Page 39 - UKRRptMay21

The impact on Ukraine’s economy from the coronavirus (COVID-19) pandemic was milder than expected in 2020 and the economy is expected to rebound strongly this year.
Ukraine’s economy contracted by 2.8% in January and February, compared to the first two months of last year, estimated the Ministry of Economic Development and Trade. Except for retail trade, all sectors were down. But consensus forecasts put Ukraine’s 2021 GDP growth at 4%.
Inflation is also a concern, but the National Bank of Ukraine (NBU) returned to aggressive tightening in March and is expected to continue to hike rates to bring inflation under control.
Ukraine's annual inflation will reach a 1.5-year high of 8% in March 2021, exceeding the central bank's forecast of 7.6%, said a monthly Reuters poll of Ukrainian analysts.
Analysts said consumer prices rose due to inflation imported from world commodity markets, notably wheat, corn, sunflower oil and crude oil.
Oleksiy Blinov, Alfa-Bank Ukraine’s Head of Research, said: “These changes in external prices are directly and indirectly transmitted to consumer inflation in Ukraine.”
The IMF has predicted that Ukraine’s consumer price index will end this year at 7.9%.
Ukraine may receive $2.7bn from the IMF this summer under a plan by the International Monetary Fund Managing Director, Kristalina Georgieva, to allocate $650bn from international reserves to restore the world economy after the coronavirus crisis. Unlike the conventional IMF programs this money would not have to be paid back. The National Bank of Ukraine Governor, Kyrylo Shevchenko, announced the possible windfall yesterday following a meeting with Alfred Kammer, the Director of the IMF’s European Department.
On April 20 t he US Embassy announced that the US Government is providing $155mn in “additional development funding” through USAID. In the heading “Counter Russian Aggression” the US will provide $63mn “to reduce Ukraine’s energy and economic dependence on Russia by advancing connections to Europe’s energy grid and strengthening businesses in the East.” Other business-oriented projects include: promoting transparency, building the land market, safeguarding anti-corruption institutions, expanding judicial reform and supporting the development of online e-government platforms.
The National Bank of Ukraine (NBU) generated UAH40.73bn of profit for distribution in 2020, of which it decided to direct UAH24.43bn as a contribution to the state budget, the NBU reported on April 20, adding that the entire tranche has been already paid to the state budget.
The rest of the distributable profit, UAH16.30bn, will be directed to increase the NBU’s reserves which, by law, should be equal to 10% of the annual average financial liabilities of the entity.
The state receives almost UAH2bn more than the National Bank expected last
39 UKRAINE Country Report May 2021 www.intellinews.com