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Last updated: 17 Feb 2011

IBobserver is the first specialized newspaper in Ukraine and CIS region, devoted to the international trade development

February-March 2011 / www.ibcontacts.com.ua / ?2 International trade development Any business activity outcome Despite the crisis and redistri- The land market uncertainties is predetermined by country bution of the domestic IT mar- and problems of Ukrainian ru- TRADE FINANCE risks. ?But that?s not fair!?- ket, the computer technologies ral regions significantly impair you will say. Unfair, but it is segment is vigorously develop- competitiveness of the domes- Under Umbrella of the State reality. On the other hand, ing, lagging behind the global tic agricultural sector. had there been no risks, there trends only in terms of sales Comments: ICC, KredEx, would be nothing to insure. volumes. 4 9 10 EXIMBANKA SR, KUKE 1 Credit Curtain or Just a Cover-Up? Comments: EXIMBANKA SR, EKF, EDC, Finnvera, UNDER UMBRELLA ONDD, SACE 4 Euler Hermes: International Trade Development Forecast OF THE STATE Difficulties of 2011 will not pre- vent trade finance market gen- The global liquidity crisis became a serious argument in favor of an export credit eral growth agency establishment in Ukraine. In the current environment, when exporters, 5 apart from being obliged to deliver quality products, need to grant financing Exclusive Interview with EBRD terms, businesses will be unable to succeed without national ECA. Chief Economist Erik Berglöf Trade finance volume is going to The material was prepared jointly with the Ministry of increase Economic Development and Trade of Ukraine 6 Today, Ukrainian exporters more than age to obtain more favorable export terms. FINANCIAL ever count on more active support from the Establishment of a national export credit government, because the market turmoil agency (ECA) would strengthen Ukrain- REPORTS resulted in significant tightening of trade ian companies? positions on global markets finance terms and conditions. The banks and boost exports from Ukraine. ?The role of raised their interest rates, demand collaterals ECA for Ukrainian exporters is difficult to over- Find Ten Dierences of higher values, reduced the payment defer- estimate. Establishment of such national agency Key dierences between national ral terms and are reluctant to lend in general. in Ukraine could significantly accelerate develop- All this happens on the background of gen- ment of national economy and banking sector on and international nancial reporting eral noncompetitiveness of Ukrainian com- the whole, since ECA-supported lending schemes standards 8 panies on international trade markets. will engage not just a buyer and a seller, but also Since the first years of Ukraine?s inde- a bank in the seller?s country. The first and fore- pendence and up to now, ferrous metals and most objective of ECA is the support of the na- MARKETS AND their products have represented a lion?s share tional producers, large and medium businesses, of Ukrainian exports (41.3% in 2001 and which are the backbone of our economy, and such TRENDS 34.9% for the first ten months of the past year, activity would undoubtedly become economic respectively). However, the metal prices fell growth driver, leading to expansion of the range of three times during the past several years and, products exported, creation of new jobs, existing Resetting Underway with the foreign companies installing new production capacities upgrade, exports geography production capacities, Ukrainian export- expansion, and international image of Ukraine Crisis helped Ukrainian IT market ers are becoming less and less competitive. improvement?, ? told IBOBSERVER Mr. Kon- Comments: Asus, Everest, Moreover, the lack of adequate state regula- stantin Kamarali, Head of Trade Finance and transparent mechanism of Ukrainian producers K-Trade, Navigator tory and financial support to Ukraine?s tre- Documentary operations Department of the 9 support?. mendous scientific and industrial potential First Ukrainian International Bank (PUMB). Until a national ECA is established, the prevents its promotion in the global markets. ?Besides, ? said Mrs. Natalia Neumeicheva, only thing Ukrainian companies can count Hurdle Racing on the Market The above mentioned resulted in visible Head of Department of Trade Finance of on is recurrent assistance on the part of other Ukrainian agricultural market in reduction of exports from Ukraine to the SwedBank, ? none of Ukrainian insurers is pre- governments.For example, in April 2009, standby mode European Union, which is a major global pared to cover the domestic banks? risks inherent Ukrainian industrial goods (steel, in particu- trade market that just five years from now to financing investment projects, accepting the lar) exporters had hopes to obtain funds from Comments: ?Myronivsky Khlibo- consumed some 40% of total national exports risks of foreign banks in connection with Ukrain- the G20 countries, which promised to contin- product?, ?Ukrzernoprom? 10 (now reduced 4 times). And this trend will ian products import. And the existing preferences ue trade finance provision to the companies 2 aggravate unless Ukrainian exporters man- granted by the state can hardly be viewed as a from the developing markets. ner of the international forum held ment in Ukraine which has been Dear partners, to discuss trade financing in Eura- the point of concern of the market sia. players for many years. In our edition, we focus on the IBOBSERVER is published bi- IBCONTACTS is proud to pre- prospects of trade relations devel- monthly and distributed by courier sent you the next issue of IBOB- opment between Ukrainian entities service/mail among top managers SERVER newspaper, which is the and their foreign partners, discuss of trade companies from Ukraine only periodical within the territory trade finance issues, analyze risks, and CIS countries and among sub- of Ukraine dedicated to the issues credit insurance matters, specific scribers of ?Kontrakty? business of international trade develop- legal issues, and other topical as- weekly. The newspaper circulation ment. pects of the international trade. is 25,000 copies. All materials of this newspaper Reading IBOBSERVER, you can We will be happy to receive your are prepared by IBCONTACTS ex- also find out how to realize inter- suggestions and comments on our perts in collaboration with Minis- national projects, conduct nego- tries, international organizations, publications. tiations with foreign partners to foreign export agencies, banks, as obtain the best possible contract well as large exporters and import- terms and conditions, to attract ers. trade finance both abroad and in IBOBSERVER has become the Ukraine, prepare required project first and the only professional Regards, and financial documentation, as ground that united main interna- well as what international stand- tional trade relations players in ards you should seek to comply Ukraine and abroad enabling them with in order to expanding your to discuss critical issues of cooper- trade customer base. ation and search for common solu- Kateryna S. Barabash, This issue is primarily dedi- tions. Managing Director of cated to the discussion of aspects In addition, in 2011 IBOBSERVER of export credit agency establish- has become an official media part- IBCONTACTS 2 TRADE FINA NCE ¹2 / February-March 2011 / IBOBSERVER / www.ibcontacts.com.ua 1 We would like to remind that then the G20 Mr. Aleksei Mostovoi, Head of Credit De- governments allocated 250 billion US Dollars partment and Board Member of ING Bank Ministry of Economic for distribution among developing countries Ukraine Oleksiy Mostovyi. Indeed, Ukraine?s (including Ukraine) via European Bank for share in the total output of machine building Reconstruction and Development (EBRD), and metal processing industry of the former International Financial Corporation (IFC), USSR was 35-40%, while today it shrank to Development and Trade and foreign ECAs. Besides, in the opinion the tiny 16-17%. And, despite exports of ma- of the experts of the World Bank Institution, chine building industry products and services the decline of the trade finance transactions growth, the lack of state support to export ac- volume accounts for 10-15% of the global eco- tivity via loans, insurance and guarantees is of Ukraine nomic downturn. ?I think that the trade facilita- the major factor hindering development of the tion programs implemented by the EBRD and the machine building industry. Deputy Minister of Economy of IFC are good alternative to a national ECA. Within The first attempts to establish a Ukrainian Ukraine, Valeriy Muntian, has offi- the scope of such programs authorized banks can export credit agency date back to 2000, when cially advised IBOBSERVER that ?fa- confirm importers? banks export letters of credit in respective initiative was articulated in the Mes- cilitation of realization of Ukraine?s favor of Ukrainian manufacturers or even provide sage of the President to the Verkhovna Rada export potential is one of the funda- required financing?, ? confirmed to our cor- (Parliament) of Ukraine titled ?Ukraine. Enter- mental elements of the state industrial respondent Mr. Vitaliy Kislenko, Director of ing the XXI century. Strategy of economic and and structural policy. To that end, the Department of State Sector and Trade Finance. social policy for 2000-2004?. That document government takes steps to establish in for the first time officially recognized the ne- WTO Makes Ukraine an integral and efficient sys- cessity to support exports of high-technology tem of support of domestic exporters? Advances to Exporters products via implementation of export incen- operations on the international com- According to expert assessments, govern- tives program based on mechanisms of grant- modities markets. The specialists of ments of the developed countries allocate ing export loans and their insurance. Later on, to finance export support programs on the in 2005, 2008 and 2009 three other draft laws the Ministry of Economy have made average 0.35% of their GDPs. The experts of on establishment of an ECA in Ukraine were an in-depth analysis of the systems the Organization for Economic Cooperation published. Each such draft law envisaged of state support to national exporters and Development believe that direct foreign establishment of a state joint stock company implemented in different countries investments have a two-fold impact on the (?Ukrainian Company of Export Insurance?). (in particular, the experience accumu- economy, while in the developing countries The mission of such institution was to arrange lated by export development agencies) this indicator may be even higher. In other credit facilities for exporters and their custom- and initiated a project of establishment words, the state support significantly contrib- ers, to facilitate insurance and reinsurance of of a system of state financial support utes to the efficiency of business. export credits, to guarantee tender proposals of export of Ukrainian goods similar In Ukraine, the national export support is- of Ukrainian exporters, and to ensure partial to those existing in the WTO member- sues are managed by the Ministry of Econo- compensation of interest payable on the ex- countries. my. The government assists the exporters in port loans. None of the above draft laws was Within the scope of the project, the following areas: financial aid, organization ever enacted as they did not provide clear cut the Ministry prepared a draft law of of expositions, introduction of trade restric- procedures of ECA operation. Ukraine ?On State Support of Export tions (distribution of export/import quotas), ?Among the other main obstacles to the estab- Activity? that envisages creation of a technical barriers (registration, testing and lishment of an ECA in Ukraine I would mention favorable environment and new op- support of domestic export is feasible chemical agents approval in accordance with the lack of internationally recognized approach portunities for domestic enterprises, subject to adoption of special Law that REACH system), bringing Ukrainian econ- and framework of risks, ratings, group, terms, and protection of Ukrainian exporters from would provide for respective financ- omy in compliance with the requirements of limits evaluation lack of market players confidence, the Kyoto Protocol and the WTO treaties. risks of default and financial losses, ing from the State Budget. According insufficient state guarantees with regard to respec- It is a known fact that the government was and tive terms and risk limits, as well as absence of a raising competitiveness of Ukrain- to preliminary estimates, such a Law exceptionally active in supporting Ukrain- procedure for review and processing of applications ian goods on the global markets. The will, if effective, make it possible to ian exporters in the period of Ukraine?s ac- from importing countries on long-term financing draft law provides adoption of new increase the exports by domestic pro- cedence to the WTO. The same measures are from Ukrainian banks and, of course, the continu- regulatory approaches to the organiza- ducers on the average by 3% per an- currently taken by Ukraine as a WTO member ing devaluation of hryvna and exchange rates vola- tion of state support of export transac- num thanks to introduction of systems (since May 2008) to meet the WTO?s require- tility?, ? told Mr. Kislenko IBOBSERVER rep- tions based on insurance, lending and of insurance, lending and export guar- ments. Today, Ukraine faces the challenge resentative. granting guarantees to exporters, first antees, reduction of financing costs of preferences and exemptions abolishment As of today, the state agencies are guided of all ? via establishment of respective and, as a consequence, to expand sales introduced with regard to certain industries. in their activity by the provisions of the new agency. market for Ukrainian goods, as well The WTO officials believe that state guaran- draft law ?On the State Financial Support to The international experience shows as increase revenues for domestic pro- tees will ensure maximum benefit if they are Export Activity? submitted to Verkhovna that introduction of the system of state ducers and create of new jobs?. granted for the purposes of transactions of ex- Rada in 2010. The draft law envisages the porters optimization (especially those of high- sufficient financial support to the exporters tech products), rather than on facilitation of comprising some UAH 650 million (0.2% of their dumping operations conflicting with fair total exports in value terms). Furthermore, competition rules. In addition, the only state according to the draft law, the contingent export support mechanism approved by the losses in case of customer default is to be re- WTO is the financing, insurance and render- imbursed by the state or based on the guar- ing of guarantees at the cost of the state budget antee of the foreign customer which will be (through export credit agencies). recognized against the state revenues and These are export credit agencies, predomi- will help balance budget expenditures. The nantly state-owned, that support exporters draft law authors expect national manu- in all European countries covering their risks facturers? exports to grow on the average arising from transactions with foreign coun- 3%, or 1.2 billion US Dollars, per year. Such terparts. ECAs? mission is to insure and cover growth rates will be achieved thanks to the export credit facilities to successfully promote system of insurance, trade finance and guar- domestic products on international markets antees of exports implementation, credit as well as to support foreign investments. The costs reduction, higher revenues of domes- largest European export credit agencies are tic manufacturers, working positions crea- Euler Hermes Kreditfersischerung (Germa- tion and markets for Ukrainian goods ex- ny), Coface (France), GIEK (the Netherlands), pansion through active participation in the CESCE (Spain), KUKE (Poland), and some international tenders. others. ECAs are operating in compliance ?I think it is necessary to revise the existing with the international rules and principles ap- regulatory documents, in particular, currency proved by the Consensus of the OECD coun- transactions regulation legislation. In addi- tries and respective agreements of the Berne tion, considering the fact that the largest share Union, also known as The International Union of Ukrainian exports fall on the CIS countries of Credit & Investment Insurers. and countries with high political and economic Loans against ECA guarantee are granted risks, one should clearly understand the extent to applying two scenarios. The first scheme en- which the government would be ready to insure visages a loan to a domestic bank with a view the risks of importing countries (at the expense to financing the contract of the national export- of budgetary funds), accepting direct liability of er, under the second option, loan is given to commercial, political and economic risks of such the exporter by a foreign lending bank against countries?, ? said Natalia Neumeicheva. the guarantees of a domestic bank. The option Establishment of a national ECA will selected depends on the level of confidence of become possible only upon enactment of the lending bank/the ECA in the bank or ex- legislative framework understandable and porter in question. acceptable to all market players. Special at- In Ukraine, the state supports national tention should be paid to financing high-tech exporters via state-owned Ukreximbank. Ini- development products, whose production tially, the bank performed functions similar and sales are a crucial driver of economic to those of the Western banks specializing in growth in any country. ?To prepare forecasts foreign trade financing, including lending to regarding establishment of ECA in Ukraine, exporters. In practice, however, Ukreximbank one should be able to influence the process, and is operating as a universal financial institution. there should be demand for such agency services among market players. Therefore, in my opinion, Moving on market leaders should discuss the practicability of establishing such ECA in general and, if such the Winding Route project finds support, submit respective propos- ?Establishment of Ukrainian ECA requires a als to the working group in charge of national clear program and legislative base, as well transpar- projects and to the Committee for economic re- ent and sufficient sources of its financing. I believe forms under the jurisdiction of the President of that support on the part of an export credit agency Ukraine?, ? added Vitaliy Kyslenko. In his would significantly accelerate the development of, turn, Mr. Kamarali emphasized that, even in first of all, domestic machine building sector (in- case a clear and transparent state program cluding basic engineering industry, instrument of ECA establishing is approved such agen- making industry, car-building, and power engi- cy will be able to launch its activities only in neering industry)?, ? told our correspondent 2 to 5 years. ¹2 / February-Marc h 2011 / IBOBSERVER / www.ibcontacts.com.ua TRADE FINANCE 3 COMMENTS: As such, the implementation of export EXIMBANKA SR, risks insurance practices will facilitate the traders? efficiency. Another problem Slovakia is that many strong Ukrainian companies apply versatile tax optimization schemes under which deals are made via friendly Concerning to Ms. Denisa Petríková, had negative foreign trade balance for companies incorporated in the countries Director of International Relations De- the first 10 month of 2010 in the amount with preferential tax legislation which partment of the Slovakian Eximbank of EUR 68.5 mil. Therefore, we consider eliminates the risk of default for Ukrain- ?Ukraine has established its Export the increase of our exports as crucial and ian exporters on the part of their coun- Credit Agency ? Export-Import Bank of we believe that your IB Observer could terparts from such countries. Ukraine (UKREXIMBANK) in 1992. The help us to accomplish this goal. Furthermore, financial support of ex- agency is a member of the Berne Un- We are convinced that the main role port operations has to be just one com- ion Prague Club. EXIMBANKA SR has of the national export credit agency is to ponent of a comprehensive complex of signed the Agreement on Cooperation support exports with the aim to increase measures including both economic di- with UKREXIMBANK in 2003. competitiveness of the country adhering plomacy and assistance in organizing The export from Slovakia to Ukraine to the international rules and principles business forums, expositions, etc. grew on year to year basis (2009/2010) in this field. The activities of an ECA Of course, when attempting to estab- by 21.2%, followed by the increase of should also have positive impact on the lish an ECA, we will not avoid numer- import by 73%. Based on the informa- employment rate of the country?. ous difficulties, primarily those of ?po- tion from our Statistical Office Slovakia litical? nature. Such structure will be in charge of great financial resources man- agement; therefore, even the question of its subordination to any governmental body will be the subject of heated dis- KredEx cussions: although it is quite logical that such structure should be accountable to Krediidikindlustus AS, the Ministry of Economy, the Ministry of Ukrainian National Estonia Finance and the State Committee of Fi- nancial Services can also pretend to have Committee of the control over such agency. On the other side, according to vari- Mr. Mariko Rukholm, Member of supported international trade. Without International Cham- ous expert evaluations, up to 10% of total Board considers that ?For the compa- their involvement quite many transac- ber of Commerce insurance claims are paid in Ukraine to nies, who are exporting or willing to tions would have not taken place. fraudsters, not mentioning the situations export, the challenge is always higher During financial crises the ECAs when it will be necessary to indemnify than for companies who are trading on have role to stabilize the market. In Es- Mr. Volodymyr Shchelkunov, The losses or realize the subrogation rights, domestic market. On the export markets tonia for example 2008 all private credit President of the Chamber commented for example, in the Equatorial Africa we have to adopt habits and customs, insurers limited strongly its activity by on the establishment of the national ECA countries. Unfortunately, there is always which are common there and at the reducing credit limits for Estonian com- as follows: National Export and Credit a great deal of persons wishing to ar- same time also meet high competition. panies. As result several companies suf- Agency establishment is more than ur- range fraudulent schemes. One major challenge for companies fered under liquidity problems as their gent issue for Ukraine. Indeed, it is ex- In our opinion, fraud risk may be mit- is to provide to potential customers fa- financing depended on credit insurance. tremely difficult for us to compete with igated by way of business circles? repre- vorable payment terms. Good product Unfortunately some of the international the leaders of global economy in high- sentatives delegation to the supervisory or service is not always enough; the credit insurers also closed their doors tech products market segment in the board or another body that will oversee deal can be decided based on financ- for time being. In such situation ECAs developed countries. On the other hand, such structure, as well as by special by- ing terms. And here the ECAs have have opportunity to extend their activ- the markets of Africa, Middle East and laws on the risks underwriting proce- great role to play. As they provide cover ity. Southern America also represent high dures enactment. for credit risk, they help companies to Thus, the establishment of the na- potential for Ukrainian producers, pri- Nevertheless, although exports risks sell so that the risk of getting money is tional export credit agency in Ukraine marily thanks to the still existing trading insurance is vital for exporters, there still hedged. If we speak about longer pay- would be definitely a positive step: as relations of the former USSR with these exists uncertainty as regards relations ment terms then also banks would be ECAs are networking, having a partner regions and our readiness to trade in of businesses with the new structure. involved in providing favorable financ- organization in Ukraine has a huge val- ?uncivilized? environments. At the same In fact, if risks are insured on an arm?s ing terms for buyer. Data of Berne Un- ue for information exchange?. time, in doing so we should be prepared length basis, the interested companies ion show in which extent ECAs have to take respective business risks. Many will encounter difficulties as reputation of these countries are very peculiar, and, of the national financial sector has been as such, a correctly organized activity of far from perfect in the period of the re- ECA may become one of the fundamen- cent global market turmoil. Hardly any tal drivers of our exports growth. enterprise will agree to ship its goods It is enough to mention KUKE and against ECA?s guarantee, as, in case of KUKE S.A, MEHIB to realize that the former social- losses and default of the insurer, such Poland ist camp countries have already success- enterprise would have to engage into fully mastered this technique. Moreover, litigation with a state-owned entity. even in the post-Soviet regions there are In our opinion, in order to test this examples of export insurance companies technology, it will be most appropriate Ms. Anna Pavlak, Head of Insur- ucts without financing for the importer. establishment, such as those operating to launch a pilot project, under which ance Department and State Guarantees Therefore, the presence of a national in Kazakhstan and Belarus, and ? since the government will authorize an eligi- considers that ?The national ECAs play export credit agency strengthens the po- recently ? in Russia. ble company: important role in developed economies. sition of domestic companies on inter- The country?s top leaders are also 1) to maintain relations with foreign They support and stimulate exports national trade market, especially those aware of this issue ? to support this state- credit rating agencies to underwrite for- through credit insurance and guaran- companies which export goods and ser- ment, it will be enough to mention that eign customers? risks; tees (pure cover providers) as well as vices normally purchased with the use the list of the national security priorities 2) to transact with 3 to 5 authorized through direct financing (eximbanks). of medium and long term export credits. approved by the Decree of the President insurers, selected on a competitive basis, Almost all OECD member countries Most of the countries from the former of Ukraine of 10 December 2010 includes which will be reimbursed a portion of established their national ECAs many Eastern Bloc have already set up their ?implementation of measures to facili- costs incurred in this type of activity and years ago. ECAs fill the gap on the mar- national export credit agencies. In ear- tate organization in 2011 of a system of a share of potential losses. ket which cannot be filled by commer- ly 90-ies such agencies appeared i.a. in export crediting and insurance, includ- The above scheme will make it possi- cial insurers. This was particularly vis- Poland, Czech Republic, Hungary and ing state support of the schemes of cred- ble to take advantage of the established ible during the recent global economic Slovenia. Later on many other coun- it and export risks insurance?. customer relations and to prevent many crisis when many private insurers and tries decided to create their own ECAs, On the other side, resolution of this fraudulent acts, as the private entities are reinsures limited their appetite for risk including Balkan states, Kazakhstan, issue via establishing a state-owned ex- well known to keep a wary eye on every or sometimes even stopped extending Uzbekistan and even Belarus. It would port insurance company has a number of penny expended. coverage for new transactions. When be important for players of the interna- weak points. In any case, it is required to perform the capacity of commercial players on tional trade market to know that they The major part of Ukrainian exports a scrupulous quantitative analysis of all the credit insurance market shrinks, the can rely on support from a specialized is represented by products of low level alternative options of solving the issue of ECA may step in and continue stimula- Ukrainian export-oriented institution processing. Given the specifics of these financial support to export and econom- tion of trade flows. with state mandate. It is important not products markets, many metallurgical ic result of such options, including the When the country shifts from export- only for exporters from Ukraine, but and chemical enterprises, accounting for scenario of the costs of letters of credit/ ing raw materials and semi-products to also for their partners in other countries more than half of the national exports, guarantees reimbursement/guarantees, more sophisticated goods and services and for banks involved in international either have well-established trade rela- and respective financial risks insurance. (machinery, construction services etc) trade financing. Also, for the community tions with major foreign resellers, or Another type of problems to address the role of ECA?s support growths. of ECAs it would be helpful to have a re- have established their own trade houses is represented by organizational issues. Buyers of investment goods expect and liable export credit insurer counterparty abroad and, therefore, they hardly need Insurance of export risks, both in terms require longer tenor credits form their in Ukraine, considering it being one of ECA?s services. of underwriting and settlement of claims, suppliers and/or banks. Longer tenors the biggest markets in Eastern Europe. Alternatively, agricultural sector com- is quite peculiar and requires involving in turn are less acceptable for private The existence of the ECA in a country panies do need the ECA services: traders highly qualified personnel. Ukraine has credit insurers, so this is the area where is one of the signs of development of the are very active in these markets but, hav- neither such experts nor even clear un- sometimes ECA is the only available country and its openness for the world. ing feasible business plans, are often un- derstanding of the legislation required insurer. Suppliers who offer to their Establishment of the national export able to arrange trade financing through for such risks insurance. The explana- clients not only goods/services but also credit agency shows that the country?s bank guarantees or letters of credit as all tion is very simple ? none of Ukraine?s adequate long term financial package authorities recognize the importance of they can secure purchased goods with is markets leaders has ever employed such get competitive advantage over those exports to the national economy?. their office equipment. type of insurance. suppliers who try to sell their prod- 4 TRADE FINA NCE ¹2 / February-March 2011 / IBOBSERVER / www.ibcontacts.com.ua CREDIT CURTAIN OR JUST A COVER-UP? Any business activity outcome is predetermined by country risks. ?But that?s not fair!?- you will say. Unfair, but it is reality. On the other hand, had there been no risks, there would be nothing to insure. Kateryna S. Barabash, Specialist on Trade Finance,Managing Director of IBCONTACTS The credit rating of the country where the borrower operates is the first thing ana- lyzed by foreign financial and insurance organizations when determining credit- worthiness of potential customers. Indeed, should one confide in a company from a state characterized by political instability, corruption and growing external debt?! For example, the experts of Coface, a French ECA, believe the above risks are ?traditional? for Ukraine and other CIS countries. Coface representatives empha- sized this in their presentation made dur- ing the Country Risk 2011 Conference re- cently held in Paris. All these factors affect Ukraine?s credit ratings within the systems of different tions and attract significant foreign trade So, the question is how could a Ukrain- which we intend to discuss in more detail ECAs. For example, during the global cri- finance at reasonable interest rates. The ian entity open this credit curtain and ob- in the next issue of IBOBSERVER, is anoth- sis period, taking into account a number of primary obstacle is non-transparency of tain required limit and payment deferral er decisive factor for Euler Hermes. factors and risks, ly virtually all credit agen- Ukrainian companies? financial activities terms in the situation when country?s rat- There are, however, other equally im- cies significantly downgraded Ukraine?s which is believed to be another risk tradi- ing is rather low? portant aspects. For example, HeitmanMr. rating which was below satisfactory level tional for our region. The answer to this question is, in the Jens Heitmann, Head of Department, Fi- even before the market collapse. ?Before the crisis, we insured a great first place, in efficiency and performance nancial. Sector and Key Account Risks of While Russia?s rating was upgraded as deal of loans which resulted in significant of the interested Ukrainian company it- Euler Hermes, said that ?feasibility of any early as in January of 2010, and the rat- growth of Ukrainian companies? external self, availability of international referrals long-term trade finance project within the ing of Kazakhstan was not reduced at all, debt and, as as consequence, in failure of and solid payment discipline. For example, scope of an ECA-guaranteed interbank Ukraine?s reputation suffered the most. the whole system?, ? admitted Yves Zlo- when evaluating potential projects of trade agreement, is greatly dependent on the rat- Our national rating began to increase mod- towsky, Cofas France Chief Economist. Mr. finance provision trade finance from Hol- ing of Ukrainian bank participating in the erately only in the second half of 2010 re- Zlotowsky emphasized that one of the main land, the underwriters of the state owned arrangement and acceptance of its guar- sulting in higher volumes of insurance of factors critical for Ukraine?s rating was the Atradius agency primarily consider the antees by foreign insurance and financial trade transactions with Ukrainian compa- inefficient state governance system affect- size of the borrower and the amount of its institutions?. nies. ing the image of Ukraine in the eyes of for- profits in Euros or US Dollars. Therefore, foreign trade finance projects, The increase of Ukraine?s rating was eign investors in the long-term perspective. At the same time, when assessing the guaranteed by ECAs, are both favorable driven by a number of factors, the first and Still, it should be pointed out that some level of confidence in a potential Ukrain- and cost-effective for Ukrainian importers. foremost of them being the political stabili- improvements in the system have been in- ian importer, the experts of Euler Hermes, But such schemes will succeed only under zation in the country. However, there is a troduced already in the second half of 2010 a German ECA, rely upon the applicant?s the condition of all interested parties? (i.e. variety of aspects preventing upgrades of in comparison with the situation observed corporate rights analysis which includes buyers, suppliers, ECA, banks and under- Ukraine?s rating to an estimable level that in 2009. Furthermore, the volumes of direct review of its ownership structure and pe- writers) activities clear cut coordinationall would allow Ukrainian traders to obtain foreign investments in Ukraine have also riod of holding its shares by the same per- interested parties (i.e. buyers, suppliers, more favorable contract terms and condi- been increasing gradually lately. sons. The analysis of corporate cash flows, ECA, banks and underwriters). COMMENTS: position is scheduled for review in Q1 with the specification of tasks in the eco- ing the development in Ukraine and Export Development 2011. nomic area by 2010 (e.g. review of the the rest of the region closely. After the In terms of Ukraine?s country risk tax code) is highly appreciated by part- crisis hit Ukraine and other CIS coun- Canada rating, as you may be aware, the OECD ner economies. Ukrainian government tries we have adjusted our cover policy Expert Group is meeting next week to published its long-term forecast of key towards the country. We have become (EDC), review and discuss a potential upgrade economic indicators. The GDP growth more concerned about deteriorating Canada to Ukraine?s country risk rating. EDC in 2012-2013 is expected at the level credit quality as well as currency mis- will be represented at these meeting by 6.5% and the inflation should decrease match than before the crisis. We have Mr. John M. Place, Chief Representa- one of our economists, who will also be to 6.2% in 2013. Tax, social and economy also implemented a stricter approached tive, Russian Federation & CIS has un- meeting with the IMF to discuss their reforms should form the basis for such towards the banking sector, especially derlined that ?Canada has a well estab- programme in Ukraine. Upon her re- positive perspective. We consider as smaller banks with weak ownership. lished trade relationship with Ukraine turn at the end of January, I would be positive sign the signed IMF Stand-by We hope to see improved economic which has been an important market in pleased to share further information agreement, which represents a guaran- stability, and believe that Ukraine has the past for Canadian agricultural and from our Economics group and would tee of financial stability, in case Ukraine great potential, but we believe that agri-food products, agricultural equip- be pleased to pass on any questions you will fulfill the criteria set by the IMF, e.g. fulfilling the potential will depend on ment, oil and gas equipment and servic- may have to that group concerning their restructuring of the banking sector and whether fundamental structural re- es, transportation, and information and findings and the upcoming decision by strengthening of the financial sector le- forms will be implement timely and communication technologies. EDC is of the OECD. gal framework. Therefore, we are open correctly. Whether this will happen or the view that the economy of Ukraine is At such time that EDC fully re-opens to cover both short-term and medium- not is still a question. Among the areas increasingly showing signs of sustain- our country position in Ukraine, we and long-term Ukrainian risks primar- of concern is the high level of corrup- able recovery and that, in the long term, anticipate substantial opportunities ily based on a good creditworthiness tion, lack of political predictability, in- following stabilization at the macroeco- for support of Canadian exporters and of debtors. Main problems remain the creasing sovereign debt, external bal- nomic level, the Ukrainian market will Ukrainian buyers?. privatization process, the protection of ance, diversification of the economy, again provide highly attractive oppor- foreign investments and increase of the commercial climate (including legal tunities for Canadian companies and law enforcements?. system, political regulation, bureau- an important role for EDC in support cracy, corruption), access to reliable of Canadian exporters and Ukrainian information, financial regulation and buyers. As of the present date, however, Eksport Kredit Fond- more. given Ukraine?s current and recent mac- Improvement in the macro econ- EXIMBANKA SR, ro-economic challenges, EDC has cer- en (EKF), omy including but not limited to ex- tain restriction on its ability to provide Slovakia ternal balances, debt position, foreign support across our product areas. EDC Concerning to Ms. Denisa Petríková, Denmark reserves and public budget as well as will consider support in Ukraine on a Director of International Relations De- Ms. Anne Andreassen, Analyst improvement in the commercial cli- case-by-case basis where we are able to partment of the Slovakian Eximbank Countries & Bank Risk emphasizes that mate. Political commitment to adopt mitigate country-related risks in a sub- ?Adoption of a long-term economic re- ?The Evaluation scheme of EKF was and implement structural reforms is stantive manner. Our current country form program for the period 2010-2014 not changed. However, EKF is follow- an important issue as well?. ¹2 / February-Marc h 2011 / IBOBSERVER / www.ibcontacts.com.ua TRADE FINANCE 5 COMMENTS: When Insurance Finnvera, Finland Event Occurs Mr. Raija Rissanen, Finnvera Director to improve the transparency of the legal and egory to each classified country. This cat- informed our newspaper that ?Finnvera did As it is known, both private and state- business environment for foreign investors egory implies the minimum premium rate not introduce any changes to our risk evalu- and financiers. owned insurers are operating on the interna- to be charged on export guarantees (with ation scheme. We paid special attention to tional credit risks insurance market. Export As an official export credit agency we fol- maturity longer than two years). The ba- the banking sector credit agencies (ECAs), established by the ?s perfomance in certain low the OECD rules on export credits. There sic elements of the assesment method are countries, among which are the CIS coun- is a group of country risk experts within the governments, are distinguished by more com- a) economic development of the country tries. As a conclusion of that we restricted OECD assessing risks and setting classifica- (GDP growth, economic policy), b) exter- plicated and bureaucratic decision making risk taking of banks. We have reliefed most tions for countries. Normally each country nal situation (debt, debt service, reserves), procedures, although this allows them to more of the restrictions by now. But we still en- is classified once a year. The purpose of the c) strength of the financial (banking) sector efficiently overcome crisis situations ensuring courage the Ukrainian authorities to work assessment is to determine a premium cat- and d) overall business environment?. protection both for governments and borrow- ing entities. Indeed, in case of insurance event, private insurers cover losses out of their own funds, while state insurance companies obtain SACE, Italy required funds from the state budget. Fundamental for such cases is the nature of Mr. Marco Minoretti, CIS Risk Analyst exposure has increased in 2009-2010 as com- but there are other very critical issues to be ad- insurance event, e.g. bankruptcy of the buyer, for SACE said IBOBSERVER that ?The in- pared with the previous years. dressed in order to allow a real mitigation of or indemnification to the supplier in case of ternational financial turmoil had a relevant There are positive factors that can be the the country risk. First of all, the restructuring borrower potential default. For instance, if the impact on the already vulnerable economic base for the recovery (although a very slow of the banking system will be key to a better company is an active market player and its system and the unstable political situation in and difficult one): the increase in steel prices, business climate and to a real stabilization of arrears in payment was caused by the crisis Ukraine. The deterioration of the macroeco- the IMF program, a relatively low public debt the whole area: in some CIS countries, the in- that affected all market participants, it will be nomic context (recession, lower exports, in- and a satisfactory level of foreign exchange terbank market is nowadays virtually frozen, the case of supplier?s protection from market creased private and sovereign debt, pressure reserves. The 2010 presidential elections have and the cost of funding has hence risen. In crash. In such situations, ECAs are rather loyal on the exchange rate) and the fragility of the finally opened the way to a greater political Ukraine, Fifteen banks have come under the to borrowers (buyers), provided, however, the banking system (double-digit increase in non- stability. Nevertheless, the persisting fragili- temporary administration of the State and the following conditions are met: perfoming loans and losses) led SACE to keep ties of the country led SACE to stick to a H2 costs of recapitalization of the banking sector excellent payment discipline and credit his- Ukraine under special observation and down- risk rating for Ukraine, with a stable outlook: is very high. The adoption of anti-corruption tory of the buyer. The above condition is criti- grade the country risk level from H1 in 2007 to the high external debt and fiscal deficit, the and transparency policies will also be crucial cal for the decision of the ECA. In addition, the H2 in 2008. In spite of the adoption of a more growing contingent liabilities and, last but not to lay the basis for an efficient business envi- agency will take into account company?s effi- cautious approach in the last years, SACE has least, the already mentioned weaknesses of ronment throughout the CIS area. ciency in terms of compliance with its contrac- not changed its terms of cover in Ukraine and the banking system. For Ukraine in particular, the respect of the tual obligations to other foreign counterparts in kept on assessing all transactions on a case by The destiny of many CIS countries is commitments undertaken with the IMF will the past. For instance, ECA experts will inquire case basis. linked to commodities prices and the Europe- play a fundamental role to reassure interna- whether its accounts receivable were renegoti- As an evidence of its commitment, SACE?s an recovery, which is likely to be very lengthy, tional investors?. ated and settled. The share of company?s credit lines that gave rise to the insurance events in the total credit lines opened for the company (both in Ukraine and abroad) will also be con- ONDD, Belgium sidered. the time lapsed after the occurrence of insur- Mr. Nabil Jijakli, ONDD Secretary Gener- over the next quarters. developing a com- ance event is to be at least six month, preferably al commented that ?As it became clear rather While the most pressing dangers have prehensive strate- ? one year. Such fact will evidence importer?s quickly that Ukraine was among those coun- abated since in Ukraine, the country is still gy for the troubled operation stability. tries the hardest hit by the global financial and burdened with several issues that will most banking sector, There is a number of other factors influ- economic turmoil, ONDD introduced some likely prevent the country from a smooth re- where a clear view on asset quality is lacking. encing the decision on renewal of credit lines, specific temporary crisis measures in its cover covery. The eventual stabilization of the po- Also, the amount of external debt falling which depend on the specific character of the policy regarding Ukraine. As commercial risk, litical scene lured the IMF back to the country due is set to remain high for years to come. As borrower?s operations and its financial and the risk resulting from the deterioration of a and allowed the country to mend relations of next year especially, when redemption of business performance. debtor?s financial situation, mounted, it was with neighbouring Russia and conclude a the IMF support starts, this could create new decided to suspend cover for this type of risks welcome gas agreement. Little progress has problems for the country. In other words, the All in all, life does not end with insurance and only grant cover for political risk, which been made though in the field of long over- country has moved out of intensive care but event. is the risk resulting from a force majeure in a due structural reforms like tackling energy in- it is still far from cured. For Ukraine to see a particular country. This rather restrictive stip- efficiency in Ukraine?s industry, the country?s fundamental upgrade by ONDD, the issues Department of trade projects ulation was gradually withdrawn as the eco- notoriously complicated tax system, making touched upon above will have to be dealt with nomic circumstances in Ukraine improved headway with fiscal sustainability and finally first?. Company IBCONTACTS Euler Hermes: International Trade Development Forecast for 2011 Although threatened, the global economic recovery is likely to win through tries that have benefited least from the re- rate insolvencies will remain at a high covery. level Euler Hermes? Global Insolvencies corporate insolvencies will continue to decline in 2011 All in all, Euler Hermes estimates that, Index fell by 4% in 2010 compared with after reaching 4% in 2010, growth in the an initial forecast of 3%. After record in- Credit insurer Euler Hermes expects the each of the past six quarters and a signifi- world economy will drop back to a mod- creases in 2008 and 2009, with the Global global economic recovery to be confirmed cant rebound in most of the main global erate 3.0% in 2011 before picking up again Insolvencies Index rising by 28% in each out to 2012. It will, however, remain very indicators, such as industrial production, to 3.3% in 2012. The slowdown forecast for of those years, corporate insolvencies be- uneven from one geographic region to international trade, etc. 2011 will be more pronounced for OECD gan to decline again in many countries in another in 2011, with a slight slowdown ?We believe there will be a global recov- countries. Trends in world trade are ex- 2010. More than half the countries sur- overall. After 4% in 2010, world growth ery out to 2012,? says Wilfried Verstraete. pected to be similar, with growth drop- veyed reported a smaller number of cor- will drop back to 3% in 2011 before ris- ?However, some risks and uncertainties ping from 14% in 2010 to 8% in 2011 before porate insolvencies in 2010 than in 2009. ing again to 3.3% in 2012. After making persist, particularly for 2011. To begin moving up to 9% in 2012. The decline was stronger in Asia (12%) good the 2009 slump in 2010, world trade with, growth in Asian countries, which, and the Americas (8%) than in Europe, is forecast to grow by around 8% in both excluding Japan, have already largely Europe will lag behind where the situation of businesses remains 2011 and 2012. erased the impact of the crisis, will un- more difficult in some countries, such as The 2011 slowdown will be more pro- doubtedly drop back to a more balanced, After growing by 1.7% in 2010, the Greece, Portugal, Italy and Ireland. nounced for OECD countries than for and therefore more moderate, pace. Also, Although less robust in 2011, the euro-zone economy is forecast to grow emerging regions. the major fiscal consolidation measures gradual recovery in the world economy by 1.3% in 2011 and by 1.5% in 2012. This ?The euro zone has lost out in the pre- adopted by developed countries whose should pave the way for a drop in corpo- sluggish growth reflects the persistently sent global recovery, with GDP not ex- public finances have deteriorated signifi- rate insolvencies (forecast at 5% in 2011) weak demand in Europe under the impact pected to return to its 2008 level until the cantly as a result of the crisis and of the in a larger number of countries. The de- of unemployment - which has increased in end of 2012, due in particular to the fis- stimulus packages implemented are likely crease will not, however, manage to wipe all countries except Germany - wage mod- cal consolidation measures,? points out to hamper growth.? out the record rises in corporate insolven- W eration and the fiscal austerity measures ilfried Verstraete, Chairman of Euler Euler Hermes estimates that growth in cies recorded in 2008 and 2009. Hermes? Group Management Board. Asia will announced by several major countries slow by more than 1 percentage ?Having made use of most of the le- Against this backdrop, the decline in and which will continue out to 2013-2014: point of GDP to around 7% in 2011 after vers available to them, particularly in savings of ?100 billion for France and of corporate insolvencies is expected to con- 8.5% in 2010, in line with the slowdown terms of costs, businesses, especially Eu- ?80 billion for Germany. ?These consoli- tinue, down by 5% in 2011 after falling by expected in China, where growth is ex- ropean ones, have learnt from the crisis dation plans are a major effort for all the 4% in 2010. Corporate insolvencies will pected to drop from 10% in 2010 to 8.8% in and are now better structured,? com- economies concerned. However, the aus- nonetheless remain at very high levels 2011 and in 2012. The outlook for 2012 re- ments Michel Mollard, member of Eu- terity measures called for are proportion- next year. mains good for the region as a whole with ler Hermes? Group Management Board. ally tougher for those countries that have growth of 7.4%. ?They will still have to get through 2011 A benefited least from the recovery, such as t the same time, after rebounding to before they can benefit fully from the re- Ireland and Greece,? underlines Karine 2.8% in 2010, US economic growth is set World economy: the slow- covery in 2012. Given the overall weak- Berger, Euler Hermes Chief Economist to slow slightly to 2.2% in 2011 given the down forecast for 2011 does ness of demand in Europe, they are still and Group Head of Market Management inadequate recovery in private sector em- faced with significant risks. The general not jeopardise the recovery and Strategic Marketing. Economic recov- ployment. However, the pace of recovery trend is, however, more positive than it ery is expected to remain weak in France is expected to pick up to 2.4% in 2012. The was a few months ago,? concludes Michel The global economic recovery initiated with growth of 1.3% en 2011, after 1.5% in trend is likely to be similar in Europe, Mollard. in the spring of 2009 has gradually been where 2010, before rebounding to 1.8% in 2012. fiscal consolidation will limit the confirmed with growth in world GDP in Although expected to decline, corpo- rebound in 2011, particularly in the coun- 6 TRADE FINA NCE ¹2 / February-March 2011 / IBOBSERVER / www.ibcontacts.com.ua TRADE FINANCE VOLUME IS GOING TO In the end of 2010, the European Bank for Reconstruction and Development issued a ?Transition Report 2010?. Simi- lar presentations are held by representatives of EBRD in INCREASE Kyiv annually. The EBRD is active in Ukraine since 2003, and today the country is in so-called area of bank opera- tions (29 countries in Central and Eastern Europe, CIS and Central Asia). Today the EBRD is the largest investor in the country that provides financial institutions and domestic agricultural companies with loan funds, as well as invests in projects in the field of real estate, production, electric- ity transmission, development of infrastructure and metal- lurgy. grown by 30 percent in 2010 due to good tinues to face significant institutional tries. Small and medium sized compa- harvest of sunflower seeds. Agricultural and structural challenges. Despite recent nies with low credit rating find it in- exports would have been even higher, if improvements, it ranks low among its creasingly difficult to obtain financial it were not for grain export quotas in- international peers in global surveys of support to conduct their international troduced by the authorities to prevent business environment and governance. business. In less developed countries shortages and contain local price in- Significant hurdles remain in the areas local banks are noticeably restrictive creases. of competition policy, setting up new in their business activity. This is com- Imports also picked up after a steep businesses and bankruptcy procedures, pounded by the tendency of many drop in 2009, but relatively subdued while business governance standards Western commercial banks to reduce or domestic demand and slow recovery remain weak. Businesses face difficul- close their trade finance lines for many of bank credit has helped to limit the ties when accessing land, which remains banks in EBRD?s region. This is particu- widening of the trade deficit so far. The largely non-tradable. Sector specific larly the case in Ukraine and Kazakh- April gas deal with Russia has helped to transition gaps also tend to be large. The stan where the banking sector suffered keep import costs down. Staring in Oc- authorities? reform agenda, unveiled in enormously as a result of defaults dur- tober 2010, import growth accelerated June 2010, includes a comprehensive ac- ing the crisis but also in smaller CIS due to increase of gas imports. Based on tion plan in all key structural areas and, countries where the risk of doing busi- the preliminary information published if implemented both letter and spirit, ness is still regarded as too high. Bar- This time the report was presented by the National Bank of Ukraine, we es- should help institutional and infrastruc- ring very rapid economic recovery in by EBRD Chief Economist Erik Berglöf timate the current account deficit in 2010 ture reforms over the medium term the region, we expect that pick up of that came from the London office of at about 2 percent of GDP. It is expected trade finance to the levels experienced the bank. In an exclusive interview to to widen to around 4-5 percent of GDP What are your forecasts for 2011 con- before the crisis would take some time IBOBSERVER Mr. Berglöf spoke about in 2012 as steel prices are expected to cerning financing of international to materialise. the prospects and specific character of either stabilise or grow only modestly, trade? trade finance market in Ukraine and an- and recovery of the domestic consumer EBRD?s involvement in trade financ- nounced the EBRD forecasts with regard and investment demand picks up. The beginning of 2010 was charac- ing during and after the crisis to international trade in the nearest fu- terised by the legacy of the 2008/2009 ture. What needs to be done to strengthen trade finance crisis in the EBRD region To partly mitigate the reduction of What is the current situation in the Ukrainian export market? caused by a decline in risk-taking ca- the private sector?s ability to finance Ukrainian export market, influence of pacity and liquidity available to finance trade transactions during the crisis, the crisis and expected post-crisis de- Although Ukraine?s exports are less trade through banks, export credit the EBRD expanded its trade facilita- velopment? energy and resource dependent than agencies, private insurance underwrit- tion programme (TFP) launched in in some neighbouring countries, the ers and investment funds. Furthermore, 1999. The programme can guarantee Compared to other countries in the share of high-value added manufactur- low levels of commodity prices, export any genuine trade transaction to, from region, Ukraine?s exports are relatively ing remains low. At the same time, past revenues, together with a devaluation and within the countries of operation. well diversified in terms of products growth drivers have faded: unit labour of local currencies and the slowdown of 114 issuing banks in 21 countries of and markets. Its share of world exports costs increased, average external tariffs domestic economic growth contributed operations currently participate in the doubled during the decade before the are now lower than they were during to reduce demand for imported goods. programme with limits exceeding ? 2 financial crisis. However, high reliance the previous decade and medium-term However by the end of the first quar- billion, as well as more than 700 con- on commodities and goods with low growth in the main trading partners is ter of 2010 the situation in the region be- firming banks throughout the world. value added and high energy intensity expected to be slower than before the gan to change. Resource-rich countries Since 1999 TFP has facilitated more (e.g., scrap metal, steel products and crisis. To facilitate growth and further such as Armenia, Kazakhstan, Mongolia than 10,000 foreign trade transactions chemicals) made the economy vulner- diversify its export product basket and and Russia benefited from the rebound in the total amount of ? 6bn. A good able to changes in external environment. advance its content, the authorities in commodity prices, while countries example of the value of TFP during This risk materialised during the crisis need to create conditions for improv- with a heavy concentration on the ex- the crisis is a guarantee transaction in as international prices and external de- ing competitiveness of Ukraine goods port of machinery such as the Czech Ukraine, which supported import and mand collapsed. The impact of the crisis (both price and costs competitiveness). and Slovak Republics, Hungary and distribution of agricultural machin- was amplified by the deterioration of It is unlikely that Ukraine?s dependence Poland benefited from a rebound of the ery. This guarantee covered a letter of Ukraine?s terms-of-trade as it had to pay on several low value added and energy cyclical demand. Imports increased as credit issued by a bank in Ukraine and higher gas import prices. intensive export sectors would fall over consumer confidence about future earn- confirmed by a bank in Germany. The After falling by around 40 percent in time without attracting large scale qual- ings recovered, resulting in an increased original agreement predated the cri- dollar terms in 2009, exports of goods ity investments. domestic demand for consumer goods. sis and was concluded without EBRD are estimated to have grown strongly In Transition Report 2010 (available As a result, latest indicators?includ- support, but in order for shipments in 2010, supported by a recovery of ex- this year in both English and Russian ing statistics on short term trade credit of equipment to continue throughout ternal demand (in particular, from the language versions), we have analysed insurance and intensity of trade-related 2009, EBRD was asked to guarantee EU and Russia) and higher global steel the question of how to invigorate export SWIFT messages collected by the Berne payments under this contract up to an and other commodity prices. Export of growth. In the cross-country analysis Union?point to a tentative recovery of aggregate value of ? 50 million. TFP steel and steel products, machinery and of determinants of exports, corrup- trade finance volumes. programme remained in high demand equipment, energy and chemical prod- tion, weak rule of law and customs are However, the generally favourable in 2010, with support provided to 1,286 ucts grew particularly fast. Export of ag- among main factors that subtract from picture masks differences in access to foreign trade transactions for the total ricultural products is estimated to have export growth in Ukraine. Ukraine con- trade finance across sectors and coun- amount of ? 778 million. ¹2 / February-Marc h 2011 / IBOBSERVER / www.ibcontacts.com.ua 7 8 FINANCIAL R EPORTS ¹2 / February-March 2011 / IBOBSERVER / www.ibcontacts.com.ua FIND TEN DIFFERENCES The understanding of the key differences between the national and the international financial reporting standards will help Ukrainian companies prepare their IFRS financial statements more efficiently and faster. Any company intending to prepare its methods: straight-line method, reducing the financial covenants of their loan agree- financial statements according to the In- balance method, accelerated depreciation ments well before the end of the reporting Preparation of consolidated ternationa
Posted: 17 February 2011, last updated 17 February 2011

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