Ukrainian Economy in Brief Newsletter

The Verkhovna Rada didn’t adopt draft law №9107-1, which allows the NBU to nationalize banks of sanctioned owners, during the second reading. Only 212 MPs voted for the draft law which needed a minimum of 226 votes for the bill to pass. The majority faction ‘Sluga narodu’ gave just 162 votes, the lack of votes being caused by the absence of numerous MPs during the voting. The Parliament will reconsider the draft law №9107-1 at the end of May.

 The Cabinet of Ministers of Ukraine submitted draft law №9269, on the financial monitoring of politically exposed persons (PEPs), to the Verkhovna Rada. This draft law is benchmark №14 in the Memorandum with the IMF. One of the main changes is that the relevant definition under this draft law doesn’t include any reference to a three-year limit, after which a person is no longer regarded as a public official. Accordingly, anyone who satisfies this definition will be treated as a PEP for an indefinite term as it was prior to the tabling of an amendment which limited PEP status for a three-year period. Draft law №9269 also seeks to implement a risk-oriented approach in the financial monitoring of PEPs. It is the toughest task under the Memorandum which has so far failed to secure enough votes to pass this draft law.

 The President of Ukraine signed draft law №8433, which enhances transparency and accountability of NBU special accounts for donations in accordance with the 8th Structural Benchmark in the IMF Memorandum. It requires programs financed from these accounts to be treated as budget programs under a Special Fund of the State Budget controlled by the MoF.

Other Topics of Interest

Ukraine’s Usyk Beats Fury in Heavyweight Championship Rematch

By beating Fury in May, “The Cat” had already joined the likes of Muhammad Ali, Joe Louis and Mike Tyson as undisputed heavyweight, and the first of the four-belt era.

 The Government launched the corporatization of Energoatom, one of the largest nuclear power plant operators in Europe. On May 2, the Cabinet of Ministers approved the decision to reform Energoatom into a joint-stock company.

 Other key economic issues

 Cancelation of the draft law which sets a salary cap for civil servants and SOE employees wasn’t included in the parliamentary agenda. On May 2, only 99 MPs (of 226 needed) voted to include in the agenda the draft parliamentary resolution №8312-P to cancel the decision to adopt the law with the amendment that would return the 30,000 UAH additional payments to the military by capping salaries of civil servants and SOE employees to a ceiling of ten times the minimum wage (effectively, UAH 67,000).

 The Head of the Parliament cannot sign t draft law №8312-P until Parliament considers this draft resolution.

 Davyd Arakhamia, the head of the majority faction Sluga Narodu proposed to postpone consideration of resolution №8312-P and to create a working group of representatives of the Verkhovna Rada, the government and the defense and security authorities to work out a final solution regarding the issue of the payments for Ukrainian defenders. This scenario was suggested by the Minister of Defense, the Minister of the Internal Affairs, the Commander-in-Chief of the Armed Forces of Ukraine, the Chief of the General Staff of the Armed Forces, Head of the State Border Guard Service, the Commander of the National Guard and the Head of the State Security Service.

 The announced working group should present a new draft law on the payments for Ukrainian defenders by the end of May. It is said that the new draft law will require up to 10-15 times lower expenditure from the state budget and won’t include a salary cap for civil servants and SOE employees.

 The Verkhovna Rada supported the extension of martial law and general mobilization in Ukraine for a further period of 90 days, until 18 August 2023. It is the 7^th time the Parliament voted for the extension of martial law.