Cooperation of Ukraine with World Bank and IFO is the way towards stability and development

News / 2 December 2008 | 17:30

“Ukraine highly appreciates open and sincere relations established between our country and the World Bank,” Minister of Economics of Ukraine Bohdan Danylyshyn stressed.

Over the time of Ukraine’s independence its cooperation with the World Bank facilitates to further economic growth and financial stabilization, stirring up market transformations, integration into the EU as well as provides an opportunity to take into account the world experience in introduction of measures for advancement of economic development.

Over this period the Bank proposed to Ukraine resources to the tune of over USD 5.56 bn which consists around 36.4% from the general sum of IFO financial resources over this timeline.

“On conditions of broadening of the global financial crunch Ukraine is interested in obtaining the significant financial resources from international financial organizations to soften negative fallout of the crisis on economic and social development of our country,” the head of economic department stressed.  

Bohdan Danylyshyn views under this situation the resources of the World Bank still remain the most competitive at the value of resources for Ukraine as compared to international capital markets.

On November 5, 2008 the Council of Directors of International Monetary Fund approved an annual Stand-by (SBA) program to the amount of around USD 16.4 bn targeting assistance to Ukraine to support its financial and economic stability.

The Economics Minister is convinced that introducing of the blueprint would facilitate to macroeconomic stability, lowering of inflation level, stabilization of the national system under conditions of the global crunch, trust on financial markets and structure reconstruction in the economy on conditions of worsening of foreign economic conjuncture.

The instrument will be directed to:

- solving of problems in financial sector by means of: 1) support of liquidity and broadening of guarantees in deposits; 2) strengthening of capacity of the banking system including the state funds; 3) regulating of an issue of debts of households and entrepreneurs’ sector;

- lessening of influence of external shocks and reducing of level inflation by pursuing a respective macroeconomic line.

The Economics Minister also emphasized readiness of the World Bank to operatively response and solve issues of providing resource support to Ukraine to correspond with our topmost needs of the development. In this context Bohdan Danylyshyn is grateful for the possibility to receive the backing on the side of the World Bank through applying a mechanism of a new system loan – the Third loan for the development policy.

So, on November 25, 2008 negotiations between the delegation of Ukraine with representatives of the World Bank have been successful which resulted into initialing of the text of Agreement on loan between Ukraine and IBRD concerning the project “The Third loan for the development policy”. Moreover, the Protocol and Letter of the Government of Ukraine to the World Bank concerning the development policy which would enable for the World Bank on December 23 of the current year to forward for consideration by the Council of Directors of the Bank this credit, which in its turn would enable signing of an Agreement on loan and receiving till the end of the year these funds to the tune of USD 500 mn for support of the state budget of Ukraine as well as carrying out structure and institution reforms.

According to Bohdan Danylyshyn, deepening of cooperation with the World Bank appears pressing not only to overcome the global financial crisis but to solve issues to ensure eliminating of restrictions for the development.

“Ukraine is concerned in obtaining the financial support of the World Bank for realization of infrastructure projects, primarily in those directions where Ukraine bears highest needs while the experience of cooperation appears the most successful: these are introducing of projects in the areas of state municipal and transport infrastructure, energy sectors and energy saving,” the Minister emphasized.

The year of 2008 has become a turning point for optimization of the structure of the World Bank portfolio in Ukraine, its reorientation for the support of real economics sector and development of infrastructure, also improvement of the state of project portfolio occurred. So, on the outcomes of 2008 financial year (01.07.2007 – 30.06.2008) Ukraine has demonstrated the best over all the years of collaboration with IBRD showing of applying the funds along the investment projects which totaled 13%.

In 2008 the portfolio of IBRD projects on all stages of the project cycle (initiating, preparing and realizing) has reached almost USD 3.5 bn. So, 9 investment projects were in active phase of realization, the sum of IBRD loans amounts USD 817.517 mn, as well as 1 system project “The Second loan for the development policy”.

September-October of the current year the laws on ratification of agreements into three investment projects under the IBRD support were approved, which gives an opportunity to launch realization of 2 infrastructure and 1 institutional projects to the general sum of USD 390 mn (agreements into the projects are being taken into effect):

- Project on modernization of state finances;

- Project on municipal infrastructure;

- Project on power energy transfer.

Furthermore, initiating and preparing of 4 investment projects of infrastructure development which would enable attracting additional resources in the sphere of energy and transport to the general sum of around USD 1.4 bn is being conducted.

So, Ukraine counts on holding negotiations with the Bank and approval by the Council of Directors of the World Bank by June 30, 2009 of the following projects:

1)      Improvement of motor roads and safety of roads;

2)      Rehabilitation of hydroelectric power stations;

3)      Rehabilitation and development of the system of electric supply of Kyiv;

4)      Raising of carrying capacity of Znamyanka-Dzhankoy railway line.

Bohdan Danylyshyn considers that joint acquisitions with the World Bank can be noticeably significant and that Ukraine is interested in obtaining financial support of the World Bank for realization of infrastructure projects in maximal amounts according to the Cooperation Strategy of the World Bank with Ukraine for 2008-2011.

 “We possess every reason to rely on deepening of cooperation with the World Bank and other financial organizations,” the Economics Minister of Ukraine is convinced.

With this objective an optimal mechanism for fast and effective applying of IFO resources to finance priority objects of social and economic development has been elaborated.

So, on October 17, 2008 the Government of Ukraine approved a new ordinance of the Cabinet of Ministers of Ukraine “On order of initiating, preparing and realizing of projects of economic and social development of Ukraine supported by international financial organizations”. This instrument envisages a series of changes introduction of which will enable to significantly stir up the process of initiating, preparing and putting in force agreements on loan as well as will ensure timely applying of funds on the stage of realization of joint with the international financial organizations projects. In particular, it will enable to synchronize the cycle of initiating and preparing of project with the budget cycle which will afford to manage in 12-days of preparation in average which exists in practice.

“Putting in force of this ordinance respond to urgent needs of international financial organizations and Ukraine to ensure effective attracting and use of investment resources for the development and will give impetus to the development of fruitful cooperation between Ukraine and the World Bank,” Bohdan Danylyshyn believes.

In the context of the development and deepening of bilateral cooperation Ukraine proposes to consider the possibility to provide financial support form the side of the bank in the following priority directions:

- Energy and energy saving: Project of rehabilitation of thermoelectric power station and Project in electric energy transition 2 phase.

- Development of transport infrastructure: improvement of transport exploitation state of motor roads along the directions Kyiv-Chernihiv-Novi Yarylovychy; Kipti-Glukhiv-Bachivsk; Kyiv-Kharkiv-Dovzhansky; Kyiv-Luhansk-Izvaryne; Kyiv-Chop; Kyiv-Kovel-Yagodyn; Kharkiv-Shcherbakivka; building and overhaul of roads in the directions: Kharkiv-Krasnograd-Pereshchepyne-Novomoskovsk; Dniporpetrovsk-Tzarychanka-Kobelyaky-
Reshetylivka; building and improvement of transport exploitation state of motor roads connecting check-points via teh state border with cities of Ukraine which are planned to host the finals of Euro-2012 Football Championship.

- Municipal development: ensuring of improvement of functioning and development of infrastructure of Northern Crimean canal as a strategic priority in the sphere of water supply of Autonomous Crimean Republic; Project of the development of municipal infrastructure (2 phase) of improvement of heat supply of the cities.

“Ukraine has been and still remains one of the states in Europe which is characterized with stability in pursuing foreign and internal policy. At the same time successful solving of problems of reforming of economics calls for support from the side of international financial organizations and in this aspect development of collaboration with the World Bank proves of great significance for Ukraine,” Bohdan Danylyshyn summed up.

Government portal

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Ukraine, Russia ’set for new gas talks’

News / 2 December 2008 | 16:23

(AFP) A delegation from Ukraine’s state gas company Naftogaz is to hold talks Tuesday in Moscow with Russian energy giant Gazprom on clearing Ukraine’s massive gas debt, a government source said.

“The negotiations will take place on Tuesday and Wednesday,” said the source, who asked not to be named.

The Russian company says Naftogaz owes some 2.4 billion dollars (1.9 billion euros) and has warned of potentially crippling gas cuts if the debts are not paid. Ukraine disputes some of the penalties imposed for late payment.

Kiev agreed last week to pay the debts owed for September and part of those owed for October by December 1. Gazprom has said part of this sum has now been paid back but not the full amount required.

Gazprom has also warned that it could raise the price to 400 dollars per 1,000 cubic meters — more than double what Ukraine pays now — if the debt is not paid.

Currently Ukraine pays Russia 179.5 dollars for 1,000 cubic metres of gas, much less than what European Union countries pay. A sharp rise would be bad news for Ukraine’s economy, which has been hit hard by the financial crisis.

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Ukraine says Somali pirates may release Faina ‘tank ship’ soon

News / 2 December 2008 | 15:26

Ukraine’s Foreign Ministry has received information indicating that the MV Faina cargo ship, seized by Somali pirates almost two months ago, may be released soon, a spokesman said Monday.

The Faina, carrying 33 T-72 tanks and other heavy weaponry, was seized by Somali pirates on September 25. The pirates initially demanded a $35 million ransom, but this has since been lowered to $3 million.

However, Vasiliy Kirilich refused to answer any more questions on the topic, saying it was “not a matter for public discussion.”

He did say however that Ukraine had no intention of paying a ransom and that it was involved in “diplomatic measures to speed up the release of the crew of the seized vessel.”

France Press reported from the Somali capital of Mogadishu on Sunday that an agreement to release the ship had been reached, and that the vessel and its crew would be freed soon.

The crew is made up of 17 Ukrainians, three Russians, and one Latvian. The Russian captain of the Faina, Vladimir Kolobkov, died of a heart attack after the vessel was seized, and his body is still on board.

The pirates said nearly three weeks ago that supplies of fresh water and food on board the vessel were running low.

A spokesman for the U.S. Navy’s 5th Fleet earlier claimed that the intended destination for the weapons was southern Sudan’s rebel region, and not Kenya as had been announced.

Both the Ukrainian and Kenyan authorities have denied the allegation.

News on the possible release of the Faina follows a report that a Saudi supertanker seized by the pirates on November 15 could be released in the next 48 hours.

Somali pirates have attacked around 90 ships so far this year, resulting in the seizure of around 39 vessels, including 200 crew members. The east African nation has been without a functioning government since 1991.

UN Secretary-General Ban Ki-moon said in his quarterly report to the UN Security Council in November that pirates had earned up to $30 million in ransoms this year. The Security Council has also adopted a British-proposed resolution on tougher sanctions against Somalia over the country’s failure to prevent a surge in sea piracy.

NATO and the EU are to launch on December 8 a joint naval operation, dubbed Atalanta, against piracy near the coast of Somalia. The operation could involve up to 10 warships.

RIA Novosti

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Production of metal in Ukraine declined twice

News / 2 December 2008 | 14:55

Production of metal in Ukraine declined twice against November, 2007. iron smelting declined by 57%, steel production – by 55%, production of rolled products – by 51%, according to the Ministry of Industrial Policy of Ukraine.

“It is too early to tell about stabilization,” an official of the Ministry stated

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Nato allies divided over Ukraine and Georgia

News / 2 December 2008 | 13:20

Washington and several of its European allies were divided last night over how to respond to Georgia`s and Ukraine`s bids to join Nato and over whether to resume high-level Nato-Russia contacts frozen because of the Russian invasion of Georgia in August, Guardian reported.On the eve of a meeting of Nato foreign ministers today in Brussels, the Americans pushed for a new formula that would put Ukraine and Georgia on a slow path to Nato membership. But at least six European Nato members opposed the US move, which is backed by Britain, suggesting that the two-day Nato meeting will result in an ambiguous fudge. Since 1999 prospective Nato members have had to follow a roadmap known as the Membership Action Plan (MAP) to qualify for membership. At a Nato summit in Bucharest in April President George Bush pressed for Ukraine and Georgia to be awarded the MAP, but he was defeated by Chancellor Angela Merkel of Germany who argued that such a step would increase friction with Russia. The summit agreed a contradictory compromise, denying the two countries the MAP while stating they would eventually become Nato members. The summit instructed today`s meeting to review those decisions. With British and east European support, the Americans argued last night that the deadlock could be broken by pushing ahead on the membership path outside the MAP. Germany, Spain, Italy and others disagreed, contending that there could be no Nato membership process without it. “The whole discussion around the MAP has become so politicised that it has lost its sense. It has turned into something of enormous political symbolism,” said a senior US official. “We should just try to put it aside.” The British have sought to bridge the divide by proposing that the MAP procedure remains valid, but that Georgia`s and Ukraine`s membership bids be processed through two separate commissions between Nato and the applicants. The main European countries reject this. On balance they view Georgia as the bigger villain in the August war with Russia, regard Georgia`s president Mikheil Saakashvili as untrustworthy, believe that political instability in Ukraine makes it unsuitable for Nato, and are anxious to avoid further confrontation with Moscow. “There is no consensus,” said a senior Ukrainian official. “The MAP will not be given to Ukraine. The issue has been removed from the agenda.” Rather than enhancing Nato security, both post-Soviet countries represent a security risk for the alliance, argues the west European camp. Diplomats and analysts say that the transatlantic split is such that today`s session will produce a formula that effectively replicates the conflicting signals sent in Bucharest. They add that the Bucharest decision was a mistake that contributed to the Caucasus crisis in August. The issue of Nato membership for the two countries is intimately linked with western policy towards Russia, currently incoherent and contradictory. President Nicolas Sarkozy of France earlier this month backed Russian calls for a major summit next year to try to redefine Europe`s “security architecture.” An international foreign ministers` meeting in Helsinki later this week could see Germany, France, Russia, and Finland supporting the summit, which is also opposed by the US and Britain. “We have good European security institutions,” said the senior US official. “The institutions that exist are sound. I am not convinced we need a new architecture.” A senior European diplomat said the Russian proposals could be considered but that the Americans had to be involved in any discussion about European security. “The first thing the Russians need to do is explain what they have in mind.” Guardian

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BYuT is ready to form coalition with Party of Regions

News / 2 December 2008 | 14:00

The BYuT faction is ready to form coalition with the Party of Regions faction.

Valeriy Pysarenko MP from the BYuT told journalists today.

According to him, today for the BYuT it is important to form the coalition in the VRU in the composition of at least 300 MPs.

“This is not a secret to anybody that the BYuT proposes both the Party of Regions and other political forces to form united coalition. This is not a crime that in the period of crisis we try to attract all political forces to unification,” he said.

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Government intends to increase budget assignments for science

News / 2 December 2008 | 12:30

The Government intends to increase the State Budget expenditures for the development of science. Prime Minister of Ukraine Yulia Tymoshenko told at solemn meetings on the occasion of the 90th anniversary of establishment of the National Academy of Sciences of Ukraine.

According to Yulia Tymoshenko, the Government backs up the increase of social provision of the domestic scientists, “I have only one dream – to provide you with proper labour conditions in Ukraine”. The Prime Minister noted that, in particular, the Cabinet of Ministers initiates the introduction of a complex program on supporting young scientists, “The Ukrainian science should have powerful young personnel”.

The Prime Minister noted that despite the fact that average wage and pensions of scientists had been increased during the last year, the Government would keep on it, “In that way, we give an opportunity and right to the people who devoted their life to the science to be backed up by the state and devote completely themselves to research investigations and studies”.

Moreover, the Prime Minister hopes that in the nearest future the political forces in the Parliament and the Government will achieve understanding, stability and political predictability, 190 laws drafted by the Government are in the Parliament after all, including the laws on science. “I believe that both the Parliament and Government are aware of the necessity to support and improve the science,” Yulia Tymoshenko stressed.

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Rusyns formed their government

News / 2 December 2008 | 11:52

Temporal government of Podkarpattya Rus has been formed. It starts its work since today. The leader of Rusyn movement Dmitriy Sidor informs.

According to him, declaration of independence of Podkarpattya Rus is in his competence. AT the same time he did not called names of the government members in order to avoid provocations.

Earlier the second European congress of Podkarpattya Rusyns put ultimatum to the power of Zakarpattya – to declare national autonomy of Rusyns in Ukraine’s conmposition on December 1. In case it is not done, then Act on declaration of reunion of Rusyn statehood in status of Podkarpattya Rus republic from November 22, 1938 will come into effect automatically.

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Chubarov reminded that Crimea is Ukrainian autonomy thanks to Tatars

News / 2 December 2008 | 11:05

17 years ago, on December 1, 1991, more than a half of residents of Crimea supported the referendum on Ukraine’s independence. This result took place due to votes of the Crimean Tatars, deputy head of Majlis Refat Chubarov stated.

“As to Crimea, then results of the referendum in our region had for Ukraine more importance, than results in any other region. This was Crimea where Ukraine had a risk to get a negative result. In spite of not all Crimean Tatars returned home and only about 80 thousand of our compatriots participated in the referendum, this was due to them who supported aspiration of Ukrainians for independence, and we received 54% of votes in the Crimean region,” Chubarov stated in an interview to the “Den” newspaper.

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Official NBU dollar rate is over 7

News / 2 December 2008 | 10:46

The National Bank of Ukraine set official currency rates for December 2, 2008:

UAH 714,2000 per USD100  (+26.4300 hrn);

UAH 900,4634 per EUR 100 (+25.1385 hrn);

UAH 2,5561 per RUB 10 (+0.0647 hrn).

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