Main economic events in Ukraine:

January 1999 - February 1999

January 1

• Article 1 of the Decree of the President of Ukraine on amendments in taxation (signed August 7, 1998) comes into force. It specifies that from January 1, 1999 the 5% payroll tax payable to the Chernobyl fund is abolished. This corresponds to measures agreed under the programme supported by the IMF under its EFF facility.

January 6

• ING Barings Ukraine wins a court case against the State Tax Administration (STA) regarding payments of tax on profits on T-bills held by non-residents. In November, the STA imposed large fines on several banks for non-payment of profit tax on T-bills held by their clients, who are registered in countries, with which Ukraine has signed agreements on the avoidance of double taxation.

January 14

• The President of Ukraine appoints:

- Volodymyr Kuratchenko as first Vice Prime Minister (earlier head of Zaporizhzhya regional administration);

- Myhaylo Gladii as Vice Prime Minister for agriculture (earlier head of Lviv regional administration).

January 15

• The Parliament adopts the law on Yavoriv's special economic zone, which is created in Lviv region, for a period ending in 2020. Companies implementing investment projects of no less than 0.5 mn USD are granted significant tax privileges. These include exemption from profit tax for the first five years, a 50% reduction of the rate in subsequent years, and exemption from VAT payments on equipment and land tax for the first three years.

January 18

• According to a Resolution of the Cabinet of Ministers, Kryvorizhstal metal works, the largest Ukrainian metallurgical enterprise, obtains a one-year deferral of its debt payments, payments to the state budget and payments to off-budget funds, with the excepmtion of the Pension Fund and the Social insurance fund. The Ministry of Finance is authorised to grant the plant a one-year deferral of payments on its government-guaranteed foreign credits. The payables of Kryvorizhstal amount to 1.6 bn Hrn. as of December 31, 1999.

January 19

• The President of Ukraine signs the Decree "On sales of non-agricultural land plots". The documents allows for sales of state- and municipally-owned land plots, on which privatised facilities are located. Land plots can only be sold to Ukrainian legal entities and citizens of Ukraine who own the facilities on which the land plots are located. According to the interim regulations of the Ukrainian Constitution, the decree comes into force in 30 days after it was signed (excluding the parliamentary holidays), provided that the Parliament does not reject it.

January 22

• The IMF approves new quota member-countries. Ukraine's quota is to be raised by 37.5% from SDR 997.3 mn to SDR 1.372 mn. In order to raise their quotas IMF member-countries have to pay within a period of 30 days. The state budget of Ukraine for 1999 stipulates 42.79 mn Hrn. for payments to international financial organisations.

January 25

• The President of Ukraine signs the Law of Ukraine "On state budget for 1999".

January 26

• The IMF mission reviewing the progress of implementation of the EFF program, insists that Ukraine has to revive the domestic government securities market, introduce a strict monetary policy and significantly reduce government expenditures. The IMF also insists that Ukraine should raise electricity and gas tariffs for the population and municipal enterprises as well as for public transport, as one of the policy measures agreed under the EFF program.

January 27

• The President of Ukraine appoints Andriy Honcharuk as Minister of foreign economic relations and trade.

January 28

• The President of Ukraine appoints Anatoliy Holubchenko as first deputy head of the State Property Fund (earlier first Vice Prime Minister).

January 30

• According to a Resolution of the Cabinet of Ministers, a new off-budget fund is created under the National agency for management of the state corporate rights. The funds raised will be used for financing measures aiming at the "improvement of the management of the state corporate rights".
• The Cabinet of Ministers adopts a resolution (No. 127/99) ordering an issue of "conversion discount T-bills". The discount bonds will be used to replace T-bills (OVDP) held by Ukrainian banks and maturing in February 1999. The new bonds will proportionally mature on May 5, July 28, August 11 and September 8, 1999, granting its holders a 33% yield p.a. The T-bills falling due in February, thus rescheduled, are reported by Ministry of Finance to total 173 mn Hrn. The overall amount of domestic T-bills held by commercial banks is estimated at about 2.5 bn Hrn.

February 3

• The Parliament extends mass privatisation in Ukraine till May 1, 1999. Auctions for privatisation certificates will continue to be held until that date.

February 8

• According to the statement of Viktor Yushchenko, Governor of the NBU, Ukraine may count on the renewal of the EFF program of the IMF and receive a 157-mn USD tranche of the 2.2-bn USD EFF loan by the end of March 1999. Governor Yushchenko held extensive talks with the IMF authorities in Washington on the financial situation and the progress of systemic reforms in the country. The EFF program was suspended in fall 1998, after the first two tranches has been disbursed, because of an insufficient implementation of the memorandum of the economic policy.

February 9

• Deputy Prime Minister Serhii Tihipko announces the new exchange rate corridor for Hryvnia. According to the statement, the new band is set at 3.4-4.6 Hrn/USD and will be effective for the entire year 1999. The National bank and the Government of Ukraine strongly intend, according to the statement, to design the exchange rate policy in a way that would allow Ukraine to keep its currency within the newly set limits.

February 10

• The National Bank of Ukraine raises reserve requirements on commercial banks from 15 to 17%, effective from February 21.
• President Kuchma dismisses Energy Minister Oleksii Sheberstov per Decree.

February 16

• The Parliaments fails to overrule the Presidential decree on sales of land plots where privatised objects are located. The decree permits purchase and sale of land plots where privatised objects (including objects of unfinished and suspended construction) are located.

February 17

• The upper house of the Russian Parliament - the Federation Council - ratifies the Russian-Ukrainian treaty on friendship, cooperation and partnership. The treaty will however come into force after the agreement "On the Parameters of Division of the Black Sea Naval Fleet" is ratified by Ukrainian Parliament.

February 19

• CS First Boston Ukraine and Ministry of Finance reach an agreement about the conversion of T-bills held by the bank and maturing in February.

February 22

• The Cabinet of Ministers creates a Council of Exporters. According to the Cabinet's resolution, the Council will, among other things, form the legislative environment and supervise export activities of Ukraine enterprises.

February 23

• In an attempt to increase revenues of the Pension Fund, President Kuchma issues a Decree stipulating that deductions from real estate transactions (1% of the estate value) and mobile communications services (10 Hrn per month for each mobile phone registered) are earmarked as the Fund's revenues.

February 24

• President Kuchma approves per Decree the State privatisation program for 1999.

February 25

• National Bank of Ukraine broadens the exchange rate margin for hard currency transaction carried out by banks and exchange kiosks from 5% to 10%.

February 26

• The Ministry of Finance of Ukraine settles the 160-mn DM (92 mn USD) interest payment on its 1-bn DM 16-% p.a. Eurobond (falling due in February 2001). The amount was withdrawn from the currency reserves of the NBU.

Nominal and real Gross Domestic Product (mn Hrn, current prices)

Sources: Derzhkomstat of Ukraine; unofficial estimates.

Employment (thousand persons) and wage arrears (mn Hrn), end of period

Sources: Ministry of labour and social policy; unofficial calculations.

Monthly inflation: consumer and wholesale price indices

Sources: Derzhkomstat of Ukraine.

Living standards

Sources: Derzhkomstat of Ukraine; unofficial calculations.

Government (consolidated) Budget (mn Hrn)

Sources: Ministry of Finance of Ukraine.

Monetary aggregates (mn Hrn, end of period)

Sources: National Bank of Ukraine; Derzhkomstat of Ukraine; unofficial estimates.

Foreign trade, balance of payments data (mn USD, current prices)

Sources: National Bank of Ukraine.

Ukraine's privatisation balance, mn Hrn

Source: Unofficial estimates based on data provided by State property fund of Ukraine.