Highlight: Anti-crisis measures - CAN THE GOVERNMENT ENSURE MACROECONOMIC STABILITY?
Politics:On March 21, Russia officially annexed Crimea, a peninsula with population of 2.4 m in the south of Ukraine.The annexation was not recognized by Ukraine and by the international community.
Real Sector:Industrial output in February declined by 3.7% yoy due to weak domestic and external demand.
Energy sector:The National Energy Regulation Commission raised gas tariffs for all types of consumers to reduce deficit of the Naftogaz.
Agriculture: The Government somewhat revised taxation rules and reduced fiscal spending for agriculture.
External sector: Current account deficit in February reduced to USD 0.1 bn mainly due to decline in merchandise imports.
Fiscal policy: Taking into account high fiscal gap and unrealistic fiscal parameters approved in the initial State Budget Law for 2014 the Government revised downwards all major fiscal parameters.
Privatisation: The plan for privatisation receipts for 2014 is ambitious and is not likely to be executed.
Social policy:Real disposable income growth in 2013 decelerated to 5.3% due to slower growth of all income components.
Labour market: Unemployment rate of economically active population in age of 15-70 (ILO methodology) declined to 7.6% in the fourth quarter of 2013.
Monetary policy: Consumer inflation surged to 3.4% yoy in March in response to hryvnia depreciation and increase in inflation expectations.
Exchange rate:InMarchhryvniaweakenedsharplyastheNBU refrained from supporting exchange rate through interventions.
State debt: State borrowings were lower than target in the first quarter of 2014 due to low demand for state domestic bonds and no access to international capital markets.
