OREANDA-NEWS. On 30 March 2009 was announced, that the Cabinet of Ministers (CabMin)exercised its right to remove the extra tariff of 13% on non-critical imports taking effect since 6 March 2009. The law on extra tariff imposition was adopted by the Verkhovna Rada in late December 2008 and anticipated the tariffs decrease or removal by the Cabinet of Ministers. According to the law the non-critical imports included meat and fish, some fruit, sausage, sugar, wines and alcohol, as well as coal, outer clothing, home appliances and all kinds of transport. Meanwhile the CabMin retained extra tariffs on automobile and refrigerator imports.

Millennium Capital sees the news to be POSITIVE, since the removal of the extra tariffs on imports will assist in the exports growth in 2009, since a lot of countries, trade partners of Ukraine, announced that they will increase imports tariffs for Ukraine correspondingly. At the same time Millennium Capital expects that this decision will deteriorate the Budget Income fulfillment in 2009. In particular, according to Millennium Capital’s estimation, CabMin expected to receive around UAH 18bn via the extra tariff from non-critical imports in 2009, which will be lost after its latest decision. Meanwhile, the preservation of the extra tariff for automobiles and refrigerators will have little effect on the Budget income in 2009. In particular, the automobile and refrigerator importers expecting the tariffs rise most likely imported their production in January and February 2009 before the law took effect. This could increase the Budget Income by around UAH 3bn in these months, thus being one of the reasons of the announced Budget Income over performance. Therefore, no Budget inflow from automobile and refrigerator imports is expected in the next half a year and the government will need around UAH 15bn of additional income to fulfill its 2009E Budget Deficit (3% of GDP).

Millennium Capital is an integrated financial services provider. Established in 2000 by a group of professionals with solid background in securities and corporate finance, Millennium Capital is now one of the major investment banking institutions.