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Economic Summary for Ukraine

  • Year 2010: Economic Summary for Ukraine "Beginning of reforms"

    01.09.2011
    Free
    • The cooperation with the IMF was reloaded. On July 28 the IMF Executive Board approved a 29-month SDR 10 billion (near USD 15.15 bn) Stand-By Arrangement for Ukraine. The initial disbursement equivalent to USD 1.89 bn was available immediately.
    • After sharp drop in 2009, real GDP grew by 4.2% in 2010 primarily due to increase in real private final consumption. Net exports made negative contribution to real GDP growth at 2.7 p.p.
    • Industrial production grew due to recovery of export-oriented sectors.
    • Agricultural performance was supported by further growth of livestock sector, while crop production was lower than in 2009.
    • The gas market reform was initiated in 2010 with the approval of the law on natural gas market. Moreover, the gas tariffs for population were increased by 50% in August.
    • The National Regulatory Commission for Public Utility Markets was established as a independent regulatory market to start operation in 2011. It will be responsible for setting tariffs, which were defined by local authorities before.
    • Current account deficit widened to USD 3.0 bn. It was covered by financial account surplus.
    • Population welfare improved in 2010. Unemployment rate (ILO) reduced, while real wages grew by 10.2% in real terms.
    • The Government succeeded to conduct several fiscal reforms. The Tax Code was approved combining all legislation on tax system into one document. Besides, new version of the Budget Code was approved. The Parliament also approved a long expected law on public procurement.
    • The law on unified social contribution was approved meaning that starting 2011 companies will pay only one social security payment instead of four. The Pension Fund was defined as an administrator of this contribution.
    • The Pension Fund’s gap remained high being financed by the direct central fiscal transfer as well as loans provided by the State Treasury.
    • State borrowings remained major source of fiscal deficit financing. As a result, state debt reached USD 54.3 bn or 36% of GDP in 2010.
    • The Ukrtelecom was de facto privatised in 2010, even though receipts were transferred to the budget only in 2011.
    • Consumer inflation returned to single digits.
    • UAH/USD interbank exchange rate remained generally stable in 2010.
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