CITY PROFILE CHERVONOHRAD DEMOGRAPHIC ECONOMIC FISCAL Dear Friends!

It is a great honour for me as Mayor to present you with the City of Chervonohrad Profile.

This important document was created as part of the Building Capacity in Evidence-Based Economic Development in Ukrainian Oblasts and Municipalities (EBED) project—a joint Canada–Ukraine initiative.

Chervonohrad is a special city located in the northern part of Lviv region. It is a major centre of the mining and processing industries in the Lviv-Volyn hard coal basin, and a place of welcoming and industrious people.

Today we must make every effort to ensure the ongoing sustainable growth and development for our city, so that year after year it becomes a better place in which to live. This requires creating the proper environment for making long-term managerial decisions and providing in-depth monitoring of the key indicators of municipal development.

The City of Chervonohrad Profile contains exhaustive information on the social and economic environment of the city. The information contained here will help us attract the additional investment we need to develop new industries and expand and improve our existing ones. This document provides a base upon which to build the innovative programs and projects that are key to the development of our city.

On behalf of Chervonohrad’s residents and myself, I want to thank the Canadian International Development Agency and our Ukrainian colleagues from the EBED project, municipal government institutions, and the Chervonohrad City Council for their efforts and contributions to the creation of the City of Chervonohrad Profile.

I am confident that this document will prove a valuable resource for city residents, government officials, investors, scientists, experts, and all others who care about Chervonohrad’s future.

Yours faithfully, Mayor of Chervonohrad Ihor Chudiyovych Chervonohrad City Proﬁ le: Demographic, Economic, Fiscal.

This document was prepared within the framework of the Interna onal Technical Assistance Project “Building Capacity in Evidence-Based Economic Development Planning in Ukrainian Oblasts and Municipali es” (EBED project).

Project Director: Paul Darby

Authors: Brenda Laﬂ eur (Benchmarking Expert) Joseph Haimowitz (Economic Expert) Ma hew Stewart (Fiscal Expert) Natalia Khodko (Consultant on Sta s cal Analysis) Oleksandr Zholud (Consultant on Economic Analysis) Olga Romanyuk (Senior Budget and Gender Consultant) Sheila Rao (Benchmarking Expert, Fiscal Forecas ng Expert) Special thanks to Ihor Chudiyovych, Mayor of the City of Chervonohrad; Vasyl Turko, Deputy Mayor for Financial Services of the City of Chervonohrad; and Ihor Kornat, Chervonohrad city council deputy and EBED Local Coordinator in Chervonohrad, for their assistance and support in preparing the Cher- vonohrad City Proﬁ le.

Editors: Brenda Laﬂ eur Iryna Vernoslova Joseph Haimowitz Maxim Boroda Natalia Khodko

Design: Yana Kopylova

Data used in the city proﬁ le were collected with the par cipa on of structural subdivisions of the execu ve commi ee of Chervonohrad city council.

All the photos used in this document were taken in Chervonohrad and provided by city council.

The EBED project’s main goal is to ensure the sustainable economic development of the Ukrainian oblasts and ci es through building the capacity of oblast and city oﬃ cials to apply quan ta ve analysis and forecas ng tools to improve the economic development planning of their territories (www.ebed.org.ua).

The EBED project is implemented by The Conference Board of Canada (www.conferenceboard.ca) and fi nanced by the Government of Canada through the Canadian Interna onal Development Agency (www.acdi-cida.gc.ca). The opinions expressed in this document are of the authors only and do not refl ect the offi cial posi on of the Government of Canada and the Canadian Interna onal Development Agency.

INTRODUCTION ...... 6 Overview ...... 6 Administra ve and Territorial Division...... 6 Local Self-Governance...... 7 Historical background ...... 7 Geographic Loca on ...... 8 Climate ...... 8 Mineral Resources ...... 8 Social and Economic Overview ...... 9

CHAPTER 2. DEMOGRAPHIC PROFILE ...... 10 Overview ...... 10 Overall Popula on Dynamics ...... 10 Change in the Natural Popula on ...... 11 Net Migra on ...... 12 Summary of Natural Popula on Change and Net Migra on ...... 14 Popula on Distribu on by Age and Sex ...... 14 Dependency Ra o ...... 15 Indicators of Chervonohrad’s Demographic Situa on ...... 17

CHAPTER 3. ECONOMIC PROFILE ...... 18 Overview ...... 18 Economic Structure ...... 18 Sales of Goods and Services ...... 18 Employment ...... 19 Unemployment ...... 20 Size Distribu on of Employers ...... 21 Key Industries in Chervonohrad ...... 22 Key Enterprises in Chervonohrad ...... 23 Infrastructure Development ...... 23 Residen al Construc on Sector ...... 23 Consump on Ac vity ...... 24 Services Sector ...... 24 Investment ...... 25 Fixed Capital Investment...... 25 Direct Foreign Investment ...... 28 Interna onal Exports and Imports ...... 28 Exports ...... 28 Imports ...... 28 Wages ...... 29 Conclusions ...... 31 Indicators of Chervonohrad’s Economic Performance ...... 32

CHAPTER 4. FISCAL PROFILE ...... 33 Overview ...... 33 Budget Surplus/Deﬁ cit ...... 33 Revenues ...... 34 Special Fund ...... 37 Budget for Development ...... 38 Modiﬁ able Revenues ...... 39 Expenditures ...... 39 Indicators of Chervonohrad’s Fiscal Health ...... 43

5 Chervonohrad - Demographic, Economic, Fiscal INTRODUCTION Chapter 1

OVERVIEW

The se lement founded 1692 City status obtained 1951 Resident popula on 82,542* Popula on density 3,941 persons per sq. km* City’s share in the oblast’s popula on 3.27%* Area 21 sq. km Key industries mining, light industry Average annual temperature +6.8°С

ADMINISTRATIVE AND TERRITORIAL DIVISION

The city is not divided into districts. The jurisdic on of Chervonohrad also includes the town of Sosnivka and the urban community of Hirnyk.

*Data as of January 1, 2011. 6 Chervonohrad - Demographic, Economic, Fiscal LOCAL SELF-GOVERNANCE The system of local self-government includes the mayor, the city council, the execu ve commi ee, and other execu ve bodies of the city council. The Chervonohrad City Council comprises 50 members who work in nine permanent commissions. The city council em- ploys 65 staff members (as of September 7, 2011). The city has a Single Licensing Offi ce that provides services for business en es. Local licensing bodies issue licenses and permits through this offi ce. HISTORICAL BACKGROUND The city of Chervonohrad obtained its current name in 1951 along with its city status. The previous name, Krystynopil, was given in 1692 when the se lement was founded. Feliks Kazimierz Potocki, who was a Voivode of Krakow and Crown Hetman of Poland, founded a new se lement near Novyi Dvir village. He named the se lement Krystynopil a er his wife Kris na. In 1695, the Potocki Castle and the Holy Ghost kościoł (Polish Catholic Church) were built in Krystynopil. In 1713, the Greek Catholic community built St. George’s Church. The city began developing around these three buildings, followed by a market place and individual houses. The most prosperous period in the history of the city was in the time of Franz Salezy Potocki (1724–1772), one of the most powerful Polish magnates. He created favourable conditions for economic development of the city by building a mill, sawmill, and brick factory, as well as starting the grain and brick trade. He also built a luxurious French-style palace between 1756 and 1762. The central part of the city was completed during the time of Franz Salezy Potocki.

Potocki had a permanent Cossack regiment in Krystynopil. By the end of the 18th century the city had developed signiﬁ - cantly, with over 200 households. In addi on to farming, ci zens were engaged in cra s, trade, and carpentry. There was a dis llery, saddler’s workshop, weaving factory, and soap factory opera ng in the city. However, 50 years of prosperity was followed by a long period of decline. The par on of Poland in 1772 was a disaster for the city as Russia and Austria-Hungary fought for these lands. The city was captured and recaptured several mes by the two contenders and was heavily destroyed as a result of these ba les. When Austria-Hungary won, the Potocki family sold Krystynopil in 1781. Frequent owner changes between the end of the 18th century and the beginning of the 19th century caused the city to decline. In the second half of the 19th century there was a small economic and cultural recovery in Krystynopil. The mill was rebuilt, a winery and brewery were constructed, and trade recovered. Krystynopil became a key grain trading centre. In 1906, almost 6,000 ci zens lived in Krystynopil. During World War I Krystynopil was in a combat zone for almost a year. The city was heavily damaged (70 per cent, according to some es mates) including the Potocki Castle. Moreover, a er the defeat of Austria-Hungary in World War I, ﬁ gh ng con nued between Polish troops and the Ukrainian Galician Army (West Ukrainian People’s Republic). A er the fall of the Ukrainian People’s Republic in 1920, Krystynopil became part of Poland.

7 Chervonohrad - Demographic, Economic, Fiscal

The fi rst wave of a acks in World War II aff ected Krystynopil and the city was occupied by Nazi Germany. The sec- on of the old city inhabited by the Jewish community was burned. Some ci zens joined the Ukrainian Rebel Army and fought against both the Nazis and Polish troops. In July 1944 Soviet troops entered Krystynopil. According to the agreement between the USSR and Poland signed on August 16, 1945, Krystynopil became part of the People’s Republic of Poland. Between April and May 1946 (as a result of the Opera on Visla) all ethnic Ukrainians were deported with the help of Polish troops. Because of the large coal deposits found by scien sts prior to World War II in the Zabuzhzhia region, the Soviet government exerted pressure on Poland to exchange certain territories. The agreement signed on February 15, 1951 resulted in Krystynopil becoming part of the Ukrainian Soviet Socialist Republic and renamed Chervonohrad. In return, Poland got Ustrzyki Dolne and territories in Bieszczady. Chervonohrad developed quickly as people from all over the Soviet Union moved there. Na ve ci zens were not allowed to come back as they were believed to be “ban- derivtsi” (Ukrainian na onalists). In 1951, Chervonohrad began the construc on of mines, apartment blocks, plants, and factories. The more recent history of the city is closely connected with Lviv–Volyn Coal Basin. Zabuzhzhia has been transformed into a mining region with its centre in Chervonohrad. In 1990 Chervonohrad was the fi rst Ukrainian city to remove a monument to Lenin. GEOGRAPHIC LOCATION Chervonohrad is located in the western part of Lviv Oblast—in the Polissia Plain in Nadbuzhanska Hollow where the Solokija and the Rata tributaries fl ow into the Western Bug. The City of Chervonohrad lies in West Ukrainian forest- steppe zone (Small Polissia). The city lies in the middle la tude of the Northern hemisphere rela ve to the equator and in the Eastern hemisphere rela ve to the Greenwich meridian. Chervonohrad’s coordinates are 50°23ʹ12″ northern la tude and 24°13ʹ44″ eastern longitude. Chervonohrad’s land area is 21 sq. km (Chervonohrad – 17.8 sq. km; Sosnivka town – 2.0 sq. km; Hirnyk urban community – 1.2 sq. km). The city stretches for 8 km from north to south and 5 km from east to west. Distance from Chervonohrad to select ci es: Lviv – 72 km; Kyiv – 524 km; London – 2,007 km; Paris – 1,912 km; Berlin – 970 km; Brussels – 1,671 km; Moscow – 1,296 km; EU border – 50 km. CLIMATE Chervonohrad is situated in a wet and moderately warm macroclima c area with suffi cient soil moisture. The climate is moderately con nental (temperate con nental) characterized by mildness and high humidity levels. The average annual air temperature is +6.8°C. The average temperature in January is between –4.2 and –4.4°C and in July it is between +18.0 and +18.4°C. The average number of days with temperatures over 10°C is 155 to 160. The average annual precipita on is 560 to 640 mm. On average there are 170 precipita on days a year in the city. Most precipita on (65 per cent) falls in the summer. The soil is moisturized primarily by snow and rain; the share of ground waters is insignifi cant (less than 10 per cent). Unfavourable clima c events include fogs, ice, sleet, strong winds, and spring me light frosts. Southwestern winds are most common in the city. The wind speed is highest between November and March and the lowest is in August. MINERAL RESOURCES The northern part of the Chervonohrad mining area lies in the Volyn uplands while the southern part lies within the basin of the Upper Bug and Styr. Key mineral resources in the region are Zabuzke and Mezhyrichanske (exploited) as well as Tiahlivske and Liubelske (explored) coal beds. The key mineral resources of Chervonohrad are Zabuzke and Mezhyrichanske coal beds. The fi rst boreholes were made 8 Chervonohrad - Demographic, Economic, Fiscal in 1938. Compared to Donbass, the coal of Chervonohrad is of lower quality with a lower hea ng value and higher ash content. A signifi cant por on of the coal is used by the Dobro vska thermal power plant (Lviv Oblast) and the Burshtyn- ska thermal power plant (Ivano-Frankivsk Oblast). The rela ve uniformity of sediment rocks that are close to the surface explains the availability of certain construc on materials in this area. They include carbonaceous rocks (chalk and malm), construc on and concrete sands, brick loams and clay, natural stone construc on materials, and expanded clays. Malm—which is used as a raw material for cement—is plen ful, but is not currently mined in the territory of the basin. Quaternary forest loams, which are the main raw material for brick produc on, create a thick layer on an eroded chalk surface. Loams lie in a wide stripe which goes across the basin from north to south. The loam deposit in Chervonohrad raion lies near the town of Sokal. Numerous peat deposits can be found in the swamp lands of the Western Bug River and its tributaries. SOCIAL AND ECONOMIC OVERVIEW The industrial sector of the city currently includes 23 enterprises in 10 industries. Among them: 3 mining enterprises; 3 energy, gas, and water produc on and distribu on enterprises; and 17 processing enterprises opera ng in food, chemical and petrochemical industries, pulp and paper, metalworking, woodworking, and mechanical engineering. There are several major enterprises in the city including three mines of Lvivvuhillia State Enterprise and two large light industry enterprises (Kalyna OJSC and Duna-Vesta Ltd.). The city has a public transporta on system. Passenger transporta on is provided by small and medium-size buses. The municipal passenger transporta on system includes 6 routes with 38 vehicles opera ng on a daily basis. Public bus transporta on is provided by four private transporta on companies. There is one bus sta on in the city used for intercity transporta on. The Chervonohrad railroad sta on is a part of Lviv Railroad. The only long-distance trains going through the Chervonohrad sta on are on the Kyiv–Lviv (and vice-versa) route. Local trains include the Chervonohrad to Kovel route. Trains between Lviv and Kovel, Rava Ruska and Sokal, and Lviv and Sokal pass through Chervonohrad. The city is far from major European, interna onal, and na onal roads. The former republican road between Lviv, Kovel, and Brest lost its importance a er the rupture of economic es within former USSR countries. A sec on of this road is now part of the Kovel–Volodymyr-Volynskyi–Chervonohrad–Zhovkva regional road. Chervonohrad has road connec ons with Radekhov and Rava Ruska. The educa on sector of Chervonohrad comprises 13 preschool ins tu ons and 15 compulsory secondary educa on ins tu ons (including 3 educa on complexes and gymnasium). The city also has a boarding school for orphans. There is a mul disciplinary voca onal school #11 and a Professional Mining and Construc on Lyceum. Higher educa on in the city is represented by 3 ins tu ons: the Chervonohrad Mining and Economic College State Educa onal Ins tu on of the 1st accredita on level, a branch of the Interregional Academy of Personnel Management, and a branch of the Economic Department of Ivan Franko Lviv Na onal University of the 4th accredita on level. Medical aid to ci zens is provided by 22 medical treatment and preven ve ins tu ons. In addi on to inpa ent ins tu- ons there is the Rovesnyk medical complex located 7 kilometres from the city.

9 Chervonohrad - Demographic, Economic, Fiscal DEMOGRAPHIC PROFILE Chapter 2

OVERVIEW

Over the 2002–11 period, Chervonohrad’s popula on declined, with the male popula on decreasing at a faster rate than the female popula on. The number of deaths has been larger than the number of births in every sample year except 2009. Net migra on has been nega ve, with the net ou low being larger to other parts of Ukraine than to the other countries. In 2011, females accounted for 53.6 per cent of Chervonohrad’s popula on. While males accounted for 51.7 per cent of the under-25 age group, females accounted for 55.8 per cent of the 25-or-older age group. The average age of the city’s popula on in 2011 was 39.6 years—slightly older than the average age in Lviv Oblast.

OVERALL POPULATION DYNAMICS The popula on of Chervonohrad has been gradually declining. (See Chart 2.1.) From December 2001 to January 2011, the popula on fell by 2.9 per cent—from 85,034 to 82,542. The number of males fell faster than the number of females. In fact, almost three-quarters of the popula on decline were males. The share of females in the city’s popula on currently stands at 53.6 per cent. (See Table 2.1.) The rate of popula on decline began to slow in 2008 as a result of lower net migra on ou lows and lower natural popula on decreases. The popula on stabilized in 2010 as a result of an increase in natural popula on in 2009 and a reduc on in the net migra on ou low in 2009. However, in 2011, the popula on has again decreased due to a fall in the natural rate and higher migra on ou lows—mainly females.

10 Chervonohrad - Demographic, Economic, Fiscal

CHART 2.1. POPULATION DYNAMICS, 2002‒11 (NUMBER OF PEOPLE)1

90,000 Total 80,000 popula on

70,000

60,000

50,000 Female 40,000 Male

30,000

20,000

10,000

0 2002 200320042005 2006 2007 2008 2009 2010 2011

Source: Main sta s cs oﬃ ce in Lviv Oblast.

TABLE 2.1. CHERVONOHRAD POPULATION, 2006‒11 Popula on, Popula on Males Females Year number of growth, per Number of Per cent of total Number of Per cent of total people cent males popula on females popula on 2006 83,391 -0.47 38,961 46.7 44,430 53.3 2007 82,986 -0.49 38,667 46.6 44,319 53.4 2008 82,848 -0.17 38,499 46.5 44,349 53.5 2009 82,685 -0.20 38,352 46.4 44,333 53.6 2010 82,688 0.00 38,357 46.4 44,331 53.6 2011 82,542 -0.18 38,278 46.4 44,264 53.6

Source: Main sta s cs oﬃ ce in Lviv Oblast.

The popula on of Chervonohrad is aff ected by two factors: a) the change in the natural popula on; and b) net migra- on. Change in the Natural Population The change in the natural popula on is defi ned as the diff erence between the number of births and the number of deaths in a par cular year. If the number of births is larger than the number of deaths, there is an increase in the natural popula on. A decrease in the natural popula on occurs if the number of births is smaller than the number of deaths. In 2010, the number of births was 3.5 per cent higher than in 2006. There is, however, no clear trend in births over that me period. The number of births grew in 2007 and 2009, but fell in 2008 and 2010. (See Table 2.2.)

1 All popula on data are shown as of January 1 for each year. The only excep on is in 2002, when data are based on the na onal popula on census of December 5, 2001. 11 Chervonohrad - Demographic, Economic, Fiscal

TABLE 2.2. BIRTHS, 2006‒10 (NUMBER OF PEOPLE)2 Year Total number of births Males Females 2006 878 455 423 2007 915 440 475 2008 874 473 401 2009 962 500 462 2010 909 469 440 Source: Main sta s cs oﬃ ce in Lviv Oblast. The number of deaths has also not followed a stable trend, with deaths increasing in 2008 and 2010 and decreasing in 2007 and 2009. (See Table 2.3.)

TABLE 2.3. DEATHS, 2006‒10 (NUMBER OF PEOPLE) Year Total number of deaths Males Females 2006 1,028 639 389 2007 946 574 372 2008 951 557 394 2009 938 532 406 2010 950 548 402 Source: Main sta s cs oﬃ ce in Lviv Oblast.

Chart 2.2 shows that the increase in births and the decrease in deaths in 2009 resulted in a natural increase in Cher- vonohrad’s popula on for the ﬁ rst me during the sample period. In every other year, deaths exceeded births, meaning that there was a decline in the natural popula on.

CHART 2.2. NATURAL POPULATION CHANGE, 2006‒10 (NUMBER OF PEOPLE) 40

0 -20

-40

-60

-80 -100 -120

-140

-160 200620072008 2009 2010 Source: Main sta s cs oﬃ ce in Lviv Oblast.

Net Migration There are two types of migra on—domes c and interna onal. Net domes c migra on is the diﬀ erence between the number of people moving into Chervonohrad from other parts of Ukraine and the number of people moving out of

2 Data on births, deaths, and migra on are annual totals.

12 Chervonohrad - Demographic, Economic, Fiscal

Chervonohrad to other parts of Ukraine. Over the sample period, net domes c migra on was posi ve only in 2009, and this was very small at only seven people. (See Table 2.4.) The total net domes c ou low of females was twice that of males over this ﬁ ve-year period. TABLE 2.4. DOMESTIC MIGRATION, 2006‒10 (NUMBER OF PEOPLE) Into Chervonohrad Out of Chervonohrad Net domes c migra on Year Both Both Both sexes Males Females sexes Males Females sexes Males Females 2006 1,130 576 554 1,359 677 682 229 101 128 2007 1,155 548 607 1,219 575 644 64 27 37 2008 1,114 529 585 1,175 586 589 61 57 4 2009 1,006 515 491 999 471 528 7 44 37 2010 1,004 517 487 1,084 515 569 80 2 82 Source: Main sta s cs oﬃ ce in Lviv Oblast.

Net interna onal migra on is the diﬀ erence between the number of people moving into Chervonohrad from other countries and the number of people moving out of Chervonohrad to other countries. Net interna onal migra on has been nega ve over the en re sample period, and has been much larger for females than for males. (See Table 2.5.)

TABLE 2.5. INTERNATIONAL MIGRATION, 2006‒10 (NUMBER OF PEOPLE) Into Chervonohrad Out of Chervonohrad Net interna onal migra on Year Both Both Both sexes Males Females sexes Males Females sexes Males Females 2006 39 18 21 65 27 38 26 9 17 2007 23 17 6 66 24 42 43 7 36 2008 22 11 11 46 17 29 24 6 18 2009 23 14 9 51 21 30 28 7 21 2010 19 14 5 44 16 28 25 2 23 Source: Main sta s c oﬃ ce in Lviv Oblast.

Total net migra on—which is the sum of net domes c and net interna onal migra on—was nega ve over the 2006–10 period. The net ou low of people from Chervonohrad shrank between 2006 and 2009, but increased again (to 105 people) in 2010. (See Chart 2.3.)

CHART 2.3. NET MIGRATION, 2006‒10 (NUMBER OF PEOPLE)

-50

-100

-150

-200

-250

-300 200620072008 2009 2010

Source: Main sta s cs oﬃ ce in Lviv Oblast.

13 Chervonohrad - Demographic, Economic, Fiscal Summary of Natural Population Change and Net Migration The decline in Chervonohrad’s popula on between 2006 and 2011 was caused by both decreases in the natural popula- on and by net migra on out of the city. Overall, migra on ou lows caused more of the popula on decline over the past ﬁ ve years than did natural factors. (See Table 2.6.)

TABLE 2.6. NATURAL AND MIGRATION POPULATION CHANGES, 2006‒10 (NUMBER OF PEOPLE) Popula on change 2006 2007 2008 2009 2010 Change in the natural popula on 150 31 78 24 41 Net migra on 255 107 85 21 105 Total popula on change 405 138 163 3 146 Source: Main sta s cs oﬃ ce in Lviv Oblast. POPULATION DISTRIBUTION BY AGE AND SEX The popula on pyramid in Chart 2.4 shows the age distribu on of Chervonohrad’s male and female popula on. The propor on of males is larger in the under-30 age cohort, whereas females make up the largest share in the 30 years and older age groups. In the 30-and-older age cohort, females represent 56.7 per cent of the popula on. In the oldest age group (70 years and older), females make up 64.2 per cent of the popula on.

CHART 2.4. CHERVONOHRAD POPULATION DISAGGREGATED BY AGE AND SEX, 2011 (NUMBER OF PEOPLE)3 70 and older 65–69 60–64 55–59 50–54 45–49 40–44 Male Female 35–39 30–34 25–29 20–24 15–19 10–14 5–9 0–4 6,000 4,0002,000 0 2,000 4,000 6,000 Source: Main sta s cs oﬃ ce in Lviv Oblast.

Table 2.7 represents popula on data for various age and sex cohorts in Chervonohrad for 2007, 2009, and 2011. Be- tween 2007 and 2011, the share of young people (under 24 years) decreased for both males and females. The share of the popula on aged 25 to 44 years decreased from 2007 to 2009, but increased in 2011. The share of those aged 45 to 60 years has been growing steadily, which suggests that the propor on of people of re rement age will be increasing in the near future. Both the number and the share of the popula on over 60 years old have decreased since 2007, although the pa ern is not the same among males and females. The number of females over 60 years has increased, while that of males has decreased. This suggests that there is a high mortality rate for males in the older age group.

3 Age and sex distribu on is shown as of January 1, 2011. 14 Chervonohrad - Demographic, Economic, Fiscal

TABLE 2.7. POPULATION DISAGGREGATED BY AGE AND SEX, 2007, 2009, AND 20114 2007 2009 2011 Age and sex Per cent Per cent Per cent Number of total Number of total Number of total of people popula on of people popula on of people popula on Males 0–14 years 6,606 7.96 6,273 7.59 6,141 7.44 Females 0–14 years 6,197 7.47 5,938 7.18 5,881 7.12 Both sexes 0–14 years 12,803 15.43 12,211 14.77 12,022 14.56 Males 15–24 years 6,616 7.97 6,368 7.70 6,040 7.32 Females 15–24 years 6,375 7.68 6,039 7.30 5,502 6.67 Both sexes 15–24 years 12,991 15.65 12,407 15.00 11,542 13.99 Males 25–44 years 11,139 13.42 11,282 13.65 11,592 14.04 Females 25–44 years 12,775 15.40 12,509 15.13 12,542 15.2 Both sexes 25–44 years 23,914 28.82 23,791 28.78 24,134 29.24 Males 45–60 years 8,373 10.09 8,899 10.76 9,236 11.19 Females 45–60 years 9,856 11.88 10,509 12.71 10,971 13.29 Both sexes 45–60 years 18,229 21.97 19,408 23.47 20,207 24.48 Males over 60 years 5,933 7.15 5,530 6.69 5,269 6.38 Females over 60 years 9,116 10.98 9,338 11.29 9,368 11.35 Both sexes over 60 years 15,049 18.13 14,868 17.98 14,637 17.73 Source: Main sta s cs oﬃ ce in Lviv Oblast.

As of January 1, 2011, the average age of Chervonohrad’s popula on was 39.6 years, which is higher than the average age in Lviv Oblast (39.0 years). The average age of females was 41.6 years and that of males was 37.3 years. DEPENDENCY RATIO The dependency ra o measures the size of the “dependent” popula on in rela on to the “working-age” popula on. The dependent popula on is deﬁ ned as those typically not in the labour force—the youth popula on (0 to 15 years) and elderly popula on (55 and over for females and 60 and over for males). The working-age popula on is deﬁ ned as those aged 16 to 54 for females and 16 to 59 for males. The dependency ra o is expressed as the number of dependents for every 1,000 people of working age.5 Chervonohrad ’s dependency ra o in 2011 was 598 dependent people for every 1,000 people of working age. This total was made up of 251 people younger than the working age and 347 older than the working age.6 In 2011, 62.6 per cent (51,644 people) of Chervonohrad’s popula on were of working age, 15.7 per cent (12,989 people) were younger than the working age, and 21.7 per cent (17,909 people) were older than the working age. (See Chart 2.5.) The number of males older than the working age was less than the number of males younger than the working age. In contrast, the number of females over the working age was almost twice the number of females younger than the working age. Part of the reason for this is the earlier re rement age for females. Yet, even if we calculated the male elderly dependent popula on using the same re rement age as that of females (55 and over rather than 60 and over), the female elderly dependent popula on would s ll be 1.5 mes that of males. This is due to the longer life expectancy for females.

4 Age and sex distribu on is shown as of January 1 for each year. 5 Working age is deﬁ ned as of January 1, 2011. 6 Dependency ra o is shown as of January 1, 2011.

15 Chervonohrad - Demographic, Economic, Fiscal

CHART 2.5. POPULATION BY WORKING AND DEPENDENT AGE, 2011 (PER CENT)7

Both sexes Male Female

14.6 27.9 21.7 68.1

17.3

62.6 15.7 14.3 57.8

Working-age popula on Older than working age Younger than working age

Source: Main sta s cs oﬃ ce in Lviv Oblast.

Chart 2.6 shows that the dependedependency ra o has beenen declining,declin ng, mainly due to a lower dependencyendency ra o of ththose younger than the working age. Thehe dependencyd ra o of those olderr than the working age has remained stable.able

CHART 2.6. DEPENDENCY RATIO, 2006‒11 (NUMBER OF DEPENDENTS PER 1,000 WORKING-AGE POPULATION)8

700

600 Overall dependency ra o

500

400 Dependency ra o of those older than 300 working age Dependency ra o of 200 those younger than working age

100

0 200620072008 2009 2010 2011 Source: Main sta s cs oﬃ ce in Lviv Oblast.

7 Age distribu on is shown as of January 1, 2011. 8 Dependency ra o is shown as of January 1 for each year. 16 Chervonohrad - Demographic, Economic, Fiscal INDICATORS OF CHERVONOHRAD’S DEMOGRAPHIC SITUATION Table 2.8 compares the situa on of Chervonohrad with that of Ukraine as a whole on ﬁ ve key demographic indicators. The natural popula on growth in Chervonohrad is much less nega ve than in Ukraine in general, but net migra on is worse. The dependency ra o in Chervonohrad is lower than for the whole of Ukraine, while the share of popula on aged over the age of 60 years is markedly lower than that for Ukraine. The propor on of males and females in Cher- vonohrad’s popula on is slightly more balanced than for Ukraine in general.

TABLE 2.8. KEY DEMOGRAPHIC INDICATORS Rela ve posi on of Indicator Chervonohrad Ukraine Chervonohrad Rate of natural popula on change in 2010 -0.5 -4.4 Stronger per 1,000 people per 1,000 people Net migra on rate in 2010 -1.3 0.3 Weaker per 1,000 people per 1,000 people Dependency ra o as of January 1, 2010 601 659 Stronger per 1,000 people of per 1,000 people of working age working age Share of females in popula on as 53.63 per cent 53.87 per cent Stronger of January 1, 2011 Share of popula on over 60 years as 17.88 per cent 19.33 per cent Stronger of January 1, 2010

Source: Main sta s cs oﬃ ce in Lviv Oblast.

17 Chervonohrad - Demographic, Economic, Fiscal ECONOMIC PROFILE Chapter 3

OVERVIEW

Coal mining plays a central role in Chervonohrad’s economy. Coal mining and the wholesale trade that sup- ports the coal mining industry through the supply of inputs into the coal mining process, as well as the sale of output from the coal mines, dominate the city’s economy. From an employment perspec ve, the industrial sector is the largest in the city’s economy, employing 38 per cent of all staﬀ employees in the city (in 2009), with mining being the largest industry in the sector. Other important sectors in terms of employment include trade, educa on, and health care. Staﬀ employment in Chervonohrad is dominated by medium-sized enterprises/ins tu ons, with 56 per cent of employees working in medium-sized enterprises, 28 per cent in small-sized enterprises, and 15 per cent in large-sized enterprises. Per capita retail sales in Chervonohrad are quite high—notably above the oblast average—due to the high wages and pensions of miners. Aggregate retail sales in real terms have been increasing and, between 2000 and 2010, growth in retail sales in the city exceeded that of the oblast. Although per capita retail sales fell during the 2009 recession, the decline was smaller in Chervonohrad than in the oblast as a whole. However, in 2010 it con nued to decrease (by 1.4 per cent) while per capita retail sales in the oblast grew slightly. While wages increased robustly before the 2009 economic crisis, the crisis led to a drop in real wages of almost 9 per cent. Despite this drop, over the 2005–11 period, real wage growth averaged 8.2 per cent per year. ECONOMIC STRUCTURE Sales of Goods and Services One way in which the structure of an economy can be measured is through sales. Table 3.1 shows sales of goods and services in Chervonohrad over the 2005–10 period. Due to the importance of the mining sector for the economy, the city’s wholesale trade sector, which supplies inputs for mining and purchases the mines’ output, is also well developed. Over the 2005–10 period, trade accounted for 48 to 72 per cent of all sales in Chervonohrad, with an average share of 58 per cent. The table reveals that mining and manufacturing are also major contributors, with 16 per cent and 12 per cent of total sales, on average, over the 2005–10 period, respec vely.

18 Chervonohrad - Demographic, Economic, Fiscal

TABLE 3.1. SALES OF GOODS AND SERVICES, 2005‒10 (UAH MILLIONS IN CURRENT PRICES)1,2 Economic ac vity 2005 2006 2007 2008 2009 2010 Total city economy 911.6 1,162.1 1,335.7 1,576.9 1,795.3 2,573.6 Agriculture, forestry, and ﬁ shing 0.0 0.0 0.0 0.0 0.0 n/a Industry 297.2 459.7 500.0 537.7 443.6 494.7 Mining and quarrying 192.7 278.2 245.8 207.8 192.2 170.8 Manufacturing 78.1 140.3 196.6 275.7 182.5 249.9 Produc on and distribu on of electricity, 26.4 41.2 57.6 54.2 68.9 74.0 gas, and water Construc on 35.8 73.9 103.7 73.2 65.2 120.7 Wholesale and retail trade; repair of motor 527.0 555.0 634.9 878.6 1,182.6 1,858.9 vehicles and motorcycles Wholesale trade 186.8 215.5 544.5 776.5 660.7 1,261.3 Retail trade 340.1 339.2 89.7 101.9 521.6 578.5 Accommoda on and food service ac vi es 4.5 6.7 5.9 6.3 7.2 8.0 Transport and communica ons 25.6 28.3 41.8 30.3 37.9 37.3 Financial and insurance ac vi es 0.5 0.3 0.1 n/a 0.1 n/a Real estate, engineering, legal, and account- 15.9 25.6 32.8 33.9 43.4 42.1 ing ac vi es Educa on 0.4 0.6 0.8 1.1 1.2 n/a Human health and social work ac vi es 0.4 0.5 0.7 0.6 0.9 0.9 Other services 4.4 11.5 15.0 15.2 13.1 11.1 Sources: Main sta s cs oﬃ ce in Lviv Oblast; execu ve commi ee of Chervonohrad city council.

Employment Another way of looking at the structure of an economy is through employment. Table 3.2 shows staﬀ employment by economic ac vity and sex in 2009.3 The industry sector—the city’s largest from an employment perspec ve—accounted for 38 per cent of total employment in 2009. Other key sectors from an employment perspec ve include trade, educa- on, and health care.

TABLE 3.2. NUMBER OF STAFF EMPLOYEES BY ECONOMIC ACTIVITY AND SEX, 2009 (NUMBER OF PEOPLE)4 Economic ac vity Both sexes Males Females Number of staﬀ employees, in total 18,009 7,817 10,192 Agriculture, hun ng, and forestry n/a n/a n/a Industry 6,791 3,706 3,085 Construc on 759 526 233 Wholesale and retail trade; repair of cars, home appliances, 2,174 1,163 1,011 and personal use items Hotels and restaurants 96 9 87 Transport and communica ons 1,614 819 795 Financial ac vity 313 65 248 Real estate, leasing, engineering, and services to businesses 1,129 491 638 Public administra on 711 332 379 Educa on 2,078 335 1,743 Health care and social assistance 1,976 252 1,724 Other economic ac vity 368 119 249 Source: Main sta s cs oﬃ ce in Lviv Oblast.

1 Sales values are given excluding VAT and excise du es. 2 Due to confi den ality requirements, the data for several industries were not disclosed. Therefore, for Chervonohrad, data pub- lished by the main sta s cs offi ce in Lviv Oblast were used. These data diff er slightly from the data based on the reports of enterprises. 3 Beginning in 2010, data on the distribu on of wages and employment by sex at the city level are not longer being collected. 4 Yearly average. 19 Chervonohrad - Demographic, Economic, Fiscal

Table 3.3 presents details of staff employment in Chervonohrad’s industrial sector by sex for 2009. The mining industry, which is the backbone of Chervonohrad’s economy, is the largest employer, with 20 per cent of total employment and 52 per cent of industry employment in 2009. Other key industries, from an employment perspec ve, are the tex le industry as well as the produc on and distribu on of electricity, gas, and water. Although women make up 57 per cent of all staff employees, they account for just 45 per cent of staff employment in the industrial sector. In industry, men dominate in the mining industry and in the metallurgy and metal-working industry.5 Women dominate in the tex le industry.

TABLE 3.3. NUMBER OF STAFF EMPLOYEES BY INDUSTRY AND SEX, 2009 (NUMBER OF PEOPLE) Both sexes Males Females Number of staﬀ employees, in industry 6,791 3,706 3,085 Mining industry 3,526 2,543 983 Manufacturing 2,444 744 1,700 Food industry and agricultural proceeding industry 126 81 45 Tex le industry and tailoring 1,575 159 1,416 Produc on of other non-metal mineral products 87 51 36 Metallurgy and metal-working 240 197 43 Other manufacturing industries (combined) 416 256 160 Produc on and distribu on of electricity, gas, and water 821 419 402 Source: Main sta s cs oﬃ ce in Lviv Oblast.

Unemployment Labour markets in Chervonohrad fared quite well during the global recession of 2008–09. Unlike many other jurisdic- ons, unemployment in Chervonohrad showed no appreciable increase during the recession. Indeed, while the number of registered unemployed increased 66 per cent between the end of 2007 and the end of 2008 (see Chart 3.1), the annual number of newly registered unemployed (i.e., total inﬂ ow during the year) fell to 2,495 in 2009—its lowest level for the en re decade. Moreover, as a share of labor force, the unemployment rate, even during the 2007–11 period, was never above 1.3 per cent. As of the end of 2011, there were only 553 registered unemployed in the city.

CHART 3.1. NUMBER OF REGISTERED UNEMPLOYED AT YEAR END, 2000‒11 (NUMBER OF PEOPLE)

3,500

3,000

2,500

2,000

1,500

1,000

500

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Sources: Chervonohrad’s city employment center; main sta s cs oﬃ ce in Lviv Oblast.

5 The criteria for domina ng employment in a sector is if that sex makes up at least two-thirds of employment in that sector.

20 Chervonohrad - Demographic, Economic, Fiscal

There are substan al diff erences between the level of registered unemployment reported here and the level of unemployment that would be measured by the interna onally recognized methodology used by the Interna onal Labour Organiza on (ILO). At the end of 2011, the employment center es mated that registered unemployment as a share of the working-age popula on (16–54 for women and 16–59 for men) in Chervonohrad was 1.1 per cent. However, this may signifi cantly understate unemployment. In 2010, the unemployment rate measured using the ILO methodology suggests that unemployment as a share of the working-age popula on (15 to 70) was 9.8 per cent for the oblast. The unemployment rate using the ILO methodology and the local defi ni on of working age (16–54 for women and 16–59 for men) was even higher—10.1 per cent for the oblast. Yet the registered unemployment as a share of the working-age popula on (16–54 for women and 16–59 for men) was 1.7 per cent for the oblast at the end of 2010. The distribu on of registered unemployment by sex shows that unemployment is equally distributed between men and women. For example, during the 2005–10 period, exactly half of all registered unemployed were women. In 2005, 56 per cent of registered unemployed were women; in 2010, this dropped to 49 per cent. The average dura on of registered unemployment has declined slowly but steadily, from eight months in 2005 to four months in 2008, before increasing slightly to fi ve months in 2009. The dura on of registered unemployment for women is higher than that for men and higher for older people than for younger people. For example, in 2009, the average unemployment period for men was four months and for women it was six months; it was just three months for unemployed aged 15 to 29 and seven months for unemployed aged 50 to 59. Size Distribution of Employers The economic structure of a city has an important eff ect on the size distribu on of enterprises, ins tu ons, and organiza ons. The distribu on of staff employees by size of enterprise/ins tu on in 2009 is illustrated in Chart 3.2.6 The chart shows that staff employment in Chervonohrad is dominated by medium-sized enterprises/ins tu ons, which in 2009 accounted for 56 per cent of all staff employment in the city.7 Small-sized enterprises accounted for 28 per cent of all staff employment while large-sized enterprises accounted for 15 per cent.

CHART 3.2. DISTRIBUTION OF STAFF EMPLOYEES BY SIZE OF ENTERPRISE/INSTITUTION, 2009 (PER CENT)

28 Large-sized

56 Medium-sized

Small-sized

Sources: Main sta s cs oﬃ ce in Lviv Oblast; in-house calcula ons.

In addi on to staﬀ employment, anotherother important categcategorytegory of employmentemp is individual entrepreneurs and their hired workers. Chart 3.3 shows that the number of individualindividuaual entrepreneursentrepreneur grew steadily between January 1, 2005 and Jan- uary 1, 2010 before falling somewhatwhat in 2010. OnOn Januaryy 1, 2011, the number of individual entrepreneurs was 4 per cent lower than on January 1, 2010.. On average, thet number of indivindividual entrepreneurs grew 7 per cent per year while the number of their hired workers fellell by 6 per cent per year betwbetween January 1, 2005 and January 1, 2011. Over the course of 2010, both the number of individualndividuall entrepreneurs andan their hired workers declined. This decline may have been par ally caused by the new tax code,e, whwhichhich increased the required average payments made by entrepreneurs. This may have forced them to close their business, at least formally. for

6 Beginning in 2010, data on employment by size of employer are no longer being collected at the city level. In some cases, percentage shares do not add up to 100 due to rounding. 7 Small-sized enterprises/ins tu ons/organiza ons include those with 11 to 50 employees; medium-sized, 51 to 250 employees; large-sized, 251 and more employees. 21 Chervonohrad - Demographic, Economic, Fiscal

CHART 3.3. INDIVIDUAL ENTREPRENEURS AND THEIR HIRED WORKERS, 2006‒11 (NUMBER OF PEOPLE)8

4,500 4,000 Individual 3,500 Entrepreneurs 3,000 2,500 Number of 2,000 workers hired by individual 1,500 entrepreneurs 1,000 500 0 2006 2007 2008 2009 2010 2011 Source: Chervonohrad City State Tax Inspectorate. Key Industries in Chervonohrad Mining When the city was taken from Poland in 1951, it was decided that the mining industry should become the backbone of its economy. There are three coal mines in the city: Velykomos vska, Mezhyrichanska, and Chervonohradska. Coal is the main organic energy source for the oblast. In 2010, the mines produced 374 thousand tonnes of coal (including 139 thousand tonnes of ROM coal and 235 thousand tonnes of enriched products), which was 149 thousand tonnes less than in 2009. Considering the exhaus on of the mines and the lack of public funding for exploi ng new deposits, sales in the extrac ve industry were 170.8 million UAH in 2010, which is 21.3 million UAH less than in 2009. The 2010 produc on program for Chervonohrad’s mines envisaged 79.0 million UAH of public investment funds for buy- ing drilling equipment and replacing ﬁ xed installa ons (Velykomos vska – 35.1 million UAH; Chervonohradska – 11.4 million UAH; Mezhyrichanska – 32.5 million UAH). However, the mines did not receive these public funds in 2010.

Manufacturing The city’s light industry includes the following important enterprises: Kalyna OJSC, Duna-Vesta Ltd., and Galant-Styl Pri- vate Enterprise. In 2009, industrial produc on increased by 12.6 million UAH, with Duna-Vesta Ltd. the most innova ve enterprise in the manufacturing sector. Due to constant technical improvement and switching to computer-controlled equipment, the range of socks and stockings produced has been updated regularly. However, the light manufacturing industry remains highly dependent on imported raw materials and is thus subject to price ﬂ uctua ons in foreign markets and exchange rate shocks, since all enterprises, except Duna-Vesta Ltd, depend on customer-supplied raw materials. With respect to mechanical engineering, Zmina OJSC increased its sales by 3.4-fold in 2010 (custom machinery, con- sumer goods, mining equipment). The Chervonohradskyi Concrete Product Plant OJSC has been signiﬁ cantly increasing its produc on of other non-metallic mineral products. This company specializes in manufacturing precast concrete. In 2010, industrial sales grew by 63.3 per cent compared to the previous year. In 2010, metallurgical enterprises improved their performance by 11 per cent. Last year, Chervonohradskyi Steel Con- struc on Plant OJSC demonstrated stability (17.4 per cent growth), along with Rytm State Enterprise and Zmina OJSC (2-fold produc on growth). In 2010, Chervonohradskyi Steel Construc on Plant OJSC exported its products to Poland, Russia, and Belarus. Food enterprises increased their produc on 2.4-fold in 2010. The Western Ukrainian Agriculture Company Ltd. increased its meat and meat products produc on 3.2-fold, while Halychproduct Ltd. improved sausage produc on by 31.4 per cent. These enterprises are ac vely moving to new markets outside Chervonohrad and Lviv Oblast.

8 Data on individual entrepreneurs and their hired workers are given as of January 1 of the respec ve year. 22 Chervonohrad - Demographic, Economic, Fiscal

Meanwhile, a few industrial enterprises in the city suﬀ ered falling sales in 2010. These included Mezhyrichanska (-52.0 per cent), Chervonohradska (-24.5 per cent), Termobud Ltd. (-27.1 per cent), Kalyna OJSC (-7.9 per cent), Alladan Ukraina Subsidiary Enterprise (-25.6 per cent), Laverna Ltd. (-41.5 per cent), Kyiv Zakhid Joint Venture (-5.8 per cent), and Prom- servis Ltd. (-16.5 per cent). Key Enterprises in Chervonohrad The city has several core enterprises. (See Table 3.4.) Among them, the largest in terms of revenues is the Kyiv Zakhid Joint Venture Ltd., while the largest employers are mining enterprises.

TABLE 3.4. ENTERPRISES WITH THE HIGHEST REVENUES, 2010 Income from basic Enterprise, organiza on, ins tu on Basic ac vity ac vity, Average number of UAH employees in 2010 thousands Chervonohradska Mine Extrac ve Enterprise ROM coal produc on 45,366 1,314 Lvivvuhillia State Enterprise Velykomos vska Mine Extrac ve Enterprise ROM coal produc on 98,958 996 Lvivvuhillia State Enterprise Mezhyrichanska Mine Extrac ve Enterprise ROM coal produc on 27,256 1,240 Lvivvuhillia State Enterprise Kalyna OJSC Men’s and women’s underwear 28,619 766 Duna-Vesta Ltd. Socks and stockings 107,380 730 Western Ukrainian Agriculture Company Meat 34,412 105 Ltd. Chervonohradskyi Steel Construc on Plant Welded construc ons 37,233 177 Termobud Ltd. Steel products for construc on 4,267 54 (sandwich panels) Chervonohradskyi Concrete Product Plant Concrete products 6,642 81 OJSC Zmina OJSC Сustom machinery 31,933 74 Chervonohradteplokomunenergo U li es 41,973 335 Communal Enterprise Kyiv Zakhid Joint Venture Ltd. Wholesale and retail, bread and 450,407 860 baked products Chervonohradzhytlokomunservis U li es 19,507 500 Communal Enterprise Chervonohradvodokanal U li es 17,116 297 Communal Enterprise Source: www.smida.gov.ua.

INFRASTRUCTURE DEVELOPMENT Residential Construction Sector Most of the city’s housing stock was built in the 1950s and 1960s, when the city was ac vely growing as a coal mining town. For the last decade, the total housing stock in Chervonohrad remained virtually unchanged. Many indicators of residen al construc on rose between 2005 and 2007 before falling in 2008 and 2009. (See Table 3.5.) In 2010, real construc on output con nued to fall even as most other parameters showed a post-crisis recovery. Between 2005 and 2010, real investment in housing construc on increased cumula vely by 166 per cent. Over a longer period, cumula ve growth was much less substan al. Between 2000 and 2010, real investment in housing construc on increased cumula- vely by only 38 per cent. Real construc on output shrank by 78 per cent over the same period.

23 Chervonohrad - Demographic, Economic, Fiscal

TABLE 3.5. MAJOR CONSTRUCTION INDUSTRY INDICATORS IN CHERVONOHRAD, 2005-10 Indicator 2005 2006 2007 2008 2009 2010 Commissioning of residen al build- 3,802 6,208 8,839 4,650 5,402 9,814 ings, total m2 Commissioning of individual homes, 3,115 3,347 6,186 4,491 1,442 9,775 total m2 Commissioning of residen al build- 20 14 25 18 5 22 ings, units Real construc on output, % change -21.5 20.8 -1.6 -41.1 -19.2 -39.9 over previous year Investment in fi xed capital into hous- 3,205 5,993 7,917 8,503 2,893 21,695 ing construc on, UAH thousands Real investment in fi xed capital in -28.5 53.0 7.2 -19.5 -69.5 561.4 housing construc on, % change over previous year Sources: Main sta s cs offi ce in Lviv Oblast; in-house calcula ons. CONSUMPTION ACTIVITY At the city level, retail sales data adjusted for infl a on are a good indicator of consump on ac vity. Aggregate retail sales data for Chervonohrad reveal that retail sales of enterprises in real terms increased between 2000 and 2008 by 20 per cent per year on average, which was above the oblast growth average annual growth of 17 per cent during the same period. (See Chart 3.4.) In 2009, the recession led to a 4.7 per cent drop in per capita retail sales, which was well below the 15.4 per cent decline in the oblast as a whole. However, in 2010, there was a further 1.4 per cent drop, while per capita retail sales in the oblast grew slightly. Per capita retail sales in Chervonohrad are quite high—among oblast ci es it is second only to Lviv and 78 per cent above the oblast average due to the high wages and pensions of miners. In 2010, retail sales were UAH 10,470 per person.

CHART 3.4. RETAIL SALES GROWTH IN CHERVONOHRAD, 2000‒10 (PER CENT, CONSTANT PRICES)

0 2000 20200101 20200202 20200303 20200404 20200505 20200606 20200707 20200808 2009 2010 -5

-10

Sources: Main sta s cs oﬃ ce in Lviv Oblast; in-house calcula ons.

24 Chervonohrad - Demographic, Economic, Fiscal SERVICES SECTOR In 2010, services made up 81 per cent of the total output of non-fi nancial companies; more than 89 per cent of services are wholesale and retail trade. Except for trade, which dominated the overall services sectors, three services stood out as being especially important to the city’s economy in 2010. Transport ac vi es represented 33 per cent of all services sold by the non-fi nancial services sector; real estate opera ons represented 21 per cent of all services; and post and communica ons (including mobile communica on) ac vi es represented 12 per cent. (See Table 3.6.) In 2010, Cher- vonohrad supplied 1.1 per cent of all non-fi nancial services in the oblast.

TABLE 3.6. AMOUNT OF SOLD SERVICES9 BY FIRMS IN THE NON-FINANCIAL SERVICES SECTOR BY TYPE OF ACTIVITY IN CHERVONOHRAD, 2010 (UAH THOUSANDS IN CURRENT PRICES AND PER CENT) Economic ac vity Amount of sold services Share of total, per cent Total 134,792 100.0 Repair of motor vehicles, household goods, 286 0.2 and personal items (subsector of Trade) Transport and communica ons 61,265 45.5 Transport ac vi es 44,309 32.9 Post and communica ons 16,450 12.2 Real estate, leasing, engineering, and services 56,096 41.6 to entrepreneurs Real estate transac ons 28,514 21.2 Informa on-related ac vi es 1,676 1.2 Legal services 3,947 2.9 Architecture and geodesy-related services 6,924 5.1 Technical tes ng and research 1,175 0.9 Providing other commercial services 13,345 9.9 Educa on 6,954 5.2 Primary educa on 819 0.6 Secondary educa on 480 0.4 Higher educa on 2,667 2.0 Other educa on services 2,988 2.2 Health care and social protec on 2,499 1.9 Provision of communal and personal services, 7,692 5.7 cultural ac vi es, and sports Sanita on, garbage collec on, and disposal 5,775 4.3 Culture and sport, recrea on and entertain- 730 0.5 ment Personal services 1,188 0.9 Sources: Main sta s cs offi ce in Lviv Oblast; in-house calcula ons. INVESTMENT Fixed Capital Investment Fixed capital investment represents the spending by businesses on the construc on of buildings or the purchase of vehicles or equipment. Of the 9 ci es in the oblast, Chervonohrad is ranked 4th in terms of the nominal volume of capital investment and 5th in terms of the average rate of investment growth over the 2005–10 period. Chart 3.5 illustrates the accumula on of fi xed capital (in nominal terms) in Chervonohrad over the 2000–10 period and the growth in real investment. Following a signifi cant investment slump in 2009, there was some growth in 2010. Nominal in-

9 Does not include trade and construc on, which are described in other parts of this chapter. 25 Chervonohrad - Demographic, Economic, Fiscal vestment in fi xed assets rose to 90.7 million UAH in 2010, a 27.2 per cent increase over 2009. As can be seen, there were notable varia ons in growth rates, with both massive hikes (for example, 108 per cent nominal and 91 per cent real growth in 2007) and drops. Between 2005 and 2008, real fi xed capital investment posted a compound annual rate of growth of 11 per cent. The recession of 2009 led to a 67 per cent drop in real investment in fi xed capital in the city. In 2010 real investment in fi xed capital grew 13.5 per cent. However, this recovery was only able to par ally reverse the previous decline. Consequently, in 2010 the index of real investment in fi xed capital remained 42 per cent below the level of 2005 and 5 per cent below the level of 2000.

CHART 3.5. INVESTMENT IN FIXED CAPITAL, 2000‒10 (UAH MILLIONS IN CURRENT PRICES AND REAL PER CENT CHANGE OVER PREVIOUS YEAR)

250 250

200 200 150

150 100 PER CENT

UAH millions UAH 50 100

0 50 -50

0 -100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Nominal investment (le scale) Growth in real investment over previous year (right scale)

Source: Main sta s cs oﬃ ce in Lviv Oblast.

Between 2005 and 2010, investment fl owed primarily to the mining sector (43 per cent of total fi xed capital investment on average), the manufacturing sector (15 per cent of total fi xed capital investment), and the trade sector (14 per cent of total fi xed capital investment). (See Table 3.7.)

26 Chervonohrad - Demographic, Economic, Fiscal

TABLE 3.7. INVESTMENT IN FIXED ASSETS DISAGGREGATED BY ECONOMIC ACTIVITY, 2005‒10 (UAH MILLIONS IN CURRENT PRICES)10 Economic ac vity 2005 2006 2007 2008 2009 2010 Total 84.3 80.8 168 193.4 71.3 90.7 Agriculture, hun ng, and forestry ------Industrial sector 53.4 46.2 116.1 120.9 47.3 47.7 Mining 38.4 24.0 98.7 90.8 25.4 20.6 Manufacturing 11.6 17.1 8.0 20.8 20.9 25.6 U li es 3.4 5.1 9.4 9.3 1.1 1.5 Construc on 0.8 1.6 1.4 2.7 1.1 0.8 Wholesale and retail trade; repair of 14.7 15.1 11.5 35.4 9.5 8.8 motor vehicles, household goods, and personal items Hotels and restaurants 0.1 0.0 0.5 0.2 1.9 0.2 Transport and telecommunica ons 3.7 4.8 8.8 8.6 4.5 3.4 Finance 3.1 2.4 3.5 2.9 0.3 0.6 Real estate, leasing, engineering, ser- 5.0 7.1 9.1 9.1 4.0 23.1 vices for entrepreneurs Public management 0.3 1.7 12.5 3.1 0.2 0.9 Educa on 0.3 0.3 0.3 0.3 0.1 0.4 Health and social care 0.6 0.7 2.8 6.1 0.6 2.0 U li es and individual services; culture 2.4 0.9 1.7 4.1 1.8 2.7 and sports Source: Main sta s cs oﬃ ce in Lviv Oblast.

The main sources of capital investment in 201011 were the own funds of enterprises and organiza ons (38 million UAH or 46 per cent), funds of state budget (10 million UAH or 12 per cent), and bank loans (6 million UAH or 7 per cent). (See Table 3.8.) While the funds of enterprises remained the main source of investment between 2005 and 2010, investment from the state budget decreased and the share of bank loans and local budget grew in 2010.

TABLE 3.8. INVESTMENT IN FIXED ASSETS DISAGGREGATED BY SOURCES OF FUNDING, 2005‒10 (UAH MILLIONS IN CURRENT PRICES)12 Investment Sources 2005 2006 2007 2008 2009 2010 Total 84.3 80.8 168.0 193.4 71.3 83.2 State budget funds 40.0 15.5 64.9 88.2 11.5 10.2 Local budget funds 4.7 3.4 7.4 6.4 2.3 3.8 Own funds of enterprises and organiza- 30.5 46.9 84.9 78.6 53.3 37.9 ons Foreign investor funds 0.0 2.1 0.4 0.3 0.0 1.8 Bank credits and other loans 6.8 8.6 0.5 3.6 0.6 6.1 Other sources of funding 2.2 4.3 9.6 16.2 3.7 23.4 Source: Main sta s cs oﬃ ce in Lviv Oblast.

10 11 Since 2010, investment by source is given excluding VAT. Thus it cannot be directly compared with investment by economic ac v- ity shown in Table 3.7. 12 Beginning in 2010, the State Sta s cs Service of Ukraine collects data regarding sources of capital investments excluding value added tax (VAT), therefore data cannot be directly compared with the previous years, when VAT was included.

27 Chervonohrad - Demographic, Economic, Fiscal

Direct Foreign Investment Chervonohrad has not been a very popular des na on for foreign direct investment (FDI). Over the 2005–10 period, its share of oblast FDI never exceeded 1 per cent. However, there was an upward trend in terms of the yearly nominal inﬂ ow of funds. FDI per capita in Chervonohrad was also quite small, reaching only 70 USD by the end of 2010. Direct foreign investment in the city’s economy reached 5,799 thousand USD at the end of 2010. Industries with the biggest shares in direct foreign investment were: extrac ve industry – 2,987.0 thousand USD (51.5 per cent); metallurgy – 2,144.5 thousand USD (37 per cent); light industry – 217.0 thousand USD (3.7 per cent); chemical industry – 128.8 thousand USD (2.2 per cent); transporta on – 157.6 thousand USD (2.7 per cent); trade and car repair – 63.8 thousand USD (1.1 per cent); and services – 24.2 thousand USD (0.4 per cent). The following are the large enterprises with foreign investment disaggregated by economic ac vity: Industrial produc on—Chervonohradskyi Steel Construc on Plant OJSC, subsidiary enterprise Alldan Ukraina Ltd., Evrocom, Termobud Ltd., Polinet, Dobrobud-Liga Ltd., CHER-BUD Ltd., and Teploenergosystemy Ltd. Transporta on—Viktoria-Trans Ltd. and Integral Ltd. Trade—Import-Export Senvei Ltd.

TABLE 3.9. FOREIGN DIRECT INVESTMENT (FDI) IN CHERVONOHRAD AT YEAR-END, 2005‒10 Indicator 2005 2006 2007 2008 2009 2010 Foreign direct investments, USD thousands 4,281.5 5,135.2 5,843.9 5,759.4 5,803.5 5,798.7 FDI inﬂ ows, USD thousands 15.0 853.8 708.7 -84.5 44.1 -4.8 Share in total oblast, % 1.0 1.0 0.7 0.6 0.5 0.5 Sources: Main sta s cs oﬃ ce in Lviv Oblast; in-house calcula ons.

INTERNATIONAL EXPORTS AND IMPORTS Exports Chervonohrad has several enterprises with export poten al, but the city’s economy is chiefl y oriented toward the domes c market. Exports grew by 17 per cent per year on average over the 2006–08 period before dropping by 10 per cent during the recession of 2009. (See Table 3.10.) In 2010 exports rebounded, pos ng 9 per cent growth. The city’s exports showed signifi cantly less variability than the oblast’s exports. Both the fall and the recovery was roughly one-half that of the oblast fi gures. It is interes ng to note that about 50 per cent of Chervonohrad’s exports are fi nished products from goods made on commission, while for the oblast the share is closer to one-third. Imports Over the 2005–09 period, imports did not show a clear trend, growing gradually between 2005 and 2007 before sudden- ly tripling in 2008. A er the hike in 2008, there was a decline in 2009 and marginal growth in 2010. (See Table 3.10.) The fl uctua on of imports in 2009 and 2010 in Chervonohrad was a bit smaller than in the oblast. This is because the economic crisis was less severe for the city than for the oblast due to the city’s focus on local markets.

TABLE 3.10. INTERNATIONAL EXPORT AND IMPORT OF GOODS IN CHERVONOHRAD, 2005‒10 Indicator 2005 2006 2007 2008 2009 2010 Exports, USD thousands 21,028 23,336 31,146 32,936 29,653 32,272 Imports, USD thousands 28,905 37,474 35,439 113,231 78,200 79,646 Share of oblast exports, % 3.4 2.9 3.0 3.3 3.7 3.3 Share of oblast imports, % 3.1 3.3 2.4 4.4 4.8 3.9 Sources: Main sta s cs oﬃ ce in Lviv Oblast; in-house calcula ons.

28 Chervonohrad - Demographic, Economic, Fiscal WAGES Nominal wage growth for staff employees in Chervonohrad was quite robust before the crisis, with a slowdown during the 2009 recession. The dynamics of average monthly nominal wages for staff employees over the 2005–11 period are illustrated in Chart 3.6. The chart shows that nominal wages per employee rose steadily, averaging 25.4 per cent growth per year, over the 2005–11 period. However, adjusted for infl a on, wages grew by 8.2 per cent per year between 2005 and 2011.

CHART 3.6. AVERAGE NOMINAL WAGES, ALL STAFF EMPLOYEES, 2005‒11 (UAH PER MONTH)

2,500

2,000

1,500

1,000

500

0 2005 200620072008 2009 2010 2011 Source: Main sta s cs oﬃ ce in Lviv Oblast.

Average nominal wages for staff employees of Chervonohrad’s economy more than tripled over the 2004–09 period. The fastest average annual growth between 2005 and 2009 was in the manufacture of machinery and equipment (43 per cent), tex le manufacture, produc on of garments, furs and fur goods industry (47 per cent13), metallurgy and the manufacture of fabricated metal products (36 per cent), and the produc on of rubber and plas c products (both by 36 per cent).14 The industries with the slowest average annual growth in wages during the same period were food, beverages, and tobacco processing (12 per cent) and publishing (14 per cent). Table 3.11 provides details on the dynamics of average monthly nominal wages over the 2005–2009 period, as well as details of the diff erences in average monthly nominal wages between the sexes.15 At the aggregate level, the diff erences between average wages for males and females were substan al. These diff erences may refl ect diff erences in employment across economic ac vi es and industries by males and females, in job types within any given economic ac vity or industry by males and females, and in wages for males and females who have similar jobs.

TABLE 3.11. AVERAGE NOMINAL WAGES FOR STAFF EMPLOYEES BY SEX, 2005‒11 (UAH PER MONTH) 2005 2006 2007 2008 2009 2010 2011 Employees, total 717 922 1,182 1,581 1,697 1,912 2,355 Males 911 1,176 1,489 1,990 2,089 n/a n/a Females 578 738 944 1,261 1,396 n/a n/a Source: Main sta s cs oﬃ ce in Lviv Oblast.

13 This is largely due to a 228 per cent annual growth in 2005. 14 Beginning in 2010, data on wages by sector of the economy are no longer reported at the city level. 15 Beginning in 2010, data on wages by sex are no longer reported at the city level.

29 Chervonohrad - Demographic, Economic, Fiscal

Although there were substan al diff erences between the average wages of male staff employees and female staff employees, Chart 3.7 shows that those diff erences, which were largely stable over the 2005–08 period, narrowed substan- ally in 2009. This narrowing is due to the fact that the male-dominated manufacturing sector was hit harder by the recession than the female-dominated services sector.

CHART 3.7. RATIO OF AVERAGE NOMINAL WAGES OF FEMALE STAFF EMPLOYEES TO AVERAGE NOMINAL WAGES OF MALE STAFF EMPLOYEES, 2005‒09 (PER CENT) 68

60 2005 20062007 2008 2009 Sources: Main sta s cs oﬃ ce in Lviv Oblast; in-house calcula ons.

Table 3.12 provides details on average nominal wages for staff employees by economic ac vity and sex for 2009. The table illustrates a key point. The diff erences in average nominal wages between males and females varied depending upon the economic ac vity. For example, the average nominal wage for female staff employees in the industry sector was only 52 per cent that of male staff employees and in the trade sector only 77 per cent, while the average nominal wage for female staff employees in the hotels and restaurants sector was 12 per cent higher than that of male staff employees. Overall, the wage gap in Chervonohrad is largely explained by the prevalence of the high-wage male- dominated coal mining sector—an important sector in the city’s economy.

TABLE 3.12. AVERAGE NOMINAL WAGES FOR STAFF EMPLOYEES BY ECONOMIC ACTIVITY, 2009 (UAH PER MONTH) Economic ac vity Both sexes Males Females All Sectors 1,697 2,089 1,396 Industry 2,136 2,735 1,416 Construc on 1,186 1,264 1,010 Wholesale and retail trade; repair of motor vehicles, 1,057 1,183 913 household appliances, and personal use Hotels and restaurants 688 621 695 Transport and communica on 1,327 1,478 1,171 Financial ac vi es 3,273 3,603 3,187 Real estate, ren ng, and services for entrepreneurs 1,491 1,536 1,457 Public administra on 2,551 2,725 2,399 Educa on 1,625 1,774 1,596 Health care and social assistance 1,149 1,148 1,150 Source: Main sta s cs oﬃ ce in Lviv Oblast.

30 Chervonohrad - Demographic, Economic, Fiscal

Table 3.13 provides details on the average nominal wages for staff employees by industry and sex for 2009. The table re-emphasizes the key point made by the preceding table, which is that while there may be large differences in nominal wages for male and female staff employees for some industries, these differences are small for other industries.

TABLE 3.13. AVERAGE NOMINAL WAGES FOR STAFF EMPLOYEES BY INDUSTRY, 2009 (UAH PER MONTH) Economic ac vity Both sexes Males Females Industry 2,135 2,735 1,415 Mining industry 2,885 3,317 1,766 Food, beverages, and tobacco 958 880 1,097 Tex le manufacture, produc on of garments, furs, 1,229 1,328 1,218 and fur goods Wood processing and manufacturing of wood prod- 807 813 785 ucts, except furniture Pulp and paper industry, publishing 922 751 1,016 Chemical industry 745 763 712 Produc on of rubber and plas c products 879 937 627 Produc on of other non-metallic mineral products 846 846 846 Metallurgy and manufacture of fabricated metal 1,862 1,938 1,514 products Manufacture of machinery and equipment 1,932 2,058 1,569 Manufacture of electrical, electronic, and op - 1,066 1,154 958 cal equipment Other industries 715 715 715 Electricity, gas, and water 1,607 1,692 1,518

Source: Main sta s cs offi ce in Lviv Oblast. CONCLUSIONS Chervonohrad’s city economy is dominated by wholesale and retail trade and coal mining—they accounted for 79 per cent of the city’s sales by non-fi nancial enterprises in 2010 and 32 per cent of total employment in 2009. Other important sectors are manufacturing (10 per cent of total sales in 2010) and construc on (5 per cent). Employment in the city is concentrated in medium-sized enterprises, with 56 per cent of staff employees working in medium-sized enterprises. The industry sector is the largest employer, with 38 per cent of total employment in 2009. Two other sectors with high employment shares are educa on (12 per cent) and trade (12 per cent). The City of Chervonohrad has a well-developed mining industry, with three coal mines: Velykomos vska, Mezhyrichan- ska, and Chervonohradska. Coal is the main energy source for the oblast. Most of the city’s housing stock was built in the 1950s and 1960s, when the city was ac vely growing as a coal mining town. Between 2000 and 2010, real construc on output shrank by 78 per cent while real investment in fi xed capital in housing construc on increased by 38 per cent. Between 2005 and 2008, real fi xed capital investment posted an average annual growth of 24 per cent and a compound annual growth rate of 11 per cent. The recession of 2009 led to a 67 per cent drop in real investment in fi xed capital in the city. In 2010 real investment recovered somewhat, pos ng 13.5 per cent growth. The main des na ons for investments between 2005 and 2010 were mining, manufacturing, and trade. The main sources of capital investment were the own funds of enterprises and organiza ons, state budget funds, and bank loans. While Chervonohrad has several enterprises with export poten al, it is chiefl y oriented toward the domes c market. Exports grew by 17 per cent per year on average over the 2006–08 period, before dropping by 10 per cent during the recession of 2009 and recovering by 9 per cent in 2010.

31 Chervonohrad - Demographic, Economic, Fiscal INDICATORS OF CHERVONOHRAD’S ECONOMIC PERFORMANCE

Table 3.14 compares Chervonohrad’s economic performance and Ukraine’s economic performance for nine key economic indicators. Chervonohrad’s economic performance over the past six years has been mixed. It has exceeded that of Ukraine in some areas but lagged behind in other areas. Chervonohrad was weaker than Ukraine as a whole in terms of the growth rate and level of FDI per capita. The city has exhibited growth in per capita exports that have been close to Ukraine’s average, but con nues to lag behind the country in terms of the level of exports per capita. However, the city has had be er per capita retail sales than Ukraine. The city’s investment performance was stronger than that of Ukraine as a whole on growth in real ﬁ xed capital investment per capita but weaker on the level of nominal ﬁ xed capital investment per capita. Nominal wage growth in the city has been on par with that in the rest of the country.

TABLE 3.14. KEY INDICATORS OF CHERVONOHRAD’S ECONOMIC SITUATION

Rela ve posi on Indicator Chervonohrad Ukraine of Chervonohrad Six-year average of employment growth (2005–10), % -0.6 -0.8 Neutral Six-year average of FDI per capita growth (2005–10), % 5.1 33.5 Weaker Six-year average of FDI per capita (2005–10), USD 65.1 683.0 Weaker Six-year average of exports per capita growth 11.5 12.3 Neutral (2005–10), % Six-year average of exports per capita (2005–10), USD 342.9 1,012.7 Weaker Six-year average of retail sales per capita, UAH 7,375.2 4,185.3 Stronger (2005–10) Six-year average of real fi xed capital investment per 7.4 1.6 Stronger capita growth (2005–10), % Six-year average of nominal fi xed capital investment per 1,385.4 3,409.6 Weaker capita (2005–10), UAH Six-year average of wage growth for staff employees 25.7 28.8 Neutral (2005–10), % Sources: Main sta s cs offi ce in Lviv Oblast; State Sta s cs Service of Ukraine; in-house calcula ons.

32 Chervonohrad - Demographic, Economic, Fiscal FISCAL PROFILE1 Chapter 4

OVERVIEW

Chervonohrad generated a budget surplus every year from 2006 un l 2010. In 2010, this amounted to UAH 1.3 million, or 0.6 per cent of budget revenues. In 2010, city budget revenues were UAH 207.2 million. Given the city’s popula on of 82,688, this translates into UAH 2,505.3 per capita. As a propor on of total revenues, oﬃ cial transfers increased from 63.1 per cent in 2006 to 67.7 per cent in 2010. Over half of all transfers in 2010 consisted of equaliza on grants. Chervonohrad was a recipient of equaliza on grants each year from 2006 through 2010. In 2010, the Budget for Development accounted for 2.6 per cent of total revenues, or UAH 64.6 per capita. From 2006 through 2010, Chervonohrad’s modiﬁ able revenues averaged 5.7 per cent of total revenues; in 2010, this was 5.0 per cent, or UAH 125.2 per capita. Total expenditures were UAH 205.9 million in 2010, which is equivalent to UAH 2,489.7 per capita. Capital expenditures accounted for 7.0 per cent of total budget expenditures in 2010, or UAH 174.6 per capita. BUDGET SURPLUS/DEFICIT Chervonohrad has generated a budget surplus every year from 2006 un l 2010. (See Chart 4.1.) The largest surplus occurred in 2009 (UAH 2.6 million, or 1.5 per cent of budget revenues). In 2010, the budget surplus was UAH 1.3 million.

1 Unless otherwise noted, all ﬁ gures and sta s cs in this report are based upon budget informa on from the State Treasury Reports on the Execu on of Local Budgets for Chervonohrad for 2006–10, demographic data from the main sta s cs oﬃ ce in Lviv oblast, CPI data from the State Sta s cs Service of Ukraine, and in-house calcula ons using data from these three sources. In some cases, percentage shares do not add up to 100 due to rounding.

33 Chervonohrad - Demographic, Economic, Fiscal

CHART 4.1. BUDGET SURPLUS/DEFICIT, 2006‒10 (UAH MILLIONS AND PER CENT) 3.0 1.6

1.4 2.5 1.2 2.0 2008 1.0

1.5 0.8 PER CENT PER

UAH millions UAH 0.6 1.0 0.4 0.5 0.2

0.0 0.0 2006 2007 2008 2009 2010

Surplus/deﬁ cit (le scale) Propor on of total revenues (right scale)

Sources: State Treasury Reports on Local Budgets Execu on for City of Chervonohrad 2006–10; in-house calcula ons. REVENUES Between 2006 and 2010, Chervonohrad’s budget revenues grew at a compound annual growth rate (CAGR) of 21.3 per cent. Revenues grew from UAH 95.7 million to UAH 207.2 million. (See Chart 4.2.) The smallest year-over-year increase occurred in 2009 (7.5 per cent), due mainly to a rela vely small increase in oﬃ cial transfers (11.6 per cent) and virtually no growth in the city’s own revenues (from UAH 60.9 million to UAH 61.3 million).

CHART 4.2. REVENUES, 2006‒10 (UAH MILLIONS)

250

200

150

100

0 200620072008 2009 2010 Source: State Treasury Reports on Local Budgets Execu on for City of Chervonohrad 2006–10.

34 Chervonohrad - Demographic, Economic, Fiscal

Nominal budget revenues per capita grew from UAH 1,147.8 in 2006 to UAH 2,505.3 in 2010, which is equivalent to a CAGR of 21.5 per cent. (See Chart 4.3.) A er being adjusted for inﬂ a on, total revenues per capita increased from UAH 926.9 to UAH 1,129.9, which is equivalent to a CAGR of 5.1 per cent.2

CHART 4.3. PER CAPITA REVENUES, REAL AND NOMINAL, 2006‒10 (UAH) 3,000

Nominal 2,500

2,000

1,500

Real 1,000

500

0 200620072008 2009 2010

Sources: State Treasury Reports on Local Budgets Execu on for City of Chervonohrad 2006–10; State Sta s cs Service of Ukraine (CPI data); in-house calcula ons.

In 2010, most of Chervonohrad’s revenues consisted of oﬃ cial transfers (67.7 per cent of total revenues) and tax revenues (27.4 per cent). (See Chart 4.4.) Non-tax revenues (e.g., administra ve charges, fees, ﬁ nes) made up just 2.7 per cent of total revenues, while revenues from capital opera ons—mainly sales of land and non-tangible assets—accounted for 2.0 per cent. Revenues from targeted funds (e.g., payment for pollu on charges) represented only 0.2 per cent of budget revenues. Personal income tax comprised 80 per cent of overall tax revenues.

CHART 4.4. REVENUES BY PRINCIPAL CATEGORY, 2010 (PER CENT)

Personal income tax 22.0

Tax revenues Oﬃ cial transfers 27.4 67.7 Land payments 2.3

Other tax revenues 3.2 Non-tax revenues 2.7 Revenues from Targeted funds capital opera ons 0.2 2.0 Sources: State Treasury Reports on Local Budgets Execu on for City of Chervonohrad; in-house calcula ons.

2 The cumula ve inﬂ a on index used for this calcula on was developed using CPI data from the State Sta s cs Service of Ukraine for the 2006–10 period. 35 Chervonohrad - Demographic, Economic, Fiscal

Revenue from personal income tax more than doubled between 2006 and 2010—from UAH 22.0 million to UAH 45.5 million—a CAGR of 19.9 per cent. (See Chart 4.5.) From 2008 to 2009, personal income tax grew by only 1.9 per cent (from UAH 40.6 million to UAH 41.4 million). This was the lowest annual growth recorded between 2006 and 2010 and reﬂ ects the sharp economic downturn that saw real GDP contract by 15.1 per cent in real terms in 2009.3 Revenues from land payments increased from UAH 2.6 million in 2006 to UAH 4.7 million in 2010 (this is equivalent to a CAGR of 15.7 per cent). As a share of total revenues, revenues from land payments are rela vely low.

CHART 4.5. PERSONAL INCOME TAX AND LAND PAYMENTS, 2006‒10 (UAH MILLIONS)

45 Personal income tax 40

Land payments 35

200620072008 2009 2010 Sources: State Treasury Reports on Local Budgets Execu on for City of Chervonohrad 2006–10; in-house calcula ons.

From 2006 to 2010, oﬃ cial transfers4 to the city’s budget increased from UAH 60.4 million (63.1 per cent of total revenues) to UAH 140.1 million (67.7 per cent of total revenues), which suggests a CAGR of 23.4 per cent. (See Table 4.1.) This growth was mainly due to rising grants—principally equaliza on grants—which highlights the city’s growing dependence on the central government. Equaliza on grants grew from UAH 25.9 million in 2006 to UAH 74.2 million in 2010.

3 Interna onal Monetary Fund Country Report No. 10/262 (August 2010), p.33. 4 Consistent with Ukrainian accoun ng conven ons, revenues from budget codes 41020300, 41020900, and 41030500 have been included in “Other Grants and Subven ons.” Line item 41020300 (“Equaliza on Payments to Raions”) has also been included in “Other Subven ons.” 36 Chervonohrad - Demographic, Economic, Fiscal

TABLE 4.1. STRUCTURE OF OFFICIAL TRANSFERS, 2006‒10 (UAH MILLIONS AND PER CENT)

2006 2007 2008 2009 2010 Total Oﬃ cial Transfers 60.4 79.1 102.3 114.2 140.1 Propor on of total revenues, % 63.1 63.8 62.7 65.1 67.7 Grants 26.5 35.7 45.6 56.4 74.2 Propor on of total revenues, % 27.7 28.8 27.9 32.1 35.8 of which equaliza on grants 25.9 29.8 44.2 54.0 74.2 propor on of total revenues, % 27.1 24.1 27.1 30.8 35.8 Subven ons 30.8 36.4 51.8 53.0 62.2 Propor on of total revenues, % 32.1 29.4 31.8 30.2 30.0 Funds directed to Budget for Development 2.1 5.6 3.4 1.5 0.9 Propor on of total revenues, % 2.2 4.5 2.1 0.8 0.4 "Other grants and subven ons" 1.0 1.4 1.5 3.4 2.9 Propor on of total revenues, % 1.0 1.2 0.9 1.9 1.4

Memorandum: Total revenues 95.7 124.0 163.3 175.5 207.2 Transfers to the Equaliza on Fund 0.0 0.0 0.0 0.0 0.0

Sources: State Treasury Reports on Local Budgets Execu on for City of Chervonohrad 2006–10; in-house calcula ons. SPECIAL FUND The Budget Code of Ukraine states that the budget can be divided into a General Fund and a Special Fund. (See Chart 4.6.) The Special Fund includes all revenues dedicated or earmarked for certain budget expenditures, including own revenues from budget-funded ins tu ons such as libraries and hospitals. All revenues not designated for the Special Fund are put in the General Fund. The Special Fund is primarily comprised of own revenues from budget-funded ins tu ons, subven ons, and revenues from the Budget for Development. Between 2006 and 2010, Special Fund revenues remained virtually unchanged (UAH 23.9 million versus 24.0 million), while revenues to the General Fund more than doubled, increasing from UAH 71.9 million to UAH 183.2 million.

CHART 4.6. GENERAL FUND AND SPECIAL FUND REVENUES, 2006‒10 (UAH MILLIONS)

200

180 General Fund 160

140 Special Fund

120

100

60 40

20 0 200620072008 2009 2010

Sources: State Treasury Reports on Local Budgets Execu on for City of Chervonohrad 2006–10; in-house calcula ons.

37 Chervonohrad - Demographic, Economic, Fiscal

Revenues from subven ons made up the largest propor on of Special Fund revenues, averaging 47.8 per cent of the total from 2006 to 2010. (See Table 4.2.) However, these revenues were underpinned by large earmarked subven ons from the central government in 2006, 2008, and 2009 for individual households as compensa on for costs associated with hea ng, water, and sewage charges. These special subven ons amounted to 56.9, 47.7, and 35.3 per cent of the total Special Fund revenues in 2006, 2008, and 2009, respec vely. On average, the second largest revenue source for the Special Fund was sums earmarked for the Budget for Develop- ment, averaging 30.3 per cent of all revenues. This was followed by the city’s own revenues from the budget-funded ins tu ons (12.2 per cent on average), property taxes (4.4 per cent), and targeted funds (1.1 per cent). TABLE 4.2. SPECIAL FUND, 2006‒10 (UAH MILLIONS AND PER CENT) 2006 2007 2008 2009 2010 Budget for Development 5.3 9.5 8.0 5.8 5.3 Property taxes 0.8 1.0 1.1 1.0 1.3 Own revenues from budget-funded ins tu ons 2.0 2.7 3.0 3.0 3.7 Targeted funds 0.1 0.1 0.5 0.3 0.3 Subven ons 15.2 2.1 16.7 17.3 11.5 of which earmarked for u li es payments 13.6 0.0 14.2 10.6 0.0 Other revenues 0.4 0.3 0.5 2.5 1.8 Total 23.9 15.7 29.8 30.0 24.0

Memorandum: Total revenues 95.7 124.0 163.3 175.5 207.2 Propor on of total revenues, % 24.9 12.6 18.3 17.1 11.6

Sources: State Treasury Reports on Local Budgets Execu on for City of Chervonohrad 2006–10; in-house calcula ons. BUDGET FOR DEVELOPMENT The Budget for Development is a component of the Special Fund. Revenues from the Budget for Development are earmarked for infrastructure development purposes, including debt repayments (for en es that have debt), subway and gas pipeline construc on, and other designated purposes. For this reason, the Budget for Development plays a signiﬁ - cant role in the social and economic development of Ukrainian ci es. The Budget for Development averaged 4.8 per cent of total revenues from 2006–10, which varied from a high of 7.7 per cent (UAH 9.5 million) in 2007 to a low of 2.6 per cent (UAH 5.3 million) in 2010. (See Table 4.3.)

TABLE 4.3. BUDGET FOR DEVELOPMENT, 2006‒10 (UAH MILLIONS) 2006 2007 2008 2009 2010 Receipts from asset sales 1.7 1.7 2.5 1.5 1.3 Receipts from land sales 1.3 1.3 1.6 2.3 2.9 Investment subven on 0.2 0.9 0.5 0.5 0.3 Transfers from the General Fund 2.2 5.6 3.4 1.5 0.9 Total 5.3 9.5 8.0 5.8 5.3

Memorandum Total revenues 95.7 124.0 163.3 175.5 207.2 Propor on of total revenues, % 5.6 7.7 4.9 3.3 2.6

Sources: State Treasury Reports on Local Budgets Execu on for City of Chervonohrad 2006–10; in-house calcula ons.

Receipts from the sales of land and assets were a stable revenue source for the Budget for Development during this period. They provided, on average, nearly 57 per cent of all revenues. However, it must be remembered that the city’s stock of assets and land that it can poten ally sell is ﬁ nite.

38 Chervonohrad - Demographic, Economic, Fiscal

From 2006 to 2010, Chervonohrad transferred funds from the General Fund into the Budget for Development every year. The largest amount was transferred in 2007—UAH 5.6 million, or 4.5 per cent of total revenues. These transfers con nued despite Ukraine’s economic downturn in 2009, sugges ng a con nued capacity in the city’s fi nancial nexus to fund capital expenditures from the General Revenue Fund. MODIFIABLE REVENUES Modifi able revenues are taxes or levies that the execu ve bodies of local self-governance units can modify at will in terms of the tax base and/or tax rate. These include such items as local taxes and du es, as well as income from leasing land or buildings.5 The share of modifi able revenues in Chervonohrad’s municipal budget over the 2006 to 2010 period averaged 5.7 per cent of total revenues. (See Table 4.4.) From 2006 to 2010, land payments averaged 39.9 per cent of total modifi able revenues, rising from 33.1 per cent in 2008 to 45.7 per cent in 2010 (See Table 4.4.) The proceeds from the unifi ed single tax on small entrepreneurs are rela vely stable, averaging 28.2 per cent of total modifi able revenues over the 2006–10 period. The share of local taxes and du es in modifi able revenues declined from 21.4 per cent in 2006 to 15.3 per cent in 2010. Receipts from leasing community property averaged UAH 13.6 per cent of modifi able revenues over the 2006–10 period.

TABLE 4.4. MODIFIABLE REVENUES, 2006‒10 (UAH MILLIONS AND PER CENT)

2006 2007 2008 2009 2010 Land payments 2.7 2.3 3.1 4.4 4.7 Local taxes and du es 1.3 1.5 1.6 1.6 1.6 Receipts from community property lease 0.6 1.0 2.2 1.0 1.1 Uniﬁ ed single tax on small entrepreneurs 1.7 2.2 2.5 2.7 2.9 Total 6.3 6.9 9.5 9.7 10.4

Memorandum: Total revenues 95.7 124.0 163.3 17.5 207.2 Propor on of total revenues, % 6.5 5.6 5.8 5.5 5.0

Sources: State Treasury Reports on Local Budgets Execu on for City of Chervonohrad 2006–10; in-house calcula ons. EXPENDITURES From 2006 to 2010, expenditures increased by a CAGR of 21.2 per cent—from UAH 95.3 million to UAH 205.9 million. (See Chart 4.7.)

5 In accordance with the new Budget Code of Ukraine, adopted in 2010, modiﬁ able revenues also include the uniﬁ ed single tax on small entrepreneurs. 39 Chervonohrad - Demographic, Economic, Fiscal

CHART 4.7. EXPENDITURES, 2006‒10 (UAH MILLIONS)

350

200

150

100

200620072008 2009 2010

Sources: State Treasury Reports on Local Budgets Execu on for City of Chervonohrad 2006–10; in-house calcula ons.

On a per capita basis, nominal expenditures rose from UAH 1,143.3 in 2006 to UAH 2,489.7 in 2010, which suggests a CAGR of 21.5 per cent. However, a er being adjusted-for-inﬂ a on expenditures only grew from UAH 923.3 to 1,122.8 per capita, which suggests a lower CAGR of 5.0 per cent. (See Chart 4.8.)

CHART 4.8. CAPITA EXPENDITURES, REAL AND NOMINAL, 2006-10 (UAH)

3 000

2 500 Nominal

2 000

1 500

Real 1 000

500

0 200620072008 2009 2010 Sources: State Treasury Reports on Local Budgets Execu on for City of Chervonohrad 2006–10; State Sta s cs Service of Ukraine (CPI data); in-house calcula ons.

40 Chervonohrad - Demographic, Economic, Fiscal

In 2010, three categories made up 79 per cent of total expenditures: social protec on and social security (29.1 per cent), educa on (26.4 per cent), and health care (23.5 per cent). (See Chart 4.9.) Expenditures on housing and the municipal economy represented only 2.4 per cent of total expenditures.

CHART 4.9. EXPENDITURES BY PRINCIPAL CATEGORY, 2010 (PER CENT)

Other expenditures 18.6

Housing and municipal economy Educa on 2.4 26.4

Social protec on and social security 29.1

Health care 23.5

Sources: State Treasury Reports on Local Budgetsuddgets ExecuExecu on forfor CityCity of Chervonohrad;Chervonohra in-house calcula ons.

Expenditures on social protec on andnd social securitysecurity increasedincreased from UAH 13.1 million in 2006 (13.7 per cent of the total) to UAH 59.9 million (29.1 per cent of the total) in 2010.10. ThisTh takes into accountaccou a doubling of expenditures in this category from UAH 13.1 million in 20066 to UAH 29.82 .8 millionm inn 2007. This rapidrapid increaseinc is typical of most Ukrainian ci es at that me due to a review of basic socialcial stanstandards. As a resultresult of that review, sspending on social protec on increased at a CAGR of 46.3 per cent between 20066 and 2010. BByy contcontrast,rast, the CAGR on eeduca on and health care—the second- and third-largest expenditure categories in 2010—was 23.5 andand 25.8 perper cent, respec vely.

41 Chervonohrad - Demographic, Economic, Fiscal

CHART 4.10. LARGEST EXPENDITURES BY CATEGORY, 2006‒10 (UAH MILLIONS)

Chart 4.10a. Educa on Chart 4.10b. Health Care

70 70

60 60

50 50

40 40

30 30

20 20

10 10

0 0 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Chart 4.10c. Social Protec on and Social Security Chart 4.10d. Housing and the Municipal Economy

70 70

60 60

50 50

40 40

30 30

20 20

10 10

0 0 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Chart 4.10e. Other Expenditures

0 2006 2007 2008 2009 2010

Source: State Treasury Reports on Local Budgets Execu on for City of Chervonohrad 2006–10.

42 Chervonohrad - Demographic, Economic, Fiscal

Expenditures on housing and the municipal economy have ﬂ uctuated widely over the 2006–10 period. This category accounted for 19.9 per cent of total expenditures in 2006 but only 2.4 per cent in 2010. The large expenditure in 2006 as well as two other sharp increases in 2008 and 2009 were the result of payments by the municipality to households for debts incurred to pay for heat, power, water supply, and sewage. These payments were made possible by subven ons from the central government. (See the earlier sec on on “Subven ons.”) Total expenditures may also be viewed in terms of opera ng and capital expenditures. (See Chart 4.11.) The share of capital expenditures varied considerably from year to year, with the largest capital expenditures occurring in 2007 when the city spent UAH 22.0 million (17.9 per cent of the total budget). This share subsequently declined to 12.4 per cent in 2008, 6.2 per cent in 2009, and 7.0 per cent in 2010.

CHART 4.11. OPERATING AND CAPITAL EXPENDITURES, 2006‒10 (UAH MILLIONS)

250

Opera ng expenditures 200 Capital expenditures

150

100

200620072008 2009 2010

Sources: State Treasury Reports on Local Budgets Execu on for City of Chervonohrad 2006–10; in-house calcula ons.

INDICATORS OF CHERVONOHRAD’S FISCAL HEALTH The city’s four strengths are its con nuous budget surpluses, higher opera ng revenues than opera ng expenditures, a high opera ng surplus rela ve to tax revenues, and an absence of debt. The city earned a “strong” ra ng in each of these four categories. However, these posi ve factors are somewhat off set by the fact that total expenditures are judged to be too high rela ve to total revenues and capital expenditures rela ve to total expenditures are deemed too low. These factors earned the city two “neutral” ra ngs. The city also depends too much on central government transfers—as demonstrated by its high ra o of budget transfers to opera ng revenues—and the ra o of modifi able revenues to opera ng revenues is low. The city earned a “weak” ra ng on both categories. Overall, the city can be considered to be in a “stable” fi scal posi on.

43 Chervonohrad - Demographic, Economic, Fiscal

TABLE 4.5. INDICATORS OF THE FINANCIAL HEALTH OF CHERVONOHRAD’S CITY BUDGET Benchmark City 2006 2007 2008 2009 2010 posi on Strong Weak (2010) Defi cit/surplus per capita, UAH 4.5 16.5 13.3 32.0 15.6 > 0 < 0 Strong Total expenditures/total rev- 99.6 98.9 99.3 98.5 99.4 < 95 > 100 Neutral enues, % Modifi able revenues/opera ng 7.1 6.5 6.3 5.7 5.2 > 40 < 10 Weak revenues, % Opera ng expenditures/operat- 95.3 93.8 94.3 95.6 97.0 < 100 > 100 Strong ing revenues , % Opera ng surplus/tax revenues, 14.0 17.8 17.0 14.5 10.5 > 5 < 2 Strong % Budget transfers/opera ng 68.7 73.8 67.9 67.3 71.0 < 33 > 50 Weak revenues, % Capital expenditures/total 12.1 17.9 12.4 6.2 7.0 > 15 < 5 Neutral expenditures, % Debt servicing/opera ng rev- 0.0 0.0 0.0 0.0 0.0 < 10 > 15 Strong enues, % Debt servicing/capita, UAH 0.0 0.0 0.0 0.0 0.0 n/a No n/a No n/a Data Data Sources: State Treasury Reports on Local Budgets Execu on for City of Chervonohrad 2006–10; in-house calcula ons. ATTACHMENT 1. MAIN FISCAL INDICATORS OF THE CITY OF CHERVONOHRAD, 2006‒10 2006 2007 2008 2009 2010 Per Per Per Per Per Main budget indicators Total, Total, Total, Total, Total, capita, capita, capita, capita, capita, UAH mil UAH mil UAH mil UAH mil UAH mil UAH UAH UAH UAH UAH Revenues Budget revenues, total 95.7 1,147.8, 124.0 1,494.2, 163.3 1,970.7, 175.5 2,122.7, 207.2 2,505.3, Budget revenues growth, year- n/a 29.5 31.7 7.5 750.3 over-year, % of which city revenues without 35.3 423.7 44.8 540.4 60.9 735.4 61.3 741.6 67.0 810.5 transfers of which offi cial transfers 60.4 724.1 79.1 953.7 102.3 1,235.3 114.2 1,381.1 140.1 1,694.9 of which grants 26.5 317.8 35.7 430.2 45.6 550.4 56.4 681.9 74.2 897.9 of which subven ons 31.7 380.5 37.8 455.9 53.3 643.8 56.4 681.5 65.0 786.6 of which funds directed to 2.1 25.7 5.6 67.7 3.4 41.1 1.5 17.7 0.9 10.4 Budget for Development from the general budget fund Share of total revenues, % of which city revenues with- 36.9 46.9 63.7 64.1 70.0 out transfers, % of which offi cial transfers, % 63.1 82.7 106.9 119.3 146.4 of which grants, % 27.7 37.3 47.6 58.9 77.6 of which subven ons, % 33.2 39.5 55.7 58.9 67.9 of which funds directed to 2.2 5.9 3.6 1.5 0.9 Budget for Development from the general budget fund, % Main city budget revenue items of which city revenues with- 35.3 423.7 44.8 540.4 60.9 735.4 61.3 741.6 67.0 810.5 out transfers of which personal income tax 22.0 263.7 29.2 351.6 40.6 490.4 41.4 500.6 45.5 550.5 of which tax on owners of 0.8 9.9 1.0 11.5 1.1 13.2 1.0 12.5 1.3 15.6 vehicles and other self- propelled machines and mechanisms of which land payments 2.6 31.7 2.3 27.8 3.1 37.9 4.4 52.9 4.7 57.3

44 Chervonohrad - Demographic, Economic, Fiscal

of which payment for trade 0.8 9.7 1.2 13.9 1.2 15.0 0.4 5.0 0.4 4.9 patent for some types of entrepreneurial ac vity of which local taxes and fees 1.3 16.1 1.5 17.6 1.6 19.4 1.6 19.3 1.6 19.1 of which unifi ed single tax for 1.7 20.7 2.2 26.0 2.5 30.0 2.7 33.1 2.9 35.1 small entrepreneurs of which receipts from lease 0.5 6.6 1.0 12.2 2.2 27.0 1.0 12.0 1.1 13.7 payment for using integral property complexes and other state property of which payments for ser- 1.4 16.7 1.6 18.9 2.1 25.3 2.3 27.6 2.9 35.5 vices provided by ins tu ons subsidized from the budget of which receipts from dis- 1.6 19.8 1.7 20.0 2.5 30.7 1.5 18.4 1.3 15.3 posal of property owned by the Autonomous Republic of Crimea and property owned by municipali es of which receipts from land 1.3 15.6 1.3 16.0 1.6 19.3 2.3 27.6 2.9 35.1 sales of which other budget 1.1 13.3 2.1 25.1 2.3 27.2 2.7 32.5 2.3 28.3 revenues of which offi cial transfers 60.4 724.1 79.1 953.7 102.3 1,235.3 114.2 1,381.1 140.1 1,694.9 General and Special Funds Revenues General Fund revenues 71.9 861.8 108.3 1,305.4 133.4 1,610.7 145.5 1,760.0 183.2 2,215.6 Special Fund revenues 23.9 286.0 15.7 188.7 29.8 360.0 30.0 362.7 24.0 289.7 of which Budget for Develop- 5.6 0.0 7.7 0.0 4.9 0.0 3.3 0.0 2.6 ment, % Expenditures Budget expenditures, total 95.3 1,143.3 122.6 1,477.7 162.2 1,957.4 172.9 2,090.7 205.9 2,489.7 Budget expenditures growth, n/a 28.6 32.2 6.6 19.1 year-over-year, % Main budget expenditure items of which public administra- 4.0 48.3 5.3 63.5 7.1 86.0 7.7 92.6 8.7 105.1 on of which law enforcement 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ac vi es and state security maintenance of which educa on 23.3 279.7 29.5 356.1 40.6 489.7 45.4 549.2 54.3 657.1 of which health care 19.3 231.3 26.1 315.0 33.2 400.2 38.6 466.7 48.3 583.9 of which social protec on 13.1 156.6 29.8 359.2 34.3 413.7 43.9 530.6 59.9 724.1 and social security of which housing and munici- 18.9 227.2 3.3 40.2 19.4 233.7 14.6 176.2 5.0 60.6 pal economy of which culture and arts 3.6 43.2 5.2 63.2 6.6 80.2 7.8 94.2 9.5 115.4 of which mass media 0.2 3.0 0.3 4.0 0.4 5.2 0.4 4.5 0.4 5.1 of which physical educa on 1.0 11.9 1.3 16.2 1.7 20.0 2.0 23.6 2.5 29.8 and sport of which construc on 5.1 60.8 10.9 131.6 9.6 116.4 3.6 43.7 6.9 83.5 of which agribusiness and 0.0 0.2 0.1 1.1 0.1 1.2 0.1 0.9 0.2 2.3 forestry, fi shing, and hun ng of which transport, public 1.8 22.1 1.8 22.1 1.9 23.1 3.6 43.9 2.7 32.8 road system, communica- ons, telecommunica ons, and IT of which other services re- 0.0 0.1 0.3 3.9 0.3 3.6 0.9 10.7 1.1 13.3 lated to economic ac vity of which environmental pro- 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 tec on and nuclear security of which preven on and 0.6 7.2 0.1 1.8 0.1 1.0 0.1 1.5 0.3 4.2 elimina on of emergency situa ons and disaster con- sequences

45 Chervonohrad - Demographic, Economic, Fiscal

of which debt service 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 of which targeted funds 0.6 6.9 0.5 6.6 0.8 9.1 0.8 9.4 1.3 15.2 of which expenditures not 0.1 1.0 0.0 0.2 0.0 0.4 0.0 0.0 0.9 11.3 referred to main groups of which other budget ex- 3.7 43.8 7.7 93.1 6.1 73.8 3.6 43.0 3.8 45.8 penditures General and Special Funds expenditures General Fund expenditures 71.8 860.5 106.7 1,286.3 132.1 1,595.1 144.5 1,747.2 183.2 2,215.9 Special Fund expenditures 23.6 282.8 15.9 191.4 30.0 362.3 28.4 343.4 22.6 273.8 Structure of budget expenditures based on economic classifi ca on Opera ng expenditures, total 83.8 1,004.8 100.6 1,212.4 142.0 1,713.9 162.2 1,961.7 191.4 2,315.0 Capital expenditures, total 11.5 138.4 22.0 265.2 20.2 243.5 10.7 129.0 14.4 174.6 Budget surplus/defi cit Budget surplus/defi cit 0.4 1.4 1.1 2.6 1.3 as % of revenues 0.4 1.1 0.7 1.5 0.6 Total popula on at the beginning 83,391 82,986 82,848 82,685 82,688 of the year

Note: Budget Surplus/Defi cit is defi ned here as Revenues minus Expenditures minus Intrabudget Transfers. Note: The values of “Grants” and “Subven ons” in this Addendum diff er from those in Table 4.1. Revenues from budget codes 41020300, 41020900 and 41030300 which had been included in “Other Grants and Subven ons” category in Table 4.1 have been distributed to “Grants” and “Subven ons”, as appropriate, in the Addendum.

46 Building Capacity in Evidence-Based Economic Development in Ukrainian Oblasts and Municipali es Project (EBED project) is a ﬁ ve-year project (2010–2015) that is funded by the Canadian Interna onal Development Agency and man- aged by The Conference Board of Canada. The project provides targeted support to build capacity in evidence-based economic development planning in Ukrainian oblasts and municipali es.

The EBED project is part of the Program of Technical Coopera on with Ukraine run by the Canadian government that emphasizes capacity building at the municipal, oblast, and central government levels. Rela onships established with the help of the EBED project create opportuni es for the exchange of experiences, methodologies, and knowledge related to economic development planning processes.

The EBED project aims to encourage sustainable development of Ukrainian oblasts and municipali es by building the capacity of local authori es to use quan ta ve analysis and forecas ng tools in economic development planning.

The project provides assistance to Dnipropetrovsk and Lviv oblasts as well as to six Ukrainian ci es (Lviv, Chervonohrad, Drohobych, Nikopol, Kryvyi Rih, and Dnipropetrovsk).

In addi on to producing a comprehensive analy cal report on social and economic development in the above men oned Ukrainian oblasts and ci es, the EBED project will aid the ci es and oblasts in designing improved strategic development plans based on benchmarking (compara ve analysis) as well as on demographic, ﬁ scal, and economic forecasts.

Thanks to the EBED project, Ukrainian governmental ins tu ons will have an opportunity to engage with Canadian experts and learn from Canadian experience. This will help to iden fy evidence-based priori es in the economic development of Ukrainian oblasts and municipali es as well as to design realis c economic development plans for Ukrainian oblasts and municipali es. The project also enhances the capacity of oﬃ cials to defend city and oblast interests before the state government as well as to more eﬀ ec vely a ract foreign investment, loans, and donor assistance for economic development.

The EBED project is funded by the Canadian Interna onal Development Agency