Editor’s note: This is issue 74 of Ukrainian lawmaker Yaroslav Zhelezniak’s weekly “Ukrainian Economy in Brief” newsletter, covering events from Sept. 16- Sept. 22, 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 soft commitments in the memorandum with the IMF
The draft law on customs reform was sent to the president for signing.
On Sept. 23, Chairman of the Verkhovna Rada Ruslan Stefanchuk signed draft law #6490-d on the restart of the State Customs Service and it was sent to the President's Office. The bill will come into effect after the president signs it.
The Parliament adopted in the first reading the draft law on increasing taxes.
The Verkhovna Rada, Ukraine's Parliament, adopted in the first reading draft law #11416-d on tax increase. It was the second attempt after the previous rejection of the bill in the parliament and its revision by the Tax Committee.
The draft law suggests the record high increase of taxes to ensure additional budget revenues of Hr 58 billion ($1.4 billion) till the end of 2024 and Hr 137 billion ($3.3 billion) in 2025. As we reported earlier, the revised version has only one update which raises the bank profit tax rate up to 50%.
Lawmakers have two weeks to submit amendments to the draft law, so it can be considered the second reading not earlier than in mid-October. It means that the provision of the draft law may be applied retroactively as the text suggests they should come into effect from Oct. 1.
Martin Fornusek
The Verkhovna Rada adopted the draft law with amendments to the State Budget 2024.
Last week, the parliament voted for draft law #11417 on increasing defense spending by Hr 500 billion ($12 billion) in the final reading. Thus, in 2024 Ukraine will have the record high budget spending of Hr 3.73 trillion ($90 billion).
The Verkhovna Rada supported in the first reading the Accounting Chamber reform.
The Parliament adopted in the first reading draft law #10044-d on the reform of the Accounting Chamber.
The draft law suggests establishing a transparent competitive selection of the ACU’s members with participation and the decisive vote of international experts, extending the mandate of the Accounting Chamber to all public finances, strengthening its independence, reducing a number of the ACU’s members from 13 to 11, and introducing external audit with experts with international auditing experience.
Andrea Januta
World Bank priorities
Last week the parliament adopted four draft laws from the World Bank requirements.
During the parliamentary meetings scheduled for Sept. 17-18, the Verkhovna Rada adopted four draft laws in the final reading and one draft law in the first reading which Ukraine was obliged to adopt within the agreements with the World Bank.
The Parliament adopted in the final reading draft law #5819 on regulating rating agencies and #11474 to address the issue of privatization of the state banks which will be sold transparently via Prozorro.Sale platform.
Moreover, the Verkhovna Rada fully adopted draft law #11063-d on the State Agrarian Register and #10143 with the amendments to the Bankruptcy Code which are also obligations to the EU under the Ukraine Plan of Ukraine Facility.
Furthermore, the Verkhovna Rada adopted in the first reading the new draft law #11520 on public procurements. Me and my colleagues are preparing several proposals to the draft law in the second reading regarding closing abuses currently allowed by exceptions to the law.
Other key economic issues
Ukraine unlocked large-scale privatization.
Hotel "Ukraina”in Kyiv was sold in an auction for Hr 2.5 billion (approx $60 million) via online platform Prozorro.Sale. It's the first case of large-scale privatization after it was allowed by law. During the auction the price increased 2.5 times from the starting price.
The Verkhovna Rada obliged SOEs to publish detailed prices of procurements for construction works.
The Parliament adopted in the final reading the draft law #11057 on changes in public procurement procedures for the SOEs and required from the state contracting authorities to publish the detailed cost estimate of construction works under the signed contracts.
As we reported in Issue 48, currently several provisions, including those adopted due to the martial law, give the SOEs a right not to show the detailed cost estimate within the procurements related to construction works which leads to abuse of the provision by SOEs.
The Cabinet of Ministers presented the 2025 state budget in the parliament.
On Sept. 20, Finance Minister Serhii Marchenko presented the 2025 Draft Budget to the Verkhovna Rada according to the budget process procedure in Ukraine. Lawmakers will submit their amendments by Oct. 1 and the parliament has to vote for the draft law on the State Budget for 2025 for the first time not later than Oct. 20.
Martin Fornusek
