PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: 39111 Project Name Alchevsk Steel Mill Revamping and Modernization Region EUROPE AND CENTRAL ASIA Public Disclosure Authorized Sector Other industry (100%) Project ID P101615 Borrower(s) OJSC ‘Alchevsk Iron and Steel Works’ Implementing Agency OJSC ‘Alchevsk Iron and Steel Works’ Shmidt str.4 Alchevsk Lugansk Region P.O.94202 Tel: +38-06442-9-33-01, +38-06442-9-32-10 Email:
[email protected] Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared January 30, 2007 Public Disclosure Authorized Estimated Date of Review April 10, 2007 of CFEM Estimated Date of ERPA June 29, 2007 Signing 1. Key development issues and rationale for Bank involvement After a decade of economic decline following the collapse of the Soviet Union, Ukraine entered a period of strong growth and macroeconomic stability showing the highest GDP growth rates in Europe – average of 8.4% per annum between 2000 and 2004. With inflation under control, Ukraine achieved significant poverty reduction reporting some of the lowest poverty levels in the region. Democratic transformation of the country initiated in 2004 opened new opportunities for Public Disclosure Authorized economic growth and foreign investment as new government declared Euro-Atlantic integration the main policy priority. However, economic slowdown started beginning 2005, with GDP growth declining to 2.6% in 2005. Inflation increased to over 10% per annum due to an expansive monetary policy and increased social payments. Ukraine is an export-driven economy with an export reaching nearly 52% of GDP. The main exporters are traditional energy and resource intensive heavy industries – steel, chemical and machine building.