IR big foreign money is very different from the world in which we all live. This is a world where the former head of the NBU Valery Gontareva — not a monster, and most professional of the Ukrainian reformers.
It is a world where the oligarchs are not divided into bad bloodsuckers and the terrible usurpers, and reliable partners and scams. It is a world in which Ukraine’s place is not in the center of Europe, and somewhere between Central Africa and the Middle East.
So it’s a little to understand, I offer you the views of the representatives of foreign investment funds, which was announced at the international conference Concorde Capital, held in mid-may in Kiev.
Who are these people
The discussion was attended by six representatives of global investment funds and international financial institutions. In their management — capital in excess of the size of the economy of Ukraine almost ten times:
- The international Finance Corporation (IFC): 285 billion dollars of investment.
- The European Bank for reconstruction and development (EBRD): 130 billion euros of investment.
- AllianceBerstein: 555 billion of assets under management.
- BlueBay Asset Management: 62 billion of assets under management.
- Canyon Capital Advisors: 19 billion dollars of assets under management.
- Argentem Creek Partners: $ 1 billion of assets under management.
On Ukraine’s place on the map of international investors
“Ukraine has to compete for investment with other countries”, rather diplomatically said John Patton, portfolio Manager of the Fund Argentem Creek. Extending this statement we can see exactly which segment we can compete.
If you start from the credit rating of Ukraine, we see a fairly complicated picture: our closest “competitors” are not advanced Western countries and the economies of “third world”.
Angola, Burkina Faso, Ghana, Ethiopia, Rwanda, Suriname, Sri Lanka, Tajikistan and Tanzania — a country whose credit rating is slightly taller Ukrainian.
Comparable with Ukraine in the rating is the destiny of the Congo, Iraq and Lebanon. Among the lagging behind of Ukraine can be noted Mozambique, Puerto Rico, Zambia and Venezuela. Here is our real place on the world investment map.
It is the place of Ukraine on the investment map of the world is the reason that both the government and private Ukrainian companies can not afford to cheap international financing.
“If the sovereign rating of Ukraine will increase to “BB”, it will be another country”, — said Andrei Rodzianko of Canyon Capital Advisors. Incidentally, the “BB” is the level of Georgia, Bangladesh, Paraguay and Guatemala.
According to Timothy ash, strategist at BlueBay, we look competitive in comparison with Iraq, Tunisia, Jordan and Zambia. A “good” company.
As “honorary” place, said the strategist, we’ve earned this for two reasons:
- First — we had not so long ago to restructure the debts (Hello those who think default is good for the country).
- The second is our inconsistent position in relations with the IMF (Hello to our effective government, defer the issue of gas prices until until warmed up).
In addition to high interest rates on our bonds that makes us competitive relative macroeconomic stability. This is something that so long sought from us, the IMF, something that tried to follow NBU fighting against negligent banks and keeping interest rates high, despite widespread criticism.
Incidentally, all the foreign investors praised the work of the national Bank to tame inflation. Lead economist, EBRD Dimitar Bogov said that the NBU did his work perfectly: “Ukraine has a very high interest rate but is a consequence of lack of adequate policies in other areas.”
In particular, we inconsistently worked on the reforms agreed with the IMF. “Ukraine only received half the money from the IMF under the previous program, mainly due to the fact that much has not been done,” said the Gods.
To my great disappointment, the bright minds of governing the multi-billion dollar capital excitedly gave banal recipes to improve the business climate and investment attractiveness of Ukraine.
In short, nothing that you won’t find in any electoral program or any more or less sane strategy. Everything looks so banal, even boring. But hell, maybe it’s still worth it all once and for all to do — that look, a miracle will happen? The economic miracle.
So, all of the distinguished speakers noted that the most important basis for any progress is economic stability — prices and exchange rates, a fixture which they see an independent monetary policy of the national Bank and cooperation with international financial organizations.
“It is very important that Ukraine has the anchor (IMF) and she more or less moves in the direction of the requirements of his program,”— said a senior economist at the Fund AllianceBerstein Markus Schneider. Exactly the kind of fragile stability, which is managed by the national Bank, noted Western creditors as an important basis on which to build further improvement.
“If we are not impressed by the macroeconomic environment, we would not be present in Ukraine as investors,”— said the head of IFC in Ukraine Jason Palmer. He expressed the General opinion of all international financial institutions present in the country.
Echoes of the Gods: “First, the independence of the national Bank in monetary policy, and then we can move on.”In this “on” he sees the improvement of institutions guaranteeing the rule of law, protection of private property and an open competitive economy.
About the same sees and Palmer — trust and investment protection. “People who invest here huge capital want to know that they are in an environment of respect for the investment,” he said.
Besides reforms, among which IFC representative sees privatization. In his opinion, is able to significantly increase the inflow of foreign investments in Ukraine, spurring economic growth.
Separately, representatives of international financial institutions noted the undertakings of the government in the privatization of state-owned banks, promising support to this process. Also Palmer sees great potential for the growth of foreign investment and Bank lending in the opening of a free land market.
Patton warned that to attract foreign investment reform needs to be fast and loud. This is to ensure that Ukraine has not lost in the global agenda with all the trade wars and the upcoming electoral processes in major Western countries.