PM Oleksiy Honcharuk announced this morning he tendered his resignation to President Volodymyr Zelensky. The move came two days after the publication of leaked audio recordings of what was said to be the PM’s mid-December meeting with senior government and NBU officials during which Honcharuk made belittling remarks about the president’s economic competence.

The Cabinet of Ministers approved a list of companies banned from privatization, which should further be passed by parliament. The list includes assets in which the state will keep at least 50%+1 share, particularly Naftogaz Ukrainy, Ukrnafta, and other state oil & gas production and transportation companies; Ukrainian Railway; Ukrposhta (state postal service); and several defense sector companies. A separate lists includes companies banned from even partial privatization: defense and aerospace enterprises; special-purpose state companies; several power giants (nuclear power monopoly Energoatom, hydro power operator Uhrhydroenergo, national company Ukrenergo); and cultural properties.

Parliament approved a bill that would cancel the temporary abolition of VAT refunds on exports of oilseed crops, including soybean (effective Sep. 1, 2018-Dec. 31, 2021) and rapeseed (Jan. 1, 2020-Dec. 31, 2021).

Parliament increased royalty rates on iron ore mining from 8% (de facto 8.8% in 2019) to 11%, applied if the benchmark iron ore price (China Platts 58% fines) is less than $70/t, or 12%, if the benchmark price is higher than $70/t.

Interpipe announced its operating results for December, reporting steel production of 57.1 kt (+8% m-o-m), which put full-year output at 855 kt (-4.2% y-o-y). External steel sales totaled a mere 0.7 kt, with full-year sales up 23% y-o-y to 23.7 kt.

Sugar exports from Ukraine totaled 237 kt in 2019, down 60% y-o-y.

The Finance Ministry sold UAH 5.5bn of hryvnia-denominated bonds yesterday, its first primary bond auction in 2020, matching the auction’s volume caps and exceeding the 2019 weekly average of UAH 4.6bn. MinFin sold UAH 3.0bn of 4-year bonds at 9.9% p.a., down 100bp from the previous placement on Dec. 17; UAH 1.5bn of 2-year debt at 10.0% (-96bp from Dec. 24); and UAH 0.5bn each of 3-month and 12-month paper at 10.7% and 10.2% p.a., down 105bp and 124bp from Dec. 17, respectively. Taking into account UAH 9.2bn of domestic UAH redemptions in the first two weeks of 2020, net redemptions stood at UAH 3.7bn YTD.

WSE-listed Astarta Holding, Ukraine’s largest sugar producer, reported its CEO Viktor Ivanchyk acquired, via Albacon Ventures Limited, 10,000 shares in Astarta on Jan. 10, bringing Albacon’s total shareholding to 9,607,294 shares, or 38.4% of the total outstanding.

According to local media, SCM, which owns a 92.79% stake in Ukrtelecom through ESU, has paid Raga Establishment (formerly Epic Telecom Invest) over $700m to amicably settle their dispute over a 2013 deal to sell Ukrtelecom. SCM confirmed that a settlement was reached but refused to comment on the size of the payment.

In December, total customer deposits at Ukrainian banks increased by 9.8% m-o-m (+18.5% y-o-y) in the hryvnia segment and by 6.6% m-o-m (+28.5% y-o-y) in the F/X segment. Outstanding UAH loans dropped by 2.2% m-o-m (-0.4% y-o-y) while F/X loans shrank by 2.4% m-o-m (-8.6% y-o-y).

Ukraine’s grain harvest stood at about 75 Mt in 2019, up 7% y-o-y from 70 Mt in 2018 and a new record high. Grain exports since July 1, 2019, the start of the marketing year 2019/20 (MY; July 2019-June 2020), reached 32.1 Mt, up 32% y-o-y and including 15.1 Mt of wheat, 12.8 Mt of corn and 3.8 Mt of barley. The Economy and Agriculture Ministry estimated 2019/20 MY grain exports at 54 Mt, up 9% y-o-y.

In 2018, the local PFTS index was the best performing index globally, while the more representative KP-Dragon index dropped by 10% (yet outperforming the MSCI FM, which shed 19%). In 2019, the situation was very different.

Land reform will be in the spotlight this week as lawmakers prepare to debate a revised land market bill at second (and likely final) reading after the Rada agricultural committee approved amendments to the draft on Jan. 4.

Ukraine’s current account (C/A) recorded a surplus of $57m in November, up from deficits of $638m in October and $116m in November 2018, with the 11M19 deficit narrowing to $3.4bn from $4.2bn in 11M18. The 12-month trailing deficit stood at 2.4% of GDP ($3.6bn) in November, virtually unchanged from October and below 3.3% in 2018. The financial and capital account (F/A) surplus totaled $0.5bn in November, virtually in line with October and bringing the 11M19 surplus to $4.5bn, up from $3.4bn in 11M18 (incl. IMF financing). On a 12-month trailing basis, the F/A surplus stood at 5.1% of GDP ($7.7bn), slightly below 5.5% in October and in line with 5.0% in 2018.

Interpipe redeemed $98.5m of its Eurobonds due in 2024, cutting the outstanding amount to $210.7m.

The National Bank doubles the limit on banks’ open long and short foreign currency positions, to up to 10% of their regulatory capital. The measure takes effect on Jan. 20.