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AS OF February 7, 2015

National Bank demonstrates resolve to keep hryvnia stable

News / 7 February 2014 | 18:15

During the last few months the Ukrainian economy was under a strong pressure caused by an ongoing political crisis. However, all that time the National Bank managed to keep the stability of the hryvnia in check. In fact, business and public displayed confidence in the stability of 

This is corroborated by the NBU statistics of the hryvnia deposit dynamics in the banking system. At the beginning of 2014 the balances of businesses and individuals in the hryvnia accounts were 420.9 billion UAH, up 101.0 billion UAH. At the same time, the foreign currency account balances fell from 248.1 billion UAH to 245.2 billion UAH 

Experts say, of special significance is the public behavior. In 2013, individuals increased the balances on their hryvnia current and deposit accounts by 69.8 billion UAH, from 183.8 billion UAH (as of 1.01.2013) to 253.6 billion UAH (as of 01.01.2014). 

Since early October 2013, when the political situation in the country started to aggravate, and through the end of 2013, the population has continued to increase the balances on their hryvnia deposits. Their 

growth was 15.1 billion UAH. At the same time the foreign currency deposit balance fell by 3 billion UAH over the same period, from 186.6 billion UAH to 183.6 billion UAH. These data is a strong argument in 

terms of absence of negative expectations towards hryvnia from both business and population. At the same time the NBU and the government managed to keep the foreign exchange reserves at an 

adequate level. In 2013 they fell by only 3.6 billion USD, to 20.4 billion USD, although payments to the IMF last year alone amounted to 5.6 billion USD. 

However, a sharp destabilization of the political situation in the second half of January 2014 challenged the hryvnia stability prospects. This caused a sharp increase in demand for foreign currency. 

During January 2014, the NBU was forced to increase its presence on the interbank foreign exchange market, by using its existing mechanisms and instruments of monetary stabilization. In fact, its foreign exchange intervention amounted to 1.7 billion USD. 

In this regard, experts say that expectations are extremely important for determining the behavior of businesses and ordinary citizens. Even if there is no fundamental economic reasons for concern, 

but politicians or speculators encourage negative expectations, so the economic situation may begin deteriorating: the consumer demand falls, investments dry out, distrust in the stability of national 

At the same time, even if there are foreign trade and domestic economic factors that create difficulties for the economy, but the society believes in the ability of the government and the central bank to ensure 

a long-term stability of the national currency, the positive expectations push up the economy. Based on the understanding of this important factor that drives economic development, banking analysts comment on the NBU’s decree dated Feb. 6, 2014. 

Analysts say the National Bank demonstrates to business entities, banks, and public its resolve, on the one hand, to provide adequate liquidity to banks, so they can timely and fully meet their obligations. 

On the other hand, they can use all available market and administrative controls to prevent intentional rocking of the national currency valuation. 

So, pursuant to the decree, enterprises can’t move or withdraw money from the account in the amount that would exceed the morning balance in the account. That is, if at the opening of business, the 

enterprise has 100,000 UAH in the account, it can’t pay out more than that, even if it received 500,000 UAH on that particular day. 

Experts of the Independent Association of Ukrainian banks note that this is a standard practice adopted in most developed countries. For example, there is a similar mode for using account balances in England and the United States. 

Analysts agree that this restriction adopted by the National Bank creates some temporary difficulties for business. But in the conditions of currency market destabilization and possible deterioration of the banking system caused by panic from both business and population, this solution may help stabilize the situation. Those who have used banking system to put cash through dozens accounts within a day, no longer can do so. This would significantly reduce opportunities for currency speculation. Analysts say certain currency purchase restrictions will help reduce pressure on the hryvnia. National Bank experts say that regulatory decisions are aimed to tighten control over the timely 

payments of wages, pensions, scholarships and social allowances. However, no restrictions are introduced for payments for study or treatment abroad; transporting patients; transfers associated with immigration; cash transfers for remuneration of non-residents. 

Banking market experts believe that the decisive actions of the National Bank will help to change the foreign exchange market trends. The negative expectations and panic demand for foreign currency in the 

coming days will result in increasing sales of foreign currency by business entities and public, which will lead to strengthening of the hryvnia. 

In this regard, experts note that on Feb. 7 the National Bank was not making interventions, but just the opposite, buying up foreign currency at the rate of 8.55 UAH for 1 USD.

ForUm

Procedure for providing the disabled with rehabilitation simplified

News / 7 February 2014 | 17:00

The government has approved the initiative of the Ministry of Social Policy of Ukraine to amend the procedure for providing the disabled with rehabilitation aids. Draft resolution of the government was developed in the framework of the State Target Program “National Plan of Action for Implementation of Convention on the Rights of Persons with Disabilities till 2020”, the Information-Analytical Bulletin of the Cabinet of Ministers of Ukraine informs.

“The existing Procedure for provision of technical and other aids for rehabilitation of the disabled persons, children with disabilities, and other groups of population must be improved. It is necessary in order to improve social protection of disabled people,” said Natalia Korolevska, Acting Minister of Social Policy of Ukraine.

The approved changes envision provision with technical and other rehabilitation aids for persons with disabilities in case of occupational injury, which cannot be paid from the Fund of Social Insurance Against Industrial Accidents and Occupational Diseases, experts say.

“For example, if a disabled person suffered a double injury, one as accupational injury and another one from a common disease, the Social Insurance Fund will provide rehabilitation aids only to persons with occupational injury. Now, such person will be able to get help related to common disease as well,” Korolevska explained. 

According to experts, the procedure simplifies providing the disabled persons with rehabilitation aids, including special cell phones for visually impaired and hard-hearing children. The procedure also expands the list of diseases, for which women are provided with prosthetics paid for from the state budget.

ForUm

KCSA estimates losses from Hrushevsky Street riots at 24 m

News / 7 February 2014 | 16:51

The Kyiv City State Administration estimates losses from holding protests in the Hrushevsky Street in front the stadium “Dynamo” at 24 million UAH. 

“Losses are large. I said they were worth 24 million, but I do not know the precise figures, as every day something is going on there,” first deputy chairman of KCSA Anatoly Holubchenko said.

In addition, he said that the city government would agree if repairs will be paid by sponsors.

“Of course, as soon as the sponsors want, let them come and repair. We will be grateful,” he said.

ForUm

Expert: Russia, EU should coordinate their positions on Ukraine

News / 7 February 2014 | 16:46

Russia needs to negotiate with the European Union on joint actions on the territory of Ukraine, head of the Center for Political Studies of the Institute of Economics, professor Boris Shmelev said, ForUm correspondent reports.

“In my opinion, in the current situation that is developing in the world and in Europe, it would be appropriate for Russia to negotiate with the EU on joint actions on the territory of former Soviet Union, and particularly in Ukraine. Because confrontation will not lead to anything good,” he said.

ForUm

Yanukovych to meet Jagland in Sochi

News / 7 February 2014 | 16:34

Secretary-General of the Council of Europe Thorbjorn Jagland intends to meet with Ukrainian President Viktor Yanukovych in Sochi on the afternoon of Friday, the press service of the Council of Europe informs.

“The topics for discussion (at the meeting- Ed.) are constitutional reform, electoral legislation, as well as an advisory group to investigate, which was initiated by Mr. Jagland to oversee the investigation of clashes during the demonstrations,”  statement said.

As a reminder, the Council of Europe Secretary General Thorbjorn Jagland proposed to create the independent advisory group to investigate into violent incidents during the protests in central Kyiv. PACE in its resolution of January 30 supported the initiative.

ForUm

Agrarian Policy Ministry expedites construction of new agricultural facilities

News / 7 February 2014 | 16:20

The Ministry of Agrarian Policy and Food intends to speed up construction of new agrarian facilities in the regions, Mykola Prysyazhnyuk, Acting Minister of Agrarian Policy and Food of Ukraine, has said. According to him, local executive authorities should expedite building of new agrarian facilities pursuant to the Program for activation of economic development 2013-2014, the Information-Analytical Bulletin of the Cabinet of Ministers of Ukraine informs.

“The program will ensure fulfilling of the objectives set by President. It covers the development of the priority economic sectors, including agriculture. Most importantly, the implementation of this document will result in a social effect, which the president pointed out repeatedly. In 2013 alone, 98 agricultural facilities that created 7,600 jobs were commissioned,” Prysyazhnyuk said.

According to the Ministry of Agrarian Policy, 12 billion UAH were invested in the construction of these facilities. The Program for activation of economic development 2013-2014 in the agribusiness will help regional authorities considerably influence development of the agricultural sector in their respective fields. According to Prysyazhnyuk, the results, production indexes in the industry depend largely on the regional authorities, especially given the program budget decentralization process which will give more freedom to local authorities in managing their funds.

ForUm

Experts: Ukraine under threat of Kosovo scenario

News / 7 February 2014 | 16:00

Kosovo scenario may be implemented in Ukraine, Russian experts said during a videoconference Kyiv-Moscow, ForUm correspondent reports.

Thus, deputy director of the Russian Institute for Strategic Studies Tamara Guzenkova stressed that talks about division of Ukraine and, as a soft option, regionalization and federalization have been going on for a long time, and the likelihood that they will go into practice is quite high.

In addition, a senior research fellow at the Institute of Slavic Studies of the Russian Academy of Sciences Petr Iskenderov noted that the danger of the situation in Ukraine is that events can take unpredictable nature and get out of real control.

In turn, head of the Center for Political Studies of the Institute of Economics, professor Boris Shmelev compared Ukraine to Kosovo and Kosovars to resident of western Ukrainian regions, stressing that the latter ones set to resolve the national question with radical methods.

ForUm