Egypt canceled the contract with the Lviv Bus Plant, thanks to which Ukraine could attract hundreds of millions of dollars and provide jobs for thousands of Ukrainians. This is a prime example of how the National Bank and the government of the country close their doors to foreign investment, which provokes the collapse of hryvnia and further impoverishment of the population.
Ukrainian exports of failure, the main source of currency into the country, which largely depends on the GDP of Ukraine, contributes not only to fiction with the opening of European markets and the gap of trade relations with Russia. Ukrainian exports of killing with his own hands the local central bank, which is still in 2014 year introduced currency restrictions in the country and only two years later, talking about the need to liberalize the foreign exchange market. The restrictions were relaxed in early June, but the visible result yet.
One of the clearest examples of how due to the regulator's actions affected the Ukrainian business - is Egypt cancellation of the tender for the supply of Ukrainian buses 289 89 worth million dollars contract with possibility of extension up to 2 460 thousand buses worth million dollars.. This tender was won in 2015 Ukrainian company Sity Transport Group (CTG, the management company "Lviv Bus factories", LAZ).
After the victory of the Ukrainians in the tender the parties signed a contract in the presence of Prime Minister Ibrahim Mehleba Egypt, Cairo Governor Galia Al-Said and the Ambassador of Ukraine in Egypt Gennady Latiya.
Ukrainian company was to supply low-floor 12-meter long buses LAZ A-183-CNG, made specifically for the Egyptian tender. Under this contract LAZ 1600 intended to create jobs, but companies work fully and has not been renewed. Egyptians did not suit the economic constraints of the authorities of Ukraine, and they abandoned the contract. Not a bad deal over nothing.
"In the year 2015 CTG has won the tender for the supply of buses in Cairo 289 89 on million dollars. But due to the economic situation in Ukraine, the inability of government agencies to provide the necessary government guarantees, as well as in connection with the adoption of the law on compulsory sale coming currency prepaid, Egypt canceled the tender, "- said General Director of CTG Igor Churkin," Interfax ".
Thus, Cairo did not accept the economic context of the implementation of the contract. Egypt requirement of government guarantees means that the customer is afraid of problems with the implementation of the order, for which the money will be paid due to currency restrictions.
However, the Ukrainian producer of buses will be a second chance to get the order, but "on the other terms of payment", as Churkin said.
Egypt in the near future intends to announce another tender for the purchase of buses, now at 400 such buses, and still with the possibility of prolongation of the contract up to 2 thousand. Bus to 460 million.
But Churkin asked the Ukrainian authorities to help, because the contract with Egypt opens the perspective to create more than 18 thousand. New jobs in five years. The Government of Ukraine "has a good chance to secure the inflow of currency into the economy of Ukraine, if it turns out the real support to domestic producers derived from the provision of contracted credit lines of hard currency." Plus, it is necessary to ensure financial guarantees, local and optimize export laws, asked the general director of the Ukrainian manufacturer of buses.
And it proves once again that in the context of European integration and the imaginary break ties with Russia a real demand for Ukrainian products are not observed in the EU, and Asian markets and the Middle East markets, without the need to sign an Association Agreement hard. However, the Egyptian contract demonstrated the Ukrainian authorities that the development of exports also need relief in respect of the foreign exchange market.
"The situation with the buses - it's just one of the strokes of the country's problems caused by the lengthy exchange restrictions. The obligation to sell all foreign exchange earnings, received by prepayment, the period of weakening hryvnia significantly increases the risk of failure of long-term contracts. It creates a situation where the received as a deposit currency is sold, and the hryvnia depreciated, as a result of funds for execution of the contract, which stretched for several years is not enough "- said the first vice-president of the Russian Union of Engineers Ivan Andrievsky. "This is a serious barrier, especially for long-term export contracts. For the engineering industry, production of which is about 10% of all Ukrainian exports in monetary terms, it is all the more significant limiting ", - he added.
Ukraine has introduced administrative restrictions still in 2014 year, to prevent the outflow of capital and the collapse of the currency market. In particular, there were restrictions for individuals to withdraw currency from accounts and its purchase individual licenses for a capital O and the mandatory sale of 75% of foreign exchange earnings by exporters, as well as a temporary ban on the payment of dividends for the 2014 and 2015 years. Moreover, these measures were supported by then even the International Monetary Fund, although traditionally it was in favor of the freedom of movement of capital. Russia, incidentally, did not go down that road, although similar measures lobbied presidential adviser Sergei Glazyev. The Russian Central Bank has chosen a different strategy, releasing the ruble float freely.
The export of Ukraine is one of the main sources of currency for the country. The second source - it transfers Ukrainian guest workers. Due to the drop in exports Ukraine sorely lacking currency. In the first quarter of the year 2016 Ukrainian exports fell to 9,8 billion dollars against 19 billion for the same period of 2013 years, that is, until a coup in the country. "Without currency export growth, we can not see. Therefore the devaluation risk is always present on the Ukrainian currency market. Before the day buying and selling currencies on the interbank market of about 2 billion dollars, and now no longer 200 million. Falling striking. Currency is not enough "- said economist Alexander Ukrainian Ohrimneko. The failure of exports in recent years is also associated with the closure of the Russian market and the sharp drop in world prices for agricultural products and ferrous metals.
But the currency restrictions imposed by Ukraine, affected not only exporters, but even more so the Ukrainian population and foreign investors, says Vadim Iosub of "Alpari".
Foreign exchange restrictions - it is a problem of the entire Ukrainian economy. "Neither of which the mass attraction of foreign investments under such tight money can be no question, and internal resources are not sufficient to run the restoration process. State guarantees to attract investors Ukraine is unlikely to - a country for investors with a high risk level and global uncertainties. Features of the authorities to regulate the situation in the country were questionable, "- says Andrievsky.
Oh how sad picture of foreign investment in Ukraine, the statistics said. During the first quarter of the year 2016 balance of the financial account balance was plus 260 million dollars, whereas in the first quarter of the year was a plus 2013 4,9 billion dollars.
Thus, the balance of foreign direct investment amounted to plus 1,3 billion dollars against 1 billion in the first quarter of the year 2013. However, there is nothing to rejoice. This was largely due to the increase in capital Ukrainian banks by foreign investors, indicating Ukrainian economist Alexander Okhrimenko.
But the balance of portfolio foreign investment was minus 57 million dollars in the first quarter against their growth 2,85 billion dollars in the first quarter of 2013-th. Even worse is the case with foreign investment in private business, indicates Okhrimenko. During the first quarter of the year 2016 from Ukraine has gone abroad of private foreign investment to 730 million dollars more than it is. For comparison: in the first quarter of the year 2013 the Ukraine has gone private investment in 2 billion dollars more than was needed, that is, the situation was reversed.
For Ukraine, where the share of exports of 40-50% of GDP, the devaluation of the hryvnia was disastrous, and the words that the weak hryvnia will help exporters were fairy tales. "The theory that the weak national currency helps exporters, does not work in Ukraine. It can and does work in Russia, where the main form of exports - oil and gas, which are produced in Russia itself. In Ukraine, the main form of exports - a grain and metal, and to produce them have to use imported gas, diesel fuel and fertilizer. Therefore, a flexible export (unstable) rate the same destructive, as well as for imports, "- says Alexander Okhrimenko.
Two years later, to the National Bank of Ukraine at last it came, and he understood the need for removal of foreign exchange restrictions. But the trick is that now the regulator can make things worse. Ukrainian regulator drove himself in a vicious circle: if the head of the NBU is now sharply Gontareva remove currency restrictions, currency outflow abroad could again derail the currency market of Ukraine, does not exclude Okhrimenko.
That is why the Ukrainian regulator began to mitigate foreign exchange restrictions is extremely slow. So, from June 9 2016, the exporters are required to sell on the interbank market is not 75%, as before, but 65% of export earnings. Ukrainians in the exchanger can now buy a currency at a time not on 6 thousand. UAH, and already 12 thousand. UAH, and so on. D. However, while all these point breaks have not led to the normalization of the situation on the currency market. This requires a large liberalization of the market and time.
For business and for Lviv Bus Plant in particular, this means one thing - a new foreign tender, able to start production, to give thousands of Ukrainians work and Ukrainian budget - tax revenues, drift away into the hands of another country.