Business Update: March 31 – Ukraine prepares for long quarantine, EU sends aid, SkyUp evacuates 19,000

Quarantine measures in Ukraine will last at least two months, Interior Minister Arsen Avakov has said. “We assume that we have extended this until [April] 24 now, and then we shall see. I think, in the end, we will have to stay in quarantine for at least two months, just as the whole of Europe,” Avakov said in a video comment that has been circulated on various Telegram and YouTube channels since Monday evening.

President Volodymyr Zelensky and German Chancellor Angela Merkel have discussed further EU aid to Ukraine amid the COVID-19 pandemic. They also discussed the possibility of extra lending from the World Bank. So far, beyond the tentative $8 billion line of credit between Ukraine and the International Monetary Fund, Ukraine also received pledges of an extra 40 million euros from the European Investment Bank, and 80 million from the European Commission, as well as $1.2 million from the United States. 

The International Exhibition Center on the left bank of Kyiv’s Dnipro river could become a huge COVID-19 field hospital for the capital. The coordinator of the volunteer branch of Kyiv’s emergency services told Ukrainian media that plans were already in place to convert the venue if needed. “There is definitely a plan for 7,000 places already…” said Igor Lisky, adding that the authorities were preparing to get the venue ready. “We hope that it will not be needed,” he added.

Ukrainian authorities are moving the country to a heightened state of readiness as COVID-19 spreads. Ukraine’s top sanitary doctor claims that 240 hospitals and 67,000 beds are ready for coronavirus patients. The country has 4,188 isolation rooms and 1,716 intensive care beds, he said. According to Lyashko, there are currently 1,882 lung ventilators in Ukraine. Earlier, the health ministry reported that there were only 605 lung ventilators in the country, while multiple experts have said the country is not ready for an epidemic.

Between January and March 30, Ukraine only imported 148 lung ventilators, the State Customs Service has said. “Within the three months of 2020, some 148 artificial lungs ventilators were delivered to Ukraine, in particular: some 18 units came in January, some 97 units came in February, and 33 units came in March (as of March 27),” the customs service reported. 

The Ukrainian parliament passed a bank law required for new IMF lending in its first reading. Colloquially known as the “anti-Kolomoisky law” after oligarch Ihor Kolomoisky, the bill prevents insolvent banks from being returned to its previous owners, among other things, and its adoption is the main requirement for Ukraine to secure a much-needed loan program from the International Monetary Fund (IMF).

The draft law received the support of 267 lawmakers, primarily from President Volodymyr Zelensky’s 248-member Servant of the People party and two opposition parties, Voice and European Solidarity. Without the support of the opposition, the law would have fallen one vote short of passing the first reading.

On Twitter, a PrivatBank spokesperson jokingly responded to the result. “Bartender, 267 whiskeys!” It’s a lighthearted way for the state-owned bank – which is Ukraine’s largest and most profitable – to express real relief over the so-called anti-Kolomoisky law. Experts and bankers had repeatedly warned that any return of the bank to its previous owners could be disastrous for the Ukrainian banking sector and broader economy, while PrivatBank executives warned of economic collapse if it was allowed to happen. 

To unlock IMF support, the Ukrainian parliament also lifted the country’s long standing moratorium of farmland sales. After voting on amendments for 10 hours straight, Ukraine’s parliament has finally passed a law legalizing the sale of farmland and lifting the country’s 19-year moratorium on land transactions. The law will come into effect on July 1, 2021.

Local budgets may be stripped of the financial means to properly prepare for coronavirus, the mayor of Kyiv has warned. National anti-crisis laws that aim to create a stabilization fund (one was passed by the parliament on March 30) may result in losses to local budgets of UAH 12.4 billion ($445 million), Kyiv Mayor Vitali Klitschko said in an online briefing on March 31. “In fact, this is a robbery of local budgets. Despite the position of the president and prime minister, which they declared at the meeting with the mayors, MPs did not listen to local communities and passed a bill that provided unfair business conditions and provided big business with extra profits,” Klitschko said. “Only the loss to Kyiv’s budget in the fight against coronavirus COVID-19 will amount to about UAH 1.6 billion,” the mayor added, according to reporting by Interfax-Ukraine. 

The low-cost carrier SkyUp has made over 100 evacuation flights, returning home almost 19,000 Ukrainians. The Ukrainian airline said it has brought home almost 19,000 Ukrainians in only nine days with special flights, while more than 2,000 Ukrainians and foreigners left for their countries of residence, co-owner of the company Oleksandr Alba said on his Facebook page on Tuesday. According to him, the airline made 100 special flights to 30 countries in little over a week. “We know that our fellow citizens still remain abroad and are ready to provide assistance for their return when the opportunity arises for this,” he said.

Vodafone Ukraine allocated $1 million to fight COVID-19 in the country. The NEQSOL Holding group of companies, which owns Vodafone Ukraine, the country’s second largest telecoms operator after Kyivstar, has decided to allocate $1 million to fight coronavirus. The funds will be allocated for purchasing equipment, testing systems, medicines, and supplies needed to protect doctors and treat patients.

More of Ukraine’s biggest companies have also been making cash donations or buying equipment. The Myronivsky Hliboproduct (MHP) poultry company has allocated Hr $540,000 to purchase 19 lung ventilators and personal protective equipment in Vinnytsia Oblast. Grain giant Nibulon spent slightly less to purchase 15 ventilators for hospitals in Mykolaiv city and oblast. Kernel, one of the largest Ukrainian agricultural groups, allocated $2 million for the purchase of COVID-19 tests.

Ukraine’s Preply online tutoring marketplace raised another $10 million in a capital raise, and said it plans to open a branch in the U.S. The Preply platform for finding tutors has grown significantly since it was founded in Kyiv in 2012. “The new funding allows us to bring a more in-depth, immersive and convenient experience to both tutors and learners all over the world. Today, we are laser focused on language learning, but ultimately, I envision a future where anyone can learn anything using Preply,” CEO of Preply Kirill Bigai said in a statement.

The MHP poultry giant has reported that its net profit increased by 30% in 2019. Myronivsky Hliboproduct increased its net profit by 30% compared to 2018 to UAH 5.04 billion, or about $180 million. At the same time, however, its total debt also went up, increasing by 32.4% to UAH 14.68 billion, or about $525 million.