The fiscal position of the Government remains comparatively strong. The Government is expected to continue reforms implementation, which would also result in additional support by official international donors. Overall, real GDP is expected to grow by 1.7% in 2016.
Ukraine may find itself with new Government in the very near future. Frequent government changes do not help the country as there is little to ensure continuity in government policies. Budget planning is done on a single-year basis, senior civil servants are frequently replaced along with politically appointed Ministers.
Businesses in Ukraine want the customs procedures to become less income-focused and instead, to be aimed at facilitating trade. As the 2015 survey of Ukrainian businesses by the Institute for Economic Research and Policy Consulting showed, changes in trade regulations and customs rules are needed to boost international trade.
On January 1, 2016, provisional application of the Deep and Comprehensive Free Trade Area (DCFTA) with the EU started, which lowers duties on the EU goods. Import duty surcharge (at 5-10%) was cancelled. Further we try to analyse impact of these events on international trade.
2015 was a year of many wins and losses for Ukraine. In the first half of the year, Ukraine faced a near-perfect storm of escalating military conflict, falling commodity prices and political instability. As a result already low export revenues went even further down and foreign currency reserves dropped to 5 billion dollars.
It is settled that provisional application of Deep and Comprehensive Free Trade Area (DCFTA) between Ukraine and the EU will start since January 1, 2016. In a response, Russia is expected to increase trade barriers vis-à-vis Ukrainian goods.
How to tax small businesses? In recent months, this question has become the centre of heated discussions in Ukraine. The main topic of the discussions is the future of the Simplified System of Taxation, Accounting and Reporting (or Simplified Tax System, STS), which may be reformed as part of the government’s tax reform.
Today, when we talk about increasing the export capacity of Ukraine, we can hear about the need to focus on exporting the high-tech products, products with high value added and a high level of processing – it seems very attractive because all of the above are important “export benchmarks” which should be strived for.
The forthcoming heating season of October 2015–April 2016 may be the most challenging season for the Ukrainian energy sector since Ukraine’s independence. Each subsector of energy sector has its own challenges in addition to the general problems such as the military conflict in the East, currency depreciation, debt accumulation, and high inflation.
The short natural gas supply cut to Ukraine during the 2006 gas crisis and the 2009 dispute, in which Gazprom again decided to halt all gas supplies via Ukraine, not only contributes to a growing perception of the politicisation of EU-Russian gas trade but the reliability of Russia as an energy provider in general.
