Week's balance: Cabinet sets electricity price, vows quarantine compensation for businesses, while industrial output slides

12:00, 27.03.2021
4 min.

The Cabinet of Ministers has set household electricity price for April and promised to pay UAH 8,000 (US$286) to entrepreneurs affected by quarantine bans, while the State Statistics Service reported a higher pace of the industrial output fall – these are the key economic developments of the outgoing week.

The outgoing week was full of economic events, despite the worrying coronavirus stats showing continuous growth of daily cases that have already reached over 18,000. Over the past period, the disease has been claiming more than three hundred Ukrainians daily.

By the end of the working week, Zhytomyr, Zakarpattia, Ivano-Frankivsk, Kyiv, Chernivtsi, Sumy, Odesa, Lviv regions and the City of Kyiv were assigned into the "red" zone. In a number of regions, quarantine is being tightened.

In this regard, the Cabinet has promised to pay UAH 8,000 compensation to entrepreneurs and employees who will suffer from restrictions imposed.

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"Due to the increase in the number of cases in Ukraine, an increasing number of regions get into the 'red' zone of epidemiological danger. We understand that tougher quarantine restrictions in these regions significantly limit operations in some areas and for some enterprises that are part of the relevant industries. Therefore, in pursuance of the president's instructions, cash payments will be introduced to offer support, similar to the one people saw in winter," said Prime Minister Denys Shmyhal.

Also, he noted he expects local governments to support the initiative with additional payments.

Photo from UNIAN, Serhiy Chuzavkov

Health Minister Maksym Stepanov said, in order to curb the corona spread, the government mandated a negative PCR test for crossing into Ukraine.

Ukrainian air carriers said foreigners would be denied check-in and boarding in the absence of the negative PCR test.

Tariff clarity

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This week, the Cabinet extended until May 1 the fixed electricity price for households at UAH 1.68 per kilowatt-hour.

It is worth recalling that since January, the government has canceled the preferential threshold of 90 kopiykas for the first 100 kWh and equated the tariff to a unified rate valid until late March.

As for utility tariffs, the outgoing week has lifted the veil of secrecy off gas prices for April.

Head of NJSC Naftogaz of Ukraine's Board, Andriy Kobolyev said in April the company will maintain the gas price for household customers at the level of UAH 6.86 per cubic meter. It should be noted that on March 31, the rule expires on a price cap at UAH 6.99. This means that prices could once again go free floating.

The signal sent by Naftogaz means that the prices offered by other suppliers will not differ drastically.

Accelerating industrial recession

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Last week, the State Statistics Service released data on a decrease in industrial production in Ukraine in February 2021 by 4.6% on year, while a month earlier such decline stood at 4%.

However, compared with the previous month, industrial output in February 2021 rebounded by 0.3%.

The State Statistics Service says the largest decline was recorded in mining and processing industries, as well as in investment goods and consumer non-durable goods.

At the same time, the largest growth was recorded in consumer durables and supplies of electricity, gas, heating, steam, and conditioned air.

In addition, the stats agency detailed their data on the economic decline at the end of 2020. The real gross domestic product last year decreased by 4% year-on-year. Earlier, the National Bank estimated GDP drop at 4.4%.

Also, the agency reported an increase in retail trade turnover in January-February this year, by 4.6% on year.

Most of all, retail trade turnover grew in Kyiv, Chernihiv, and Chernivtsi regions. The largest decrease was seen in Volyn, Kirovohrad, Rivne, Kharkiv, and Cherkasy regions.

Meanwhile, the Ministry of Finance reported on a decrease in Ukraine's public debt in February by UAH 5.3 billion in national currency, to UAH 2.5 trillion. At the same time, in dollar terms, debt grew by $0.67 billion, to more than $90 billion.

EBRD's financial support


This week, for the first time during her time in office, President of the European Bank for Reconstruction and Development (EBRD), Odile Renaud-Basso, visited Kyiv where she held intensive talks with the country's leadership.

At a meeting with the key lender and investor's chief, President Volodymyr Zelensky called on the EBRD to take an active part in the development of national infrastructure projects and agriculture.

In an interview with UNIAN, Renaud-Basso said that over the past two years the bank had invested EUR 2 billion in the Ukrainian economy.

"The EBRD and Ukraine have been strong partners over almost three decades now. Ukraine is a top three investment destination for the EBRD. In the past two years alone, the Bank has committed EUR 2 billion to the economy," she said.

This year, the EBRD President noted, the bank's financial assistance will also be aimed at overcoming the consequences of the coronavirus pandemic.

According to her, the financial organization will continue to work on a comprehensive transformation of the state-owned Oschadbank.

In addition, the EBRD announced the launch in Ukraine of a pilot programme to provide assistance in the creation of online courts to consider minor claims (up to EUR 5,000 – EUR 10,000), which is then planned to be extended to other countries.

During the visit, it was also announced that the EBRD has provided $12.5 million to the Ukrainian investment company Dragon Capital for the development of environmentally friendly real estate projects.

Sanctions, investment incentives

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Last week, President Volodymyr Zelensky put into effect the decision of the National Security and Defense Council on nationalizing Ukraine's largest manufacturer of aircraft and helicopter engines and turbines, Zaporizhia-based Motor Sich.

Also, the head of state, by his decree, put into effect the NSDC decision on the application of sanctions to 19 mining companies, also ordering an audit of extraction permits issued in the country since 1994.

In addition, the president signed into laws two bills laying down tax incentives for major investment projects.

"The implementation of these laws will help Ukraine attract strategic investors, increase the country's investment attractiveness, as well as increase competitiveness of Ukraine's economy, thanks to the introduction of state support for major investment projects, in particular, by providing tax incentives," the press service of the President's Office said.

Next week, the Ministry of Health will sum up the results of the first week of quarantine bans designed to slow down corona spread.

If weather conditions are favorable, farmers will boost the pace of their spring sowing campaign.

Anna Bredikhina

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