The Embassy of Ukraine in Great Britain is being restructured. A new unit is being established to attract investment to this country and seek Western partners for private businesses. Ambassador Ihor MITIUKOV, Ukraine’s former minister of finance, notes a tremendous growth of interest on the part of the City of London, one of the world’s major financial centers, in the likely investment of free capital in Ukrainian projects. Whenever the ambassador meets top executives of London’s major investment companies, he is asked why Ukraine, where return on foreign investments is one of the highest in the world, ranks last as far as foreign capital flow is concerned. Mr. Mitiukov believes it is not enough to know how to answer this — you will not achieve success unless you work Western style.
“What factors do foreign investors take into account today when they form their opinion about the attractiveness of the Ukrainian market?”
“Foreign investors have fundamentally changed their attitude toward Ukraine recently. The three years of steady economic growth have compelled the investor to believe in the stability of this process. What attracts the owners of not only foreign but also domestic capital is timely fulfillment of the budget and foreign commitments. It is wonderful that the demand for this year’s Ukrainian eurobonds greatly exceeded the amount Ukraine planned to borrow. I can note that the demand reached $5 billion at a certain period, although the original request was for $600 million only. We had a good chance to increase the loan to receive a cheap resource. This considerably improved the structure of our public debt. I think lawmakers should take this into account when discussing next year’s budget because this opens up new opportunities for the state.”
“The loan Ukraine borrowed by floating eurobonds cost just a little over 7%. As the demand for Ukrainian securities was five times as high as the supply, is it not too high a price?”
“The achieved price level is optimal for today’s Ukraine. Yet, I do not rule out that future borrowings must and will be still more profitable. But this requires new subtle mechanisms of regulation, when even a zero point something percent reflects the dynamics of the cost if borrowing. The budgets for the next years clearly outline the borrowings to be made under very favorable conditions for financing the budget deficit. It seems to me the main result lies not only in the financial side of the mater but also in establishing a very reasonable price of Ukraine’s sovereign debt, which will in turn enable municipal and commercialized entities to enter the market on far more favorable conditions.”
“You are talking about attracting foreign capital in the shape of a public loan. And what can you say about the prospects of private Ukrainian businesses on foreign markets of capital?”
“I think a large number of Ukrainian businesses are quite able to make a spectacular appearance on international financial markets. But to do so, they must make very serious efforts to put things in order, for example, to conduct audits, improve the transparency of shareholders, and deal with a long series of other questions which London immediately asks as a rule. It is not enough to know how to answer these questions — one must know how to present a company’s development, explain why it needs additional money and to what extent the company’s assets are stable. If we learn to do this, I think foreign investment in Ukraine will increase many times over.”
“How can the Embassy of Ukraine help the Ukrainian businesses that would like to attract foreign partners to implement certain projects?”
“As to the Embassy of Ukraine in Great Britain, Ukrainian businesses can and do receive our consultative and technical assistance. We are just beginning to set up an ambassadorial section in charge of this. This section will be duly reinforced, and we are ready to do our best for the companies interested in entering foreign capital markets. Speaking of Ukraine’s foreign diplomatic representation in general, I think we must still do very much to step up the influence of trade and economic missions. They should be concerned not only with increasing trade turnover but also with attracting investors and searching for partners. I believe our embassies in such countries as Japan, Germany, France, and the US, which have amassed considerable investment resources, should widen the range of their tasks.”
“As is known, foreign investors often say that political instability in Ukraine is the main risk to sustainable development. Now too passions are running high in Ukrainian politics. What is the West’s attitude toward this?”
“The latest assessments made by the leading rating agencies point out an overall improvement in Ukraine’s political situation. They view the situation as stable. All we have to do is hope that carrying out the political reform, including making the hotly debated amendments to the Constitution, will improve, not worsen, the situation.”
