Economy and politics

Ukraine's Cabinet of Ministers submitted Parliament a revised budget for 2008 that assumes an 11.7% increase in profits and 10.3% increase in expenses.

Ukraine’s gold and foreign currency reserves increased by 3.0% (or by USD 1,026.25 mln) in 6M08 hitting a new high of USD 35.439 bln.

The European Central Bank (ECB) increased interest rates by 0.25% to 4.25%, sending it to a seven year high, in order to fight the fastest inflation in 16 years.

Ukraine’s Minister of Finance Viktor Pinzenyk announced that profits of the State Budget general fund are exceeded by UAH 8.3 bln in 1H08.

Nominal salary totaled USD 355 (UAH 1774) in May. In UAH, salaries grew 2.2% MoM and in USD, their monthly growth reached 3.6% since the National Bank appreciated the hryvnya last month.

Fitch Rating has assigned a BB- long term rating to the five-year USD denominated Ukrainian government bonds.

The NBU’s data on Ukraine’s foreign debt indicates that the whole country’s borrowings grew by USD 8 bln or 9.4% in 1Q08, up to USD 92.5 bln as of the end of March 2008.

Official statistics for foreign mercantile trade and domestic trade turnover were released. In January-April 2008, Ukrainian export of goods rose 30.9% YoY to USD 19.3 bln. Import of goods in this respective period totalled USD 26.7 bln, which is 50.3% above imports for 4M07.

Ukraine’s real GDP in May rose 7.2% YoY, compared to 6.7% YoY in April.

Standard & Poor's downgraded Ukraine’s sovereign long-term rating in foreign currency to B+ from BB-. The country was also demoted in domestic currency to BB- from BB, with a stable outlook on both ratings. S&P referred to the pro-cyclical economic policy of the Ukrainian government and its inability to combat inflation effectively.