30/12/2014 Ukraine: Daily Highlights - Ukraine will supply electricity to the Crimea at the expense of its purchase in Russia

30/12/2014 Daily Highlights by "Digests and Analytics - Ukraine" News Agency

Topics of the day

The Prime Minister and head of the National Bank of Ukraine held a press conferences summarising the year. The situation in Peski and Donetsk airport remains tense. Ukraine will supply electricity to the Crimea at the expense of its purchase in Russia.

Key Events In Ukraine

• Prime Minister Yatsenyuk held a press conference summarising the year. He said that Ukrainian expenses on the occupied territory of Donbass could reach $1 billion. Crimea will not be returned in the nearest future. Property tax is necessary in his opinion. All issues related to Russia are political. War is a barrier for investments in Ukraine. The military expenses put the heaviest burden on the budget. There are no contradictions between the president Poroshenko and the Prime Minister. Import substitution and decrease of the volume of import are necessary to stabilize the economic situation and keep steady hryvnia FX rate. Without the help of international financial organizations Ukraine can not cope with internal and external problems.In his oppinion it is possible to win fight against corruption by reducing the number of regulatory bodies, increasing the responsibility for corruption, implementation of the laws submitted by the government and pay rise for government officials.
• The head of the NBU Gontareva held a press conference instead of the report in Parliament, where she said that the main reason for the fall of the financial market in 2014 is the economic imbalance accumulated by the previous leaders of the country and the NBU. According to her, the National Bank is not required to maintain the exchange rate. The devaluation of the hryvnia reflects the state of the economy. GDP fell by 7.5%, the inflation rate in November was 21%. Ukraine has not established its import substitution, so the payment balance will be worsening. Nearly 30% of deposits (about 174 billion UAH) were withdrawn from the beginning of the year. National Bank provided $175 billion UAH to finance the government and Naftogaz that accounted for 40% of budget revenues. According to Gontareva, repayments of refinance loans exceeded new borrowing, but the majority of these loans are not repaid yet. The country has 8 systemic banks, among them - the problematic Delta Bank, which might not be saved even with nationalization. Memorandum of restructuring of the loans in foreign currency will start to work only after the moratorium on the property repossession will be cancelled.
• Ukraine signed a contract for the import of electricity from Russia with a total capacity of 1500 MW with a uniform supply schedule. Contract for the supply of electricity from Ukraine to Crimea which is occupied by Russia has been signed at the same time.
• "Energoatom" and Westinghouse has agreed to supply nuclear fuel for Ukrainian nuclear power plants. Ukraine will continue to develop cooperation with Westinghouse for the diversification of energy supply. The Russian Foreign Ministry expressed concern about the deal - it could threaten nuclear safety in Ukraine due to a mismatch requirements for the quality of the nuclear fuel shipped from the US ..
• Due to severe weather conditions Ukravtodor restricted the traffik on some roads in Dnepropetrovsk, Zaporozhye, Odessa, Kherson and Mykolaiv regions.
• Migration Service reported that from January 1, 2015 will start issue of biometric passports required for visa-free entry into the EU.
• Hryvnia exchange rate against major currencies has not changed: 15.77 UAH/USD

          19.23 UAH / €, 3.03 UAH / 10 RUR

War in Ukraine

• Militants carried out reconnaissance, keep under fire and attack the positions of Ukrainian troops. The most severe fighting was near Peski and Donetsk airport, although the press center of the antiterrorist operation denies the sharp deterioration of the situation in this area of combat operations.
• The number of temporary displaced persons from the combat zone in the Donbass and the Crimea has reached 823 thousand.
• Ukrainian humanitarian aid delivered to the social institutions of Luhansk region on the territory controlled by the Luhans’k ‘republic’ militants.

Ukraine and the World

• German Chancellor Merkel said in her New Year message that Europe can not allow  right of the strongest to rule, ignoring the principles of international cooperation. EU policy is not directed against Russia and focused on the safety of its members together with Russia. Europe will not allow itself to split.
• Russian authorities refused access of Ukrainian Consul General in Rostov to Ukrainian citizens forcibly held in Russia.
• The decision on the establishment of a Palestinian state did not get sufficient majority of votes in the UN Security Council.
• Demonstrations in Moscow and St. Petersburg in support of opposition leader Navalny attracted no more than 2 thousand people. Police arrested 170 protesters, most of whom have already been released.

Trends

• State enterprise Ukrinterenergo, which supplies electricity to the Crimea, formally falls under the sanctions imposed by the US and the EU against of entities operating in the Crimea, which may cause decline in receiving of the IMF grant.