Editor’s note: This is issue 53 of Ukrainian lawmaker Yaroslav Zhelezniak’s weekly “Ukrainian Economy in Brief” newsletter, covering events from April 22-28, 2024. The digest highlights steps taken in the Ukrainian parliament related to business, economics, and international financial programs.
The Kyiv Independent is republishing with permission.
Benchmarks and obligations in the IMF Memorandum
The Parliament adopted the draft law on hearings in the High Anti-Corruption Court and met the last structural benchmark before the next review of the program.
On April 24 the Verkhovna Rada of Ukraine adopted draft law #11130. The draft law suggests rationalizing matters or issues to be heard at the first instance by one anti-corruption judge.
However, the draft law makes several exceptions when an accused person may request the case to be heard by three judges. This exclusive right may use accused persons who are sentenced for over 10 years of imprisonment or who hold positions of the highest state authorities.
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This draft law meets the requirement under the structural benchmark #32 of the Memorandum with the IMF and one of the conditionalities of the draft “Ukraine Plan” within the financial support program with the EU.
The adoption of the draft law means that Ukraine met all structural benchmarks with the deadlines before the next program review which will start in May.
The submission of amendments to the draft law on the Bureau of Economic Security restart has ended.
The deadline to submit amendments to draft law #10439 in the second reading expired on April 25. Currently the Committee on Finance, Tax and Customs Policy draws up a table of amendments. The suggestions of the Justice Ministry were also submitted for the second reading, so our team is preparing an analysis of them.
World Bank priorities
The Verkhovna Rada rejected all draft laws on railway transport which were submitted several years ago.
The Verkhovna Rada considered and rejected draft laws #1196 and #1196-1 on railway transport.
The adoption of the new draft law on the railway transport and bringing the Ukrainian railway market to EU standard is one of the required steps under the World Bank Development Policy Loan (DPL).
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By rejecting draft laws submitted way before in 2019 the Parliament unblocked an opportunity to submit revised draft law on this issue which will meet all the agreements with the World Bank.
The Parliament rejected the draft law on accumulative pension.
On April 25, the Verkhovna Rada rejected and returned for revision draft law #9212 on accumulative pension. Ukraine has an obligation to agree with the World Bank on any changes to the pension system. However, regarding an unpredictable demographic situation due to the war, it is very difficult to calculate macroeconomic consequences for such changes.
Other key economic issues
The Parliament made a step to meet one OECD requirement.
The Verkhovna Rada adopted in the first reading draft law #10319 on tax measures to combat bribery of foreign officials in international business transactions. This step is aimed to meet another one Organization for Economic Co-operation and Development (OECD) requirement.
The Parliament dismissed seven members of the Accounting Chamber, other personnel decisions were postponed.
The Verkhovna Rada supported the dismissal of seven members of the Accounting Chamber of Ukraine whose term of mandate expired in March. The remaining five members are considered sufficient for quorum and decision-making.
However, the Presidential Office decided to postpone other potential dismissals, in particular among the ministers in the Cabinet of Ministers.
Also last week Mykola Solskyi, the Agrarian Policy ministry, submitted a resignation letter to the Verkhovna Rada. NABU and SAPO suspect Solskyi in violations regarding cases of illegally taking possession of state land in 2017-2018 when he worked as lawyer.
The Verkhovna Rada is going to consider his resignation letter during the upcoming plenary meetings.
The Parliament made a step toward changing a mechanism of customs clearance of cars.
The Verkhovna Rada adopted draft law #10380 in the first reading on customs clearance of cars in "Diia." The draft law suggests changing an approach to calculating the cost of customs clearance. The biggest objections to the draft law are inconsistency with European legislation and the reduction of customs revenues to the budget due to the new formula.
The Parliament allowed for the creation a so called “club of “white” business."
The Verkhovna Rada adopted draft law #11084 on tax administration incentives for businesses which pay taxes properly. The draft law suggests that if the entrepreneur meets simple and transparent criteria and his enterprise’s level of tax payment is above the industry average and the wage level is higher than the industry average, he will be released from tax audits and will receive support of the compliance manager to have individual tax advice.
NBU Cut Key Policy Rate to 13.5%.
On April 26, the National Bank of Ukraine announced the decision of its board to cut the key policy rate from 14.5% to 13.5%. According to the NBU’s official statement, the decision to continue the easing cycle of its interest rate policy was made considering a decline in actual and expected price pressures and lower risks to inflows of international financial support.
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