Business Update – March 16: Lawmakers move to protect Ukraine economy, workers

President Volodymyr Zelensky expects parliament to approve an emergency package of measures to protect the Ukrainian economy and the country’s most vulnerable people amid the COVID-19 pandemic.
He said he expects the National Bank of Ukraine, the Ministry of Finance and Ukraine’s state-owned banks to act in the national interest. Some businesses and citizens should have access to a program of emergency loans, debt repayment holidays and tax breaks, he said.
Members of parliament are moving to protect Ukrainian businesses and workers. They want to exempt self-employed people in Ukraine from some taxes and other state contributions. Small businesses will also get some extra protection, officials said.
Lawmakers have proposed multiple bills that could mitigate against a possible economic downturn in Ukraine and protect businesses being hit by quarantine measures relating to coronavirus COVID-19.
Draft laws to be debated on March 17 state that entrepreneurs will be exempt from paying social security contributions and exempt from personal income tax on the first Hr 4,000 ($150) of their income. Most businesses will not be inspected by tax authorities until July and will be exempt from tax penalties.
Here’s what Halyna Tretiakova, head of the parliamentary committee on social policy, had to say, as reported by Interfax-Ukraine: “In the group, which worked on Saturday and Sunday, we submitted a proposal to exempt from taxation the income of the population of small and micro-businesses… Both Europe and other countries of the world protect the population that spends money on the purchase of medicines and food.”
Pensioners with pensions below UAH 5,000 ($200) should be paid an extra Hr 1,000 ($40), Zelensky said.
The president also instructed officials to begin talks with the International Monetary Fund and other international partners on possible financial aid to Ukraine amid the coronavirus crisis.
Zelensky also proposed that the government consider a ban on food exports, except on some food products determined by his cabinet.
State-owned PrivatBank, Ukraine’s largest and most profitable bank, has said that it is ready to support its own customers and the country. On Facebook, the bank said it was donating respirator machines to hospitals in Kyiv, Odesa and Lysychanska. Its executives said the bank was ready to do more.
“The role of the banks in this crisis is most important,” said Artem Shevalev, deputy chairman of the supervisory board. “PrivatBank will be prepared to do its part, within usual sound banking principles, implementing a wide range of crisis mitigation measures for the Ukrainian economy in these challenging times.”
Ukraine’s state railway, Ukrzaliznytsia, said that its international and domestic freight trains were running normally and in line with their schedule. “As of March 16, international and domestic freight transportation is according to schedule. There are no changes in the routing of international and domestic freight trains,” the company’s press service said, as reported by Interfax-Ukraine.
The National Bank sold $130 million on March 16, in an attempt to stabilize the national currency. Since March 10, the National Bank sold over $1 billion of state reserves to stabilize the hryvnia. The panic disposal of the national currency is happening amid news of a looming economic crisis caused by the COVID-19 pandemic.
The hryvnia dropped over 5% in a week – from Hr 24.7 for $1 on March 9, to Hr 26.3 for $1 on March 16.
Maksym Nefyodov, head of Ukraine’s customs, says smuggling of masks is now more popular than smuggling cigarettes, Ukraine’s number one contraband product. “(Masks) are now transported in hidden places, under clothes, called differently,” says Nefyodov. “Cars are simply stuffed with them,” he adds. According to Nefyodov, over the weekend over 130,000 masks were confiscated by border guards.
According to Ukraine International Airlines (UIA), the company’s estimated losses will equate to 35% from its expected first quarter revenues this year. UIA attracted criticism over the weekend for hiking prices on some of its tickets as many Ukrainians rushed to get home.