News (#12 December 2015)

Chamber News

Meeting with Valeria Gontareva, Governor of the National Bank of Ukraine

On 30 October Chamber members met with Valeria Gontareva, governor of the National Bank of Ukraine, to discuss the efficiency of the current currency restrictions set by the NBU, prospects for liberalization of FX controls, mechanisms to minimize the risk of capital outflows and the shadow economy, plans and steps by the National Bank of Ukraine to ensure macroeconomic stability, promotion of the business climate and attracting new investment. Valeria Gontareva delivered an open and comprehensive speech about the end of oligarchic banking and results on cleaning up the banking system in Ukraine. She said that the hardest decision taken was the liquidation of a systemic bank Delta Bank. According to her, there was even an idea to nationalize the Delta Bank with debt-equity swap for the benefit of Delta Banks creditors, but this idea was not supported by the Ukrainian Ministry of Finance. She also informed that withdrawal of captive banks from the market doesnt have any systemic threat, as over 80 of banks hold just 10% of the banking systems assets. Ms. Gontareva explained that the measures, introduced in September 2014 and February 2015, were absolutely needed to stabilize the banking system and ensure IMF loans, without which the Ukrainian economy would not survive. The NBU generally trusts the IMFs experience in crisis and transformation economies all over the world, but would advise it to include a chapter in the IMF Bible Book on action plans for countries in conflict situations. The Ukrainian case and unique construction of capital adequacy that were designed for gradual renewal of the capital adequacy from 0 to 10% will be a good instrument for other countries which may, unfortunately, find themselves in the same situation in future.

Ms. Gontareva also indicated that three obstacles to economic development still exist: reform of the Prosecutor-Generals Office, tax reform and approval of the 2016 state budget. In this context the NBU is proposing a 15%-15%-15% flat rate of corporate, individual and VAT taxation. The NBU is continuing dialogue with the Ministry of Finance to set the tax rate on deposits back to the rate of 15%, but increase taxation of dividends to the level of 15%, respectively.

Ms. Gontareva mentioned that privatization of state-owned banks and a strategy for state-owned banks under the NBU are being discussed with the Ministry of Finance. Implementation of several quality stamp privatization cases (i.e. Oshchadbank) with the equity of IFIs (EBRD, IFC) is supported by the NBU, as was proposed in a recent Chamber position paper.

Chamber Energy Committee Meeting

The Chamber Energy Committee held its regular meeting on 6 November devoted to discussing the Chambers position regarding several Drafts and regulations. Committee members stated that there is a strong necessity to adopt several Draft Acts, among them No.3325 regarding Ensuring Conditions of the Natural Gas Market, otherwise the revolutionary On Natural Gas Market Act, which was adopted in spring 2015, will not function in properly. The Chamber members will address this position to the Ukrainian Parliament.

The meeting began with a discussion of the CMU Resolution On Approval of the Procedure of Establishing Security Natural Gas Stock and respective Draft Chamber Position Paper.

During the discussion the participants raised such questions as the work of the Central Commission on development of gas, condensate, oil fields and operation of underground gas storage. The issue of gas quality was also mentioned, as was the situation with the Draft Act on royalties. The last one resulted in common understanding of the necessity to raise the topic once again and to inform Members of Parliament about the Chambers Position on the necessity to decrease royalties by sending an official letter.

During the meeting the participants mentioned that there are several important Draft Acts, necessary for the functioning of the natural gas market, particularly Draft Act No.3325 On Amendments to Certain Legislative Acts of Ukraine to Ensure Conditions of the Natural Gas Market, Draft Act No.3073 as well as Draft Act No.3074. The Draft Acts amend Tax and Customs Codes to create conditions for a new model of the natural gas market.

The participants received an update on Draft Act No.3096 On Amendments to Certain Legislative Acts of Ukraine on Simplification of Certain Aspects of the Oil and Gas Industry, particularly about the fact that the Draft has still not been included in the Ukrainian Parliaments agenda, and so the Chamber has sent an official letter containing a proposal to include the Draft in the agenda as soon as possible.

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