Despite the rumour of Russia's withdrawal from its borders, the situation remains fragile and volatile, dominating the wider outlook for the country. Once clear from this period, provided Russia doesn't launch an invasion, Ukraine could attract further investment.
February 15, 2022
Europe - East
Eastern Europe, bordering the Black Sea, between Poland, Romania, and Moldova in the west and Russia in the east.
The royalty/tax system in Ukraine is particularly complex. A variety of levies are made on production, with rates specified in local currency and differentiated according to the depth of the reservoir and where production is sold. These rates are subject to change on an annual basis and, for gas, are tied to regulated prices. As most of the levies are fixed amounts per unit of production, with no deduction for costs, the system is very regressive, generating a significantly higher share of revenue for the government when prevailing prices are low.
Ukraine is currently coping with multiple challenges including military activity in the Donbas and severe economic difficulties. The governments of Yatsenyuk and Groysman have done more than any other in Ukraine’s history in terms of real reform. But the pace is still slow, and is suffering from protracted internal political wrangling. Combating corruption, reforming Ukraine’s judiciary as well as decentralisation, deregulation and de-oligarchisation are ongoing priorities for Ukraine’s government.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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