12/11/2015 Ukraine: Daily Highlights - The report of the Prime Minister Yatsenyuk for the year of the government

The report of the Prime Minister Yatsenyuk for the year of the government

12.11.2015 Daily Highlights by the Digests & Analytics Ukraine Agency

Topics from Media and Social Networks

• The report of the Prime Minister Yatsenyuk for the year of the government.
• The draft budget submitted to the Parliament.
• Foreign Minister Klimkin insists on bringing peacekeepers in Donbass.
• House of great Ukrainian inventor Sikorski returned to the Ministry of Defence.

Key Events in Ukraine

• President Poroshenko introduced a secret decision of the NSDC on military-technical cooperation between Ukraine and individual states.
• The draft budget for 2016 has been published on the site of the Verkhovna Rada. It planned a two-percent GDP growth with inflation of 12%. The increase of the minimum wage and living wage will not exceed the inflation rate. The Ministry of Finance planned to limit the growth of the national debt by almost 8%.
• Prime Minister Yatsenyuk report on the activities of the government in Parliament was interrupted by a scuffle with a deputy from presidential faction. Parliament Speaker Groisman closed plenary session. The decision to hold new elections in Krivoy Rog was not accepted. Experts believe that at the next plenary meeting which will be held next week, the government and the president will try to push their version of the Tax Code and the budget, which was built on its basis, despite the presence of alternative parliamentary option that should be considered first.
• Minister of Infrastructure Pivovarsky announced his intention to resign.
• Kyiv Economic Court withdrew the arrest of companies owned by oligarch Kurchenko who is close to former President Yanukovych.
• National Bank again lowered the official exchange rate of hryvnia. It went back to the two weeks minimum: 23.86 UAH / $ (+0.49 UAH), 26,13 UAH / € (+0.55 UAH), 3.45 UAH / 10 RUB (+0.07 UAH)

Ukraine at War

• The situation in the combat zone in the Donbass region remains tense. Militants fired at positions of the Ukrainian army using small arms, mortars and anti-aircraft installations on the Donetsk and Artemovsk directions. Snipers are working along the front line. There is no official data on the losses of the Ukrainian army.
• Right Sector said that they refuse to take part in the blockade of the Crimea as the partners have allowed supplies of electricity to the peninsula and the volunteers removed from decision-making. Right sector treats the resumption of power supply as another anti-Ukrainian step of the present regime and flirting with the enemy.

Ukraine and the World

• Foreign Minister Klimkin urged the UN Security Council to introduce peacekeeping forces to the territory of Donbass occupied by Russia to enforce Minsk agreements, including the disarmament of illegal armed groups, monitoring the withdrawal of Russian troops and weapons, the distribution of humanitarian aid and to ensure holding of the local elections. Russian representative Churkin said that the electoral law proposed by the Ukrainian side at the talks in Minsk was not agreed with the representatives of the "Republics" and contrary to the position of president of Poroshenko at the summit of "Norman Quartet" in Paris. UK states that Russian actions only worsens the situation in the Donbass. The representative of the United States Power urged Russia to fulfill the Minsk agreement and transfer control of the border to Ukraine and also free Savchenko and Sentsov.
• The IMF confirmed that, despite the existence of outstanding debt to Russia it will continue lending program in Ukraine if it will comply with the terms agreed in a joint memorandum.
• Ukraine and Cyprus signed a new agreement on avoidance of double taxation, where tax rates for passive income from the ownership of corporate rights in Cyprus increased. The Agreement will come into force in 2019 if it will be ratified by both parliaments.
• Russian Defense Minister Sergei Shoigu said that the Russian strategic nuclear forces were significantly updated in the current year and received new missiles and submarines.
• Central Bank of Russia announced the forecast scenario of economic development in conditions of average annual oil price of $ 35 per barrel, which denies the possibility of shocks, inflation will not exceed 7%, GDP is planned to drop no more than 2-3%.

The Trends

• Performance by MPs during the speech of the Prime Minister Yatsenyuk made a painful blow to the international image of the country. The government lost the annual immunity, the report on its activities was not submitted for consideration by MPs two weeks before the Yatsenyuk’s presentation. The Parliament did not gather enough votes for his resignation so the government and the Prime Minister will be able to continue to perform their duties for a some time. Some ministers have already announced their resignation, the deputy head of the NBU also resigned. The president's team is committed to the subjugation of the functions of government and appoint a new prime minister, but without re-election of the Verkhovna Rada due to the fact that the Ukrainian authorities have promised to foreign partners that there will be no elections in the country for next four years. To create a sustainable presidential majority in parliament, negotiations held with the faction "People's Front". Appointment of the NSDC Secretary Turchynov as a Prime Minister seems as a possible compromise, but the other members of the coalition have not yet expressed an opinion about its fate. The collapse of the coalition will lead to early re-election of the parliament, which in turn would entail the suspension of lending from the IMF. Therefore, presidential faction seeks to adopt the Tax Code and the budget for next year to get one or two of the following tranches early in 2016, before the dismissal of prime minister.
• Supporters of the Tax Code developed by the Parliament insist that their project should be considered first, and their way is the only one capable of leading the country out of a prolonged financial crisis. In their view, the budget has enough reserves for radical changes due to a sharp cuts to the budget expenditure, which has the corruption component of at least 50%. Failure to reform further worsen the economic situation in the country and could lead to social unrest. Political experts evaluate the activities of the group of reformers as the intention to create a new political force in the near future, united by common reformist goals.