WEEKLY ECONOMIC MONITOR : TRENDS The Week of January 24-28, 2000
20 Jan 2000
WEEKLY ECONOMIC MONITOR : TRENDS
The Week of January 24-28, 2000
The government officials have not announced the program of actions yet.
However, the market received a series of quite important signals, which, if implemented, would positively affect the economic situation.
1. The new team is commited to the balanced budget, adoption of which is supposed to initiate the process of putting the government finance in order.
2. The government plans to stop an increase of the external debt, the combined
volume of which is almost equal to the combined budget balance in 1992-1999.
Slowing down of rates of growth of the external debt in 1996-1997 was “compensated” by a dramatic increase of wage and pension arrears.
3. The government intends to stop an excessive money printing, namely, in the
year 2000 it does not plan to apply for the new NBU credits (see also
The Weekly Report
, January 18, 2000).
Assuming that the volume of money base equalled that of the NBU credit to the government at the end of 1997, we see that during last two years, the money base grew by 70 percent, while the NBU credit to the government increased by 154 percent. It is worth to remind that it did not stop decline of GDP by 1.7 percent in 1998 and by 0.5 percent (estimate) last year.
4. The government plans to stop the hidden emission through the purchases of the Treasury bills by the National Bank (or by purchases of them by the state-owned Oshchadnyj bank with the further repurchase of T-bills by the NBU).
In 1997-1998 the government exaggerated the reliability of the short-term bond finance. Foreign investors began to leave the market in times of the Asian crisis. However, the Ministry of Finance has continued to offer T-bills on the primary market even at exorbitant rates until default on GKOs in Russia in the middle of August 1998 and further sharp devaluation of the hryvnia.
The government promises to balance purchases and redemption of T-bills in 2000.
In this case the ratio of T-bill debt to GDP will go down significantly.
5. The government plans to start redemption of its arrears to the banking institutions. The volume of this debt was estimated at UAH 600 mln at the end of 1996, UAH 1,300 mln at the end of 1997 and UAH 2,300 mln a year ago.
Non-fulfillment of its obligations by the government led to an increase of riskiness of doing business in Ukraine. Therefore, banks had to set up higher credit rates making credits unacceptable by enterprises.
6. The government plans to stop supply of fuel and other oil products to
agriculture. The agricultural enterprises will have to buy them on commodity
exchanges, which is a normal practice in the Western countries. This
intention is quite revolutionary for Ukraine, because the agricultural lobby
is pretty strong. Despite the total debt of agricultural enterprises
with a total value of UAH 14 bln, they had an idea to rely on the government
bail-out in the future. During eight years of “successful” management of
collective agricultursl enterprises their combined market value fell from
USD 76 bln to USD 9 bln.
To summarize, we have to emphasize that the government plans are really radical and may change the situation for the better. For this, budget-2000 and the Government program of actions have to be adopted as soon as possible.
According to the State Property Fund, this year it plans to UAH 2,500 mln raise
in the process of privatization. The potential objects represent the following sectors of industry:
Planned revenues,(UAH, mln)
Chemicals and engineering
The total planned figure (USD 0.5 bln) sounds high by Ukrainian standards, but
two years ago Lithuanians managed to get two times more. Expecting revenues,
market is showing the long-awaited “bull” trend.
January 20, 2000;
The Financial Week’2
, The Ukrainian News Agency
Prepared by O.Babanin January 20, 2000
Чешский Клуб: Высшее Образование в Чехии, Клуб Чешского Языка:
Курсы чешского языка в вечернее время (включая углубленный курс)
Курсы чешского языка (интенсив/суббота и воскресенье)
Как получить высшее образование в Чехии (включая магистратуру и аспирантуру)
Государственные высшие учебные заведения Чешской Республики
Нострификация аттестатов о среднем образовании
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