In 2009 Ukrainian economy will fall by 15-16%. Such a pessimistic prognosis of former Minister of Finance of Ukraine Viktor Pynzenyk made public today. He has also said that the budget deficit may climb above 33% of GDP in 2009, and 15% in 2010.
The Government of Ukraine determined a fiscal deficit at the level of 3.97% of GDP in the project of State Budget for 2010.
Showing posts with label budget. Show all posts
Showing posts with label budget. Show all posts
Tuesday, October 6, 2009
Monday, January 5, 2009
The High Treason. Non-settled gas dispute with the Russian Gazprom is leading Ukraine to energy bankruptcy and deep economy problems.
On 1 of December Russian Gazprom cut off gas supply to Ukraine. This news was among the top-3 in the entire world media during the New Year holidays. I think it would be first if there was no war in sector Gaza. The reasons of Gazprom’s actions are totally legitimate: unpaid debt for gas supply to Ukraine in 2008 and non-existence of a supply contract for 2009. Such a confusing situation seems to be not a terrible negligence of Ukrainian authorities, but a carefully planned scheme. The goal is to take the case to state of total mess, and then to re-divide the scheme of control of profits from gas supply to Ukraine. As a side effect, the State oil and gas company Naftogaz Ukraine may go bankrupt and Ukraine may lose control of its huge gas transportation system in favour of Russia or some Russia-leaded consortium.
These actions of Ukrainian officials can definitely be qualified as a high treason. But nobody will be charged for that.
There is no need to remind here the very details of the debt-dispute Russia and Ukraine had in late December 2008 – the media explained it very good. Talking in general, the Naftogaz Ukraine failed to pay off a debt for gas shipped from Russia in 2008: it paid $1.52 billion just one day before the New Year, but Gazprom claimed the total debt was $2.1 billion (including $450 million of penalties for the late payment for November and December gas shipments).
Current situation differs from the gas problems of early 2006. Now Ukraine has significant amounts of gas saved in storages: about 17 billion cubic metres (bcm) is owned by Naftogaz Ukraine, and the intermediary RosUkrEnergo (I’ll talk about this company later) has extra 11 bcm. That’s why there is no evidence of harm for Ukraine caused by the gas cut-off. Yet. But the gas battle with Gazprom will definitely influence the crisis-hit Ukrainian economy, pushing it down. World economy crisis reduced the industrial energy consumption in Ukraine almost by a quarter, and the main problems may be laid on shoulders of Ukrainian citizens. Higher gas prices will lead to rise of a gas fees for the households, which are heavily subsidising by the state.
The problem is that a dramatic raise of gas prise was not planned in the budget of Ukraine for 2009, approved by Parliament and signed by President before the New Year holidays. Moreover, a gas-supply part of the budget had been highly criticised even before problems with Gazprom went too far. The Deputy Head of the Secretariat of the President of Ukraine Oleksandr Shlapak said on 29 December that the 1.6 billion hryvnias, the budget assigned for Naftogaz Ukraine to keep low gas prises on the internal market, is not enough at all. “If we even manage to keep a gas price at $179.5 per 1,000 cubic meters (tcm) during the talks with our Russian partners, and the Ukrainian hryvnia’s rate to dollar stay at 7.5, there will be a need to compensate for Naftogaz Ukraine up to 9.2 billion hryvnias. Feel the difference”, he informed.
This means that in 2009 somebody will go bankrupt: either Naftogas, or Ukrainian citizens, or even Ukrainian state.
The gas price for Ukraine is really a painful question for years. In 2008 Naftogaz Ukraine had to pay $179.5 per tcm for gas from Russia, which is almost 3 times less than EU countries were paying. Due to the agreement to switch to market prices “step by step”, Gazprom offered the price rise to $250 per tcm for 2009. But it was already too high for Ukraine: it was going to pay not more than $201 per tcm (according to budget plans of the Government). As a result, Ukrainian officials didn’t sign even temporary agreement and left the country without contracted gas supply at all. Can somebody imagine such a thing to happen on a state level in any other European country?
It’s obvious that something is standing behind this artificially made conflict. It seems that the real source of Ukrainian gas problems, which may easily ruin the country’s economy, is a fight for the profits from gas transit and supply to Ukraine. As for this moment the only party of gas-supply scheme didn’t lose a cent from this situation is the RosUkrEnergo, the gas-trading intermediary between Russia and Ukraine. This company is making profit “buying” huge amounts of Russian gas on Ukrainian border and re-selling it to Ukraine (working also indirectly on Ukrainian domestic market) and some Eastern European countries (like Hungary and Romania). So, everyone who is in charge of RosUkrEnergo has guaranteed billions of profit. As for today, Russian Gazprom owns 50% of RosUkrEnergo, another half is under control of the commercial structures of Ukrainian-born businessman Dmytro Firtash. By the way, he also is linked with Ukrainian Nadra bank, which was accused by Yulia Tymoshenko in fraud with hryvnia rate in December (here is a link to my post about this matter).
That’s all I have time to write today. To be continued…
These actions of Ukrainian officials can definitely be qualified as a high treason. But nobody will be charged for that.
There is no need to remind here the very details of the debt-dispute Russia and Ukraine had in late December 2008 – the media explained it very good. Talking in general, the Naftogaz Ukraine failed to pay off a debt for gas shipped from Russia in 2008: it paid $1.52 billion just one day before the New Year, but Gazprom claimed the total debt was $2.1 billion (including $450 million of penalties for the late payment for November and December gas shipments).
Current situation differs from the gas problems of early 2006. Now Ukraine has significant amounts of gas saved in storages: about 17 billion cubic metres (bcm) is owned by Naftogaz Ukraine, and the intermediary RosUkrEnergo (I’ll talk about this company later) has extra 11 bcm. That’s why there is no evidence of harm for Ukraine caused by the gas cut-off. Yet. But the gas battle with Gazprom will definitely influence the crisis-hit Ukrainian economy, pushing it down. World economy crisis reduced the industrial energy consumption in Ukraine almost by a quarter, and the main problems may be laid on shoulders of Ukrainian citizens. Higher gas prices will lead to rise of a gas fees for the households, which are heavily subsidising by the state.
The problem is that a dramatic raise of gas prise was not planned in the budget of Ukraine for 2009, approved by Parliament and signed by President before the New Year holidays. Moreover, a gas-supply part of the budget had been highly criticised even before problems with Gazprom went too far. The Deputy Head of the Secretariat of the President of Ukraine Oleksandr Shlapak said on 29 December that the 1.6 billion hryvnias, the budget assigned for Naftogaz Ukraine to keep low gas prises on the internal market, is not enough at all. “If we even manage to keep a gas price at $179.5 per 1,000 cubic meters (tcm) during the talks with our Russian partners, and the Ukrainian hryvnia’s rate to dollar stay at 7.5, there will be a need to compensate for Naftogaz Ukraine up to 9.2 billion hryvnias. Feel the difference”, he informed.
This means that in 2009 somebody will go bankrupt: either Naftogas, or Ukrainian citizens, or even Ukrainian state.
The gas price for Ukraine is really a painful question for years. In 2008 Naftogaz Ukraine had to pay $179.5 per tcm for gas from Russia, which is almost 3 times less than EU countries were paying. Due to the agreement to switch to market prices “step by step”, Gazprom offered the price rise to $250 per tcm for 2009. But it was already too high for Ukraine: it was going to pay not more than $201 per tcm (according to budget plans of the Government). As a result, Ukrainian officials didn’t sign even temporary agreement and left the country without contracted gas supply at all. Can somebody imagine such a thing to happen on a state level in any other European country?
It’s obvious that something is standing behind this artificially made conflict. It seems that the real source of Ukrainian gas problems, which may easily ruin the country’s economy, is a fight for the profits from gas transit and supply to Ukraine. As for this moment the only party of gas-supply scheme didn’t lose a cent from this situation is the RosUkrEnergo, the gas-trading intermediary between Russia and Ukraine. This company is making profit “buying” huge amounts of Russian gas on Ukrainian border and re-selling it to Ukraine (working also indirectly on Ukrainian domestic market) and some Eastern European countries (like Hungary and Romania). So, everyone who is in charge of RosUkrEnergo has guaranteed billions of profit. As for today, Russian Gazprom owns 50% of RosUkrEnergo, another half is under control of the commercial structures of Ukrainian-born businessman Dmytro Firtash. By the way, he also is linked with Ukrainian Nadra bank, which was accused by Yulia Tymoshenko in fraud with hryvnia rate in December (here is a link to my post about this matter).
That’s all I have time to write today. To be continued…
Friday, December 26, 2008
…And the unexpected gift. The Parliament of Ukraine approved the Budget 2009 today.
Ukrainian politics is really full of surprises during this Holiday season. The Members of Parliament decided to come back to the State Budget question today, and suddenly voted in favour of this document. The pro-Governmental forces have managed to find four MPs needed to have 226 votes for the project of budget – from the Our Ukraine – People’s Self Defence Block. Now the budget is approved, and nobody cares about the figures and macroeconomic data anymore – it’s time for holidays. As a result, Ukrainian MPs have two extra free days this year: as was decided, they will not work on 30 and 31 December (but the next parliamentary sitting is scheduled for 13 January 2009). Happy New Year, Verkhovna Rada!
But the political problems in the country are – of course – not resolved. Today the President of Ukraine Viktor Yushchenko will have an opportunity to comment a new budget during the live political show on Inter TV channel at 21.30 PM by Kyiv time.
But the political problems in the country are – of course – not resolved. Today the President of Ukraine Viktor Yushchenko will have an opportunity to comment a new budget during the live political show on Inter TV channel at 21.30 PM by Kyiv time.
Expected gift – II. The Verkhovna Rada of Ukraine didn’t approve the budget 2009 again.
The Parliament of Ukraine voted against a budget 2009 three times this morning. MPs failed to approve the document as a whole, and then in the first reading. Parliament considered also a proposition to come back to the budget discussion today, but the majority voted against that. The problem is that the Party of Regions, the Communist party and pro-president part of the Our Ukraine – People’s Self-Defence Block (MP’s Group “For Ukraine” founded by ex-Head of the faction Vyacheslav Kyrylenko) don’t support the budget project as it is today.
MP’s have decided to hold sittings on Tuesday, 30 December and Wednesday, 31 December. But a lot of people predict that Ukraine will start the New Year without a budget. Parliament will probably approve the document in January.
MP’s have decided to hold sittings on Tuesday, 30 December and Wednesday, 31 December. But a lot of people predict that Ukraine will start the New Year without a budget. Parliament will probably approve the document in January.
Expected Gift. The Parliament of Ukraine made a Christmas present to Yulia Tymoshenko, sending the project of budget back to her office.
Verkhovna Rada failed to pass the 2009 budget on Thursday, December 25. Most of the Members of Parliament decided that the project of budget is not realistic, in particular, because of its extra-optimistic economic forecasts. The budget, presented by the Prime Minister of Ukraine Yulia Tymoshenko on Tuesday, 23 December, supposes that the inflation will stay in frames of 9,5%, hryvnia rate to US dollar will be not more than 7-7,5, and the GDP will grow to 0,4%.
The result of the vote has demonstrated the absence of the real coalition of majority in Ukrainian Parliament. The budget was supported by all MPs of the Block of Yulia Tymoshenko and the Block of Lytvyn, and also by 44 MPs from the ex-president’s faction Our Ukraine – People’s Self-Defense. But the faction of the Communist party (who is not a Coalition member) was not in favor, and the vote failed.
Parliament will hold the sitting today, on Friday 26 December (starting at 10 AM), and will come back to the budget question – and will face problems again. Even non-economist may see that there are problems with a revenue side of the budget, and with the macroeconomic forecast (as was said). Also as Ukraine still hasn’t signed an agreement with Russia on gas supply, and nobody knows the price of gas for 2009, all the economic planning that was made is very approximate.
Some sources in Verkhovna Rada suppose that the budget 2009 will not be adopted before the New Year.
The result of the vote has demonstrated the absence of the real coalition of majority in Ukrainian Parliament. The budget was supported by all MPs of the Block of Yulia Tymoshenko and the Block of Lytvyn, and also by 44 MPs from the ex-president’s faction Our Ukraine – People’s Self-Defense. But the faction of the Communist party (who is not a Coalition member) was not in favor, and the vote failed.
Parliament will hold the sitting today, on Friday 26 December (starting at 10 AM), and will come back to the budget question – and will face problems again. Even non-economist may see that there are problems with a revenue side of the budget, and with the macroeconomic forecast (as was said). Also as Ukraine still hasn’t signed an agreement with Russia on gas supply, and nobody knows the price of gas for 2009, all the economic planning that was made is very approximate.
Some sources in Verkhovna Rada suppose that the budget 2009 will not be adopted before the New Year.
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