Ukraine’s cash-strapped government failed to reach agreement on Wednesday with a visiting IMF mission on a $15bn bailout, according to local officials. Having realised that a deal was unlikely, Kiev moved on Tuesday to patch up short-term financing needs. Ukraine raised $1.25bn through a fresh 10-year eurobond at 7.5 per cent on Tuesday, helped by international investors’ hunt for yield.
And so, Kiev has bought itself more time, though at borrowing rates much more expensive than the IMF has offered. It’s a strategy Ukraine has stuck to in recent years, but one that may not be possible if market confidence shrinks and the country’s economy continues to deteriorate. Continue reading »
News headlines about a Cyprus-crisis contagion have so far focused largely on Slovenia, Malta, Italy and Spain.
But Ukraine could also take a hit. While Ukrainian businesses are said to have possibly just $1-3bn in Cyprus – much less than the $30bn that has been estimated for Russia – if this money gets confiscated by the bailout levy or tied up by financial transaction limitations, it could be enough to tip the country’s troubled economy deeper into crisis. Continue reading »
Long the main transit route for Russian natural gas exports to Europe – and a big consumer of Gazprom fuel itself – Ukraine is now starting to use its vast gas transit pipeline network in reverse mode. It is importing less expensive gas from Europe to the West, and at prices lower than its “brotherly” Slavic neighbour charges. Continue reading »
It’s not a pretty picture on the ground in Kiev.
The Ukrainian capital is still crawling out from under a record weekend snowfall that has muddied streets, paralysed traffic and upset basic services including rubbish collection.
It will do nothing to prevent the economy falling into recession in the first quarter of 2013, after GDP growth of 0.2 per cent in 2012. But it does increase the urgency for Kiev to find external economic support, if not from Russia, then from the International Monetary Fund, which had a delegation arrive in town on Wednesday. Continue reading »
Like Russian ones, many Ukrainian companies do business through offshore special purpose vehicles or holding companies registered in Cyprus. By some estimates, billions of dollars with Ukrainian roots flow through Cyprus into offshore tax havens each year. And large portions of this – some $17bn since independence in 1991 – have made their way back into Ukraine through the Cyprus conduit, which is, in fact, the largest contributor of foreign direct investment in the Ukrainian economy.
But this does not mean that most Ukrainian companies exploiting the Cyprus tax loophole actually stash their cash there. And if they don’t, exposure will be limited, analysts say. Continue reading »
In slapping fresh import duties on car imports, Kiev may achieve its short-term goal of partially reducing Ukraine’s trade deficit while simultaneously providing a boost to slumping domestic car output.
But the protectionist move — announced on Thursday by a cash-strapped government in talks with the IMF on a $15bn bailout — could carry costlier long-term consequences. It may infuriate fellow WTO member countries already shocked by Ukraine’s plans announced in September to renegotiate 371 tariffs just five years after becoming a member of the international trade organization. Continue reading »
The news from Ukraine is that it doesn’t matter which came first, the chicken or the egg, as long as you profit from both.
The country’s top poultry and egg producers, both leading blue chips listed on the London Stock Exchange, released impressive 2012 results on Tuesday. Continue reading »
Western energy majors that are knocking on Ukraine’s door, hoping to profit from a potential shale gas bonanza, would be wise to study the sour experiences of US power giant AES.
The US-based company announced earlier this month that it had agreed to sell two regional electricity distributors – Kyivoblenergo and Rivneoblenergo – to a Russian group called VS Energy. Continue reading »
If you’re an international energy major eyeing opportunities in Ukraine, you may want to speak with DTEK, the energy group owned by Rinat Akhmetov, the nation’s richest man (pictured).
He’s looking for a partner for a huge Black Sea hydrocarbon exploration project. Continue reading »
Sometimes, you shouldn’t read too much into what a politician says on television with voters watching closely. A televised question-answer session with citizens held on Friday by Ukrainian President Viktor Yanukovich is a case in point. Continue reading »
How hard is it for a multi-billionaire to donate half of his fortune to charity? Most of us will never know.
But if more rich people took this step, the world could become a “fairer” place, according to Victor Pinchuk (pictured). The billionaire businessman this week became the first Ukrainian to join the Giving Pledge launched by US billionaires Bill Gates and Warren Buffett – and promise to give away at least half his money. Continue reading »
With billions of dollars of natural gas at stake, Ukraine and Russia seem to once again be putting brotherly Slavic love aside in favour of poker-faced brinkmanship.
It’s been two weeks since the FT revealed that Russia’s Gazprom had slapped Ukraine with a whopping $7bn bill for natural gas not supplied in 2012. Strangely, Gazprom has not said much on the matter since then. It could yet challenge Ukraine through arbitration, yet Ukrainian officials appear unphased by the prospect. Continue reading »
Ukraine’s financially-stretched government has capitalised on high global liquidity, raising an additional $1bn to a 10-year eurobond that it sold last November.
Kiev bought time as talks with the International Monetary Fund on $15bn bailout programme appear set to drag on for weeks, possibly longer. Continue reading »
The ink has not yet dried on the shale gas exploration deal signed on Thursday in Davos between Ukraine and Royal Dutch Shell. The energy giant, which might invest up to $10bn, has yet to commence exploration, let alone find commercially-viable reserves.
Yet Ukrainian officials are already waving the agreement in front of Russia’s Gazprom, counting gas flows and predicting that Kiev may not need costly Russian gas in the future. Continue reading »
Ukraine’s government has provided the first sign that it is willing to further reduce costly – some say unsustainable — subsidies by raising natural gas prices on households.
The unpopular austerity move is a key condition set by the International Monetary Fund for unlocking billion-dollar bailout loans that Ukraine needs to stay afloat this year. Continue reading »