Commission of Judges, whose members are supposed to be selected based on a special competitive commission with international involvement. It must also launch an integrity and ethics commission, also to include foreigners, that is responsible for resetting the High Council of Justice. Other judicial reforms are concluding the certification of prosecutors at the regional level and beginning the process of certification at the local level. An independent registry of cases – being investigated by the National Anti-Corruption Bureau and Specialized Anti-Corruption Prosecutor’s Office – must be completed and launched.
The EU’s €1.2bn macro-financial assistance program for Ukraine “could be jeopardized”​ if the IMF considers its program with Kyiv “off-track” because of Smoliy’s resignation, a European Commission spokesperson in Brussels tells EURACTIV. “The existence of – and adherence to – an IMF program is an essential precondition for disbursements” under EU macro-financial aid programs, the Commission spokesperson said.
The European Investment Bank may issue a €340mn low interest loan to Ukraine for restoring public buildings – schools, hospitals, roads and water systems ​– in eastern Ukraine, largely government-controlled Donetsk and Luhansk. The goal is to improve infrastructure in areas coping with large numbers of people displaced by the war with Russia.
6.1.4​ Budget dynamics - privatization
Kyiv’s state-owned Dnipro Hotel was sold by online auction in July to a real estate company for $41mn –​ 14 times the starting bid of $3mn. With 29 investors participating in the ProZorro auction, interest in the 186-room hotel may have grown after the Rada approved Tuesday a law allowing casinos in hotels with 150 rooms or more. Inga Ioanno, spokesperson for the State Property Fund, told the Kyiv Post: “As of today, it is the best location and the hotel meets all the criteria of this law for opening a gambling hall.”
The Hotel Ukraina, overlooking the Maidan, is to be the next state-owned hotel to go up for sale​. First, government lawyers have to break several legal “poison pills” that make the property unattractive to outside investors. Sennichenko, of the state property fund, said that last year Ukraine’s 3,000 state enterprises caused the government losses of $6.3bn.
44​ UKRAINE Country Report​ August 2020 ​ ​www.intellinews.com