NEWSBRIEFS (11/02/97)

NEWSBRIEFS

Economy shows signs of recovery

KYIV - The situation in Ukraine's economy remains complex, but some positive signs have emerged recently, said Minister of the Economy Viktor Suslov. The gross domestic product (GDP) for the first nine months of 1997 fell by 5 percent if compared to the same period of 1996. Nevertheless, Mr. Suslov noted that the fall in industrial production has slowed down. A positive sign is that production volumes in the machine-building, metal-processing and food industry enterprises have grown. At the same time, production in the oil processing industry is still falling, since the sector lacks a stable supply of raw materials. According to Mr. Suslov, 72.8 percent of the annual volumes of excise payments were received by the budget as of October 1. Receipt of income from personal income tax equaled 70.2 percent of annual volume. Revenue from overseas trading activities brought in 75 percent of the expected total for 1997. He stressed that during the January to September period, the share of barter operations in the economy rose from 32 percent to 39.2 percent. Roman Shpek, chairman of Ukraine's National Agency for Reconstruction and Develop-ment, said on October 14 that the Cabinet of Ministers understands that the only way to provide stable economic growth and take the country out of economic crisis is by developing the agricultural sector. An agreement was signed between Ukraine and the World Bank to provide Ukraine with a loan that is aimed at restructuring agriculture. According to Mr. Shpek, the Cabinet is now studying the possibility of implementing a USAID project on providing the private sector with American credits totaling $250 million to buy agricultural equipment. (Eastern Economist)

Ukraine earns BB+ credit rating

KYIV - The Japanese rating agency Nippon Investor Service gave Ukraine a BB+ credit rating on October 28. According to the press service of the vice prime minister for the economy, this indicator is a "significant accomplishment" for Ukraine, as a country with a developing economy. This is Ukraine's first international rating and will help to attract cheaper forms of credit. It paves the way for the first issue of Ukrainian foreign bonds in the Japanese stock market. According to the Cabinet of Ministers , this rating "conforms to the risk category to which Ukraine belongs as a country with a transitional economy. Indeed, it is even one position higher than many other countries with such economies." The main aim of acquiring a rating is to issue Ukrainian external bonds on the European and Japanese markets. The first issue of Ukrainian external bonds will take place this year. Their value will be between $250 million and $500 million (U.S.), depending upon the external financing needs of the state budget. (Eastern Economist)

Kyiv stocks hit as New York exchange falls

KYIV - Prices on the Kyiv stock exchange fell on October 28 in the wake of hefty falls on European and Asian stock markets. The Ukrainian exchange was not hit as badly as others, though the energy and chemical sectors lost 10 percent and 4.5 percent, respectively. The KAS-20 Weighted index lost 5.9 percent and the KAS-20 Simple index lost 2.6 percent. The Moscow market lost 20 percent initially, but later regained half those losses. European markets reacted to October 27's huge losses on Wall Street and the Hong Kong exchange. The Dow Jones lost a record 554 points, its biggest single-day drop ever. Hong Kong recorded a 13.7 percent loss, also its biggest ever singleday fall. A domino effect seems to have been at work, though the Ukrainian and Russian markets are relatively modern and smaller. Last week's falls in Hong Kong were triggered by an apparently over-valued Hong Kong dollar and worries that Asian economies seem weak. The falls may be partly attributed to a global correction in over inflated stock values. (Eastern Economist)

Kuchma signs declaration with Georgia

TBILISI - President Leonid Kuchma and his Georgian counterpart, Eduard Shevardnadze, signed a joint declaration on cooperation on October 28. Areas of cooperation for the future include pharmaceuticals and communications. An agreement was also signed on the prevention of dual citizenship. Mr. Kuchma said the moves mark a new stage in relations and expressed optimism for the future. Mr. Kuchma was in Tbilisi for a two-day official visit. The two presidents signed a "Declaration of Two," intended as a "counterbalance to unions and alliances within the CIS," according to Izvestiya of October 29. The Ukrainian president dismissed the CIS peacekeeping operation in Abkhazia as "unproductive" and repeated his offer to send Ukrainian peacekeeping troops to the region. He also stressed Ukraine's interest in purchasing Caspian oil from Azerbaijan and in the development of the Traseca transport project linking Central Asia, the Transcaucasus and Europe. (Eastern Economist, RFE/RL Newsline)

NATO committee visits Ukrainian capital

KYIV - A delegation of NATO's Political Committee, headed by the committee's chair, Ambassador Don McConnell, was in Kyiv on October 27-28. The committee discussed cooperation within the framework of the Charter on a Distinctive Partnership between NATO and Ukraine with Verkhovna Rada committees, at the Foreign Affairs Ministry and with the Interdepartmental Commission for Cooperation with NATO, chaired by Volodymyr Horbulin, secretary of the National Security and Defense Council. The meetings were informal, and no documents were signed. The sides discussed a plan on Ukraine-NATO cooperation for 1998, set to be approved in December. Ukraine's membership in NATO was not discussed. Ambassador McConnell said he got the impression that the Ukrainian Parliament "wants to develop good relations with NATO." (Eastern Economist)

New credits used to cover budget deficit

KYIV - Chase Manhattan Luxembourg S.A. Bank, incorporated into Chase Manhattan Corporations, gave Ukraine a fiduciary credit worth $98.98 million (U.S.) on October 23, according to Ukrainian Television. The money will be used to finance Ukraine's budget deficit. The credit will be returned next October. The credits were included in the 1997 budget as a source of external financing. The 1998 budget will make provisions for re-payment. Receipt of this credit will not change planned targets concerning the budget deficit. Ukraine received a similar credit of $369 million (U.S.) in August from Nomura of Japan, which was also used to cover the budget deficit. (Eastern Economist)

CIS summit held in Chisinau

CHISINAU - Ten of the 12 CIS presidents arrived in Chisinau, Moldova, on October 22 to attend the 21st CIS heads of state summit. (Turkmenistan's Saparmurat Niyazov was sick, and Georgia's Eduard Shevardnadze arrived one day later.) On arriving in the Moldovan capital, Russian President Boris Yeltsin noted that the CIS heads of state "have not met for a long time" and have drifted apart somewhat. Ukrainian President Leonid Kuchma expressed hope that the gathering would give impetus to the CIS's further development. His Azerbaijani counterpart, Heidar Aliev, said he hopes the CIS will become "more effective" but as a "union of equal nations [that will not] be dominated by one country." Uzbek President Islam Karimov also stressed that CIS member-countries must remain independent. He warned against attempts either to revive the USSR or to conclude alternative unions within the CIS. CIS prime ministers, excluding those from Azerbaijan and Uzbekistan, signed an agreement in Chisinau on October 23 creating a common agrarian market. The CIS foreign ministers failed to reach agreement on the proposed creation of a committee to resolve conflicts within or between member-states. Russian Foreign Affairs Minister Yevgenii Primakov said some states want that body to be purely consultative, while other unnamed countries share Russia's support for vesting it with the authority to take administrative measures and deploy peacekeepers. Belarusian President Alyaksandr Lukashenka told Interfax after the summit that the Georgian, Azerbaijani and Moldovan presidents had harshly criticized Russia's approach to resolving conflicts on the territory of their countries. Participants agreed the next summit will take place on January 23, 1998. (RFE/RL Newsline)

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