Page 35 - UKRRptOct18

Ukraine, which is running out of cash and has large bond repayments to make this autumn and next year. Sovereign external debt amortisations are $1.8bn for the rest of 2018 and increase to $3.3bn in 2019 and $3.9bn in 2020 (including bond repayments of $1.6bn in September 2019 and $2.4bn in 2020). According to the budget's draft, the nation's Finance Ministry expects that the ministry would raise UAH1.47bn from the International Bank for Reconstruction and Development (IBRD) under the Social Safety Nets Modernisation Project and UAH18.375bn of the macro-financial assistance from the European Union (EU). The total volume of domestic borrowings is planned at the level of UAH202bn, including UAH6bn thanks to the placement of nine-month government domestic loan bonds, UAH8bn - eight-month bonds, UAH10bn - one-year bonds, UAH19bn for three-month bonds pegged to the national currency. Another UAH13bn will be attracted through the placement of five-year government domestic loan bonds, UAH58.694bn - three-year and UAH87.325bn - two-year bonds (all - in the national or foreign currency).
Shaping up as the biggest privatization of the year, Ernst & Young proposes a starting price of $225.5mn for the 78.3% shares of Centrenergo that go up for auction this fall, the Finance Ministry reports. Last week, at the ICU Forum in Odesa, Piotr Piela, the EY Poland partner advising on the privatization, expressed optimism that the state owned power generating company will be auctioned off by the end of this year.
Clearstream, which operates securities settlement systems with links to over 50 national markets worldwide, sees the first quarter of 2019 as a ‘window’ to open foreign investor access to Ukraine’s domestic government bonds , Jan Willems, a vice president of Clearstream said at the ICU Forum in Odesa. Since 2017, Clearstream, a unit of Deutsche Börse, has been negotiating with the National Bank of Ukraine to establish a link between the two entities. The goal is to simplify foreign investors' access to Ukrainian government bonds. Foreign investors will not need to go to Ukraine and open an account with the bank if they have an account with the global Clearstream depository, Interfax-Ukraine reports. They will be able to buy Ukrainian securities directly.
As part of Ukraine’s decisive decentralization, local budget revenues have tripled over the last five years, to about $8bn this year , reports Hennadiy Zubko, minister of regional development. Next year, local budgets should account for 51% of the nation’s consolidated budget. Boosting local tax revenues next year, localities will get a portion of farmland lease income and a portion of subsoil mineral extraction. Ukraine’s new revenue sharing structure motivates regional politicians to court business investment.
Selling the 10mn hectares of farm land in state hands would generate $15bn to $20bn in revenue and would radically boost productivity, Makar Paseniuk, managing partner of ICU, said at the investment group’s financial forum. “That is larger than the current reserves of Ukraine,” he said “This $15bn can be raised in 3 years or less... Land reform would be a huge driver for the economy.”
Ukrainian officials signed a memorandum and loan agreement for €1bn with the EU Commission on September 14, according to Ukraine's Ministry of Finance that will be released as soon as Kyiv reaches a new agreement to restart the stalled International Monetary Fund (IMF) programme. The EU program of macro-financial assistance for Ukraine (MFA IV) consists of two
35 UKRAINE Country Report October 2018 www.intellinews.com