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  • Monthly Economic Monitor Ukraine No.4 (186)

    13.04.2016
    Free

    Highlight: Public procurement

    Public procurement legislation was revamped four times since 2008 and amended over seventy times. The goal of all four revisions was increasing efficiency of public sector spending, widely known for high level of corruption. According to the estimates of the Ministry of Economic Development and Trade losses from corruption and low competitiveness in the public procurement reached near 20% of procurement spending in 2014.

    All four major changes in procurement legislation were part of the reforms agreed with the IMF and the EU. Old law on procurement was abolished in 2008 as part of IMF stand-by agreement and replaced with the Government regulation on procurement. New law on state procurement was approved in 2010 as part of revised stand-by arrangement with the IMF. The Law envisaged more transparent rules for state procurements, even though it did not fully comply with the EU acquis. However, the Parliament almost immediately started to adopt numerous amendments to the Law to expand the number of exceptions from full competitive procedures (e.g. the purchases of energy, housing and utility services were taken out of the scope of the Law). In April 2014, new arrangement with the IMF prompted the Parliament to approve yet another new State Procurement Law. This time, key provisions of the law were harmonized with the EU rules. It was aimed to increase transparency and openness in the area of procurement, simplify procedures, and approximate legislation to the EU norms. However, some loopholes remained and procedures remained burdensome enough to attract only a few new suppliers. This prompted creation of a pilot e-procurement platform ProZorro...

    Politics:New Government is expected to be appointed in early April.

    Real sector: Military conflict in the Eastern Ukraine, high inflation, drop in domestic demand and weak external demand were among the reasons of decline in real GDP by 9.9% in 2015.

    Energy sector:The Ukrtransgaz launched a backhaul gas transportation mechanism on the Ukrainian border with Slovakia, Poland and Hungary.

    Agriculture:Ukrainian producers have already fully utilized EU tariff-rate quotas for poultry, grapes and apple juice, tomatoes, maize, honey, sugar, flour and barley cereals.

    External sector: Current account in February was negative at USD 0.3 bn.

    Fiscal policy: Growth of consolidated fiscal revenues decelerated to 16.2% yoy in February from 32.7% yoy in January.

    Social policy: Real disposable income in 2015 dropped by 22.2% due to high inflation.

    Labour market:Decline in real wage decelerated to 8.3% yoy (as compared to 13.2% yoy in January).

    Monetary policy: Monthly core inflation in March increased to 1.9% mom, what reflected effect of hryvnia exchange rate volatility in February and seasonality in clothing and footwear prices.

    Exchange rate:Interbank exchange rate remained stable in March in UAH 26-27 per USD range.

    State debt: Over two months of 2016, state debt (in hryvnia equivalent) increased by 5.8% primarily due to hryvnia depreciation.

     

    Issue:  No.4 (186) April 2016
    Attached file  (351.4 kb)
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