Businesses and the Ukrainian government are at odds over a proposed tax hike to fund the country’s fight against Russia. The Finance Ministry announced plans to increase defense spending by $12 billion through various tax increases, including war taxes on individuals and businesses. While the government insists these measures are necessary, major business associations and businesspeople are opposing the changes. The American Chamber of Commerce in Ukraine has criticized the proposed tax hike, saying it discriminates against honest taxpayers and encourages tax evasion. Despite the opposition, lawmakers are expected to introduce their own version of the law in the coming weeks.
On the economic front, mergers and acquisitions in Ukraine have seen an increase in activity. In the first half of 2024, 25 M&A deals were completed, bringing in $510 million, up from $390 million the previous year. The average deal value also saw an increase, signaling a positive trend for Ukraine’s economy. However, energy blackouts and significant debt to international bondholders continue to pose challenges for further investment in the country. Despite these obstacles, KPMG Ukraine believes more deals can be expected as the economy gradually recovers.
Ukraine’s energy supply situation has been improving after a period of instability. The head of state grid operator Ukrenergo announced that the most challenging period of the summer is likely behind them, as cooler weather and completed power plant repairs have led to fewer scheduled blackouts. However, the situation remains contingent on avoiding new large-scale damages to power plants. Meanwhile, a threat from Slovakia to cut off diesel supplies to Ukraine over a dispute with Russian oil transit highlights the complexities of the energy sector in the region.
A Ukrainian startup, Esper Bionics, is making waves by producing robotic prosthetic hands for soldiers wounded in the conflict with Russia. The company’s bionic arms are being used by over 30 Ukrainian soldiers and have provided a sense of empowerment to recipients. Esper Bionics has shifted its focus to serving the Ukrainian market after the war left many Ukrainians without limbs, emphasizing the importance of innovative solutions in times of crisis. The company’s success story showcases the resilience and ingenuity of Ukrainian entrepreneurs amid adversity.
In other news, Ukraine has signed significant contracts with its domestic defense industry, totaling $121 million, to strengthen its armed forces. Additionally, the country’s largest gas producer, Naftogaz, has put a new high-rate gas well into operation to boost gas production. The US has also emphasized the importance of increasing nuclear power capacity in Ukraine to address energy crises caused by the war. Moreover, the G7 is working on finalizing a $50 billion loan for Ukraine backed by frozen Russian assets revenue, with a plan expected to be completed by October. Despite inflation concerns, Ukraine’s central bank has ended a series of interest rate cuts in response to rising prices.
Overall, Ukraine continues to navigate economic challenges and geopolitical tensions as it seeks to secure its sovereignty and rebuild its economy amidst the ongoing conflict with Russia. The country’s resilience, coupled with innovative solutions from businesses and startups, highlights the determination of the Ukrainian people to overcome adversity and strive for a brighter future. With ongoing developments in various sectors, including defense, energy, and finance, Ukraine remains a focal point of global attention as it charts its path forward.
