1. Workshop with Government, NBU, market participants, IFIs and donors
Developing the domestic sub-national debt market in Ukraine: Key challenges and proposed action plan
Workshop with Government, NBU, market participants, IFIs and donors
Kyiv, March 6, 2007
Introductory presentation

2. Welcome Acknowledgements
Ministry of Finance
National Bank of Ukraine
USAID ATCI
EU TACIS
Municipal Development Institute
Aval-Raiffeisen Bank
Financy & Credit Bank
Forum Bank
ING Bank
Kreshchatyk bank
Pryvatbank
Ukrsibbank
ARTA Invest

3. Key impediments to development of domestic sub-national debt market
No reliable government bond yield curve
Limited SNG fiscal autonomy
Deficiencies in legal and regulatory framework for SNG borrowing
Distortions in structure of market incentives
Absence of SNG bankruptcy framework
Deficiencies in regulatory framework for CSEs

4. Develop domestic government bond yield curve
Strengthen government debt management strategy (risk-based model)
Extend maturities and support liquidity of benchmarks

5. Improve SNG fiscal autonomy
Improve SNG budget predictability
Develop own local taxes
Adopt comprehensive approach to inter-governmental fiscal reforms

6. Improve legal and regulatory framework for SNG borrowing
Improve definition of SNG debt
Include payables in debt
Include guarantess at issuance and value guarantees at risk (Public Debt Law)
Progressively move from ex-ante controls to ex-post controls and market discipline
Keep ex-ante registration
Introduce automatic approval unless objection
Move to ex-post control through budget process
Relax debt limits for cities with credit rating
Keep ex-ante control for FX debt

7. Improve structure of market incentives
Phase out Treasury loans, rely on SNG current account with private banks
Revise risk-weights used in calculation of banks capital adequacy ratios for SNG loans
Tighten controls on connected party lending between banks and SNGs
Do not impose credit ratings for SNG issuers or issues: let market decide

8. Introduce SNG bankruptcy framework
SNG default
Workout
Recovery

9. Reform legal and regulatory framework for CSEs
Apply full cost recovery tariffs (including cost of debt and equity)
Improve targeting of social protection schemes
Allow privatization of CSEs assets
Regulate PPPs, including UK-PFI type structures

10. Contact point mnoel@worldbank.org
Thank you
Contact point