Business Update: April 29 – IMF warns that Ukraine government must protect NABU independence

The International Monetary Fund (IMF) has told the government it is concerned about possible changes in legislation relating to the independence of the National Anti-corruption Bureau of Ukraine (NABU).  The  intervention from the IMF comes amid a brawl over alleged political interference at the anti-corruption agency, and alleged moves by controversial Ukrainian oligarchs and their lawmaker allies to replace its leadership.

The head of the IMF mission in Ukraine, Ron van Roden, reportedly sent a letter to the Office of the President of Ukraine, in which he warns Volodymyr Zelensky and his administration of possible changes to the fund’s financial commitments in Ukraine if  negative changes are made to legislation on the independence of the NABU, Ukraine’s main anti-corruption body.

A letter sent to the President’s Office by the IMF could amount to an effective warning: protect the NABU, or risk missing out on new lines of IMF credit. The Ukrainian Ministry of Finance expects that by the end of 2020, the IMF will disburse two tranches to Ukraine worth a total of $3.5 billion under a new loan program. Last year the two sides reached a tentative agreement on a new three-year Extended Fund Facility in the amount of $5.5 billion.

Online publication European Truth reports that van Roden wrote to Zelensky warning that the finance was not without conditions. “As you know, the institutional independence of NABU and its chairman are critical components of its effectiveness and therefore were important elements of previous IMF programs,” van Roden reportedly wrote. “Any legislative changes that restrict the independence of NABU will be perceived as a rejection of previous anti-corruption obligations and will require adjustment of any new program.”

Ukraine’s parliament will consider a new anti-crisis bill as the country continues to feel pain inflicted by COVID-19. New legislation would provide for tax and administrative exemptions for businesses, as well as tax exemption for doctors during the quarantine period that started on March 12. The Verkhovna Rada Finance Committee recommended these measures and a number of others as part of a new anti-crisis bill, deputy head of the committee, MP Yaroslav Zheleznyak, wrote on his Facebook.

Zheleznyk wrote: “This issue will be on the agenda of the extraordinary meeting on April 30,” adding that the following measures would be considered through July 31: tax exemptions for medical workers, extension of previous tax incentives and tax breaks, no charges and penalties for late payments on consumer loans.

The Health Ministry will immediately allocate about $9 million in additional financing to hospitals in regions outside the capital, the health minister has confirmed, one day after the World Bank unlocked $135 million in extra funding for Ukrainian health care reform and improvements.

Health Minister Maksym Stepanov said: “In order to control the situation with a critical lack of financing at healthcare facilities, which has been keenly felt since April 1, the Health Ministry along with the Finance Ministry have approved on the allocation in April of subsidies in the amount of UAH 241.8 million, which it had been planned to allocate in October-December. This money will be distributed among regions in the next few days.”

The Ukrainian Air Force and Antonov Airlines continue to bring medical supplies from China to Ukraine and other European countries, Interfax reports. Chief of Aviation of the Air Force of the Ukrainian Armed Forces Serhiy Holubtsov said: “Air Force planes have already completed two flights from China to Ukraine and three flights from China to Romania. Each side transported about 30 tonnes of special medical cargo.”

State railway Ukrzaliznytsia saw a 14.7 times increase in net profit last year and a 6% increase in earnings before tax and other costs, Interfax reports. JSC Ukrzaliznytsia, one of the largest employers and tax payers in Ukraine, reached about $111 million in net profit from its operations, the company said on its website, posting its consolidated financial statements for 2019, as audited by Ernst & Young. Ukrzaliznytsia’s earnings before interest, taxes, depreciation and amortization (EBITDA) in 2019 grew by 6%, to about $640 million.

The state railway said in a statement: “Revenue from the transportation of goods and passengers, which in 2019 amounted to UAH 82.4 billion, made the largest contribution (91%) to sales revenue.”

Ukrainian coffee shop chain Aroma Kava has gone international with its first outlet in Belarus, Ukrainian language media reported. Aroma Kava, a common sight on streets around Ukraine, took its first steps into the international market by opening its first outlet in Belarus. The chain said in a statement on its Facebook page that a 24-hour coffee shop is now open at 39, Independence Avenue, near the exit of the Victory Square metro station in Minsk.Aroma Kava coffee shop chain covers more than 45 cities of Ukraine.

Source: www.kyivpost.com