CITY PROFILE DNIPROPETROVSK DEMOGRAPHIC ECONOMIC FISCAL Dnipropetrovsk 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 Ivan Kulichenko, Mayor of the City of Dnipropetrovsk, and the main sta s cs offi ce in Dnipropetrovsk Oblast for assistance and support in prepara on of the Dnipropetrovsk City Profi le.

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

Design: Yana Kopylova

All the photos used in this document taken in Dnipropetrovsk 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.

© 2012 EBED project Dnipropetrovsk - Demographic, Economic, Fiscal TABLE OF CONTENTS

INTRODUCTION ...... 4 Overview ...... 4 Administra ve and Territorial Division...... 4 Local Self-Governance...... 4 Historical background ...... 5 Geographic Loca on ...... 6 Climate ...... 6 Mineral Resources ...... 6 Social and Economic Overview ...... 7

CHAPTER 2. DEMOGRAPHIC PROFILE ...... 8 Overview ...... 8 Overall Popula on Dynamics ...... 8 Change in the Natural Popula on ...... 9 Net Migra on ...... 10 Summary of Natural Popula on Change and Net Migra on ...... 12 Popula on Distribu on by Age and Sex ...... 12 Dependency Ra o ...... 13 Indicators of Dnipropetrovsk’s Demographic Situa on ...... 15

CHAPTER 3. ECONOMIC PROFILE ...... 16 Overview ...... 16 Economic Structure ...... 16 Sales of Goods and Services ...... 16 Employment ...... 17 Unemployment ...... 18 Size Distribu on of Employers ...... 19 Key Industries in Dnipropetrovsk ...... 20 Key Enterprises in Dnipropetrovsk ...... 20 Infrastructure Development ...... 22 Residen al Construc on Sector ...... 22 Transport ...... 22 Consump on Ac vity ...... 22 Services Sector ...... 23 Investment ...... 24 Fixed Capital Investment...... 24 Direct Foreign Investment ...... 24 Interna onal Exports and Imports ...... 25 Exports ...... 25 Imports ...... 25 Wages ...... 25 Conclusions ...... 28 Indicators of Dnipropetrovsk’s Economic Performance ...... 28

CHAPTER 4. FISCAL PROFILE ...... 29 Overview ...... 29 Budget Surplus/Defi cit ...... 29 Revenues ...... 30 Special Fund ...... 33 Budget for Development ...... 35 Modifi able Revenues ...... 35 Expenditures ...... 36 Indicators of Dnipropetrovsk’s Fiscal Health ...... 39

3 Dnipropetrovsk - Demographic, Economic, Fiscal INTRODUCTION Chapter 1

OVERVIEW

The fi rst offi cial record of the city 1645 Offi cial date of founda on 1776 City status obtained 1778 Available popula on 1,007,210* Popula on density 2,472 people per sq. km* City’s share in Ukraine’s popula on 2.19%* Area 405 sq. km Number of districts 8 Key industries metallurgy, mechanical engineering, food Average annual temperature +8.5°С

ADMINISTRATIVE AND TERRITORIAL DIVISION The territory of Dnipropetrovsk is divided into eight districts: Amur-Nyzhniodniprovskyi, Babushkinskyi, Zhovtnevyi, Industrialnyi, Kirovskyi, Krasnohvardiiskyi, Leninskyi, and Samarskyi. LOCAL SELF-GOVERNANCE The system of local self-government includes the mayor, city council, execu ve commi ee, other execu ve bodies of the city council, as well as eight district councils and their execu ve bodies. The Dnipropetrovsk City Council comprises 120 members who work in 12 permanent commissions. The execu ve com- mi ee of the Dnipropetrovsk City Council includes 15 members. Dnipropetrovsk City Council has 28 execu ve bodies including 7 departments, 1 head offi ce, 14 offi ces, 5 units, and a press offi ce. The city council and its execu ve bodies employ 690 staff members (as of January 1, 2012) while district councils and their execu ve bodies employ 1,386 staff members. In 2008, the ISO 9001-2000 quality management system was introduced to the execu ve bodies of the Dnipropetrovsk City Council. As of January 1, 2012 this system was introduced to 7 district councils and to most communal enterprises.

*Data as of January 1, 2011. 4 Dnipropetrovsk - Demographic, Economic, Fiscal HISTORICAL BACKGROUND Modern Dnipropetrovsk includes the territories of many se lements that used to be independent. Most of these se le- ments were founded in Cossack mes (17–18th century). The fi rst (Cossack) era in the city’s development was a small town named Novyi Kodak (middle of the 17th century to the end of the 18th century), which was fi rst men oned in 1645. According to the 19th century historian F. Makarevskyi, ci zens of Novyi Kodak built a wooden St. Michael’s church in 1645. This date can be considered the founding date of the city. Between the end of the 17th century and the beginning of the 18th century, Cossacks with families were moving into Novyi Kodak. In 1704 a new se lement named Taromske was founded near Novyi Kodak; Sukhachivka, Polovytsia, and Diivka se lements appeared later. In the middle of the 18th century, Novyi Kodak was a populous city and the centre of the Kodak administra ve area of Pidpilnenska Sich. According to the census, nearly 4,000 ci zens lived in the city in 1754. The tradi onal Cossack way of life in Novyi Kodak changed a er the destruc on of Pidpilnytska Sich in 1775. A er that, Novyi Kodak was ruled by voivode (governor) and horodnychyi (an offi cial responsible for administra ve and police func ons in a city) instead of Cossack palanka leaders. In 1776, Novyi Kodak was an administra ve centre of Saksahanskyi povit (district) of Novorossiiska guberniya (province) of the Russian Empire. For more than 10 years (from 1776 to 1789) Novyi Kodak was a povit (district) centre. The next period in the city’s development was the development of Kateryislav Pravoberezhnyi (end of the 18th century to the 1920s). In the middle of the 1780s, Russian Empress Catherine the Great ordered the building of Katerynoslav on the right bank of the Dnipro River near Kodak. A 1784 descrip on of Katerynoslav noted that Katerynoslav was founded on the town of Novyi Kodak. Between 1785 and 1791 the administra on of Katerynoslav and the povit (district) was located in Novyi Kodak while Novyi Kodak was men oned in church and secular documents as “Katerynoslav.” In the fi rst half of the 1790s, the administra on of Katerynoslav gradually moved from Novyi Kodak to a new place (Polovytsa). In July 1795, Novyi Kodak was joined to the City of Katerynoslav. From 1787 to 1802 the city was named Novorosiisk. The city then gradually developed based on its status as an administra ve centre. In 1865, nearly 23,000 ci zens lived in the city. The city developed rapidly in the last quarter of the 19th century when the fi rst sta onary bridge was built over the Dnipro River. The railroad, metallurgical plants, and other enterprises appeared in the city. The Soviet era in the city’s development lasted from the beginning of the 1920s to the beginning of 1990s. In 1926, Soviets renamed Katerynoslav to its current name of Dnipropetrovsk a er Soviet party fi gure Hryhorii Petrovskyi. In the fi rst half of the 20th century the city developed as a metallurgical and mechanical engineering centre.

The city was occupied on August 25, 1941 by German troops a er fi erce ba les. Later, Dnipropetrovsk became a centre of one of six districts of the Ukraine Reich Commission. The city was liberated by the Red Army on October 25, 1943. A er the war, Dnipropetrovsk was rebuilt and again became one of the most important industrial centres of the USSR. It was at that me that the largest aerospace enterprise—Pivdennyi Machine Building Plant—appeared in the city. Since the 1960s, the city has been a centre of high-precision mechanical engineering and aerospace technologies. The most recent era in the city’s development is the post-Soviet period as part of an independent Ukraine. Currently the city is an oblast capital and one of Ukraine’s largest ci es. It is an important regional, fi nancial, trade, and industrial centre in Ukraine.

5 Dnipropetrovsk - Demographic, Economic, Fiscal GEOGRAPHIC LOCATION Dnipropetrovsk is a city in the southeastern part of Ukraine in a steppe zone. The Dnipro River divides the city into two sec ons. The right bank sec on lies in the Prydniprovska upland and makes up two thirds of the city’s territory. The le bank sec on lies in the Prydniprovska lowland. The Samara River fl ows into the Dnipro within the territory of the city. 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. The city’s coordinates are 48°27’58’’ northern la tude and 35°01’31’’ eastern lon- gitude. Dnipropetrovk’s land area is 405 sq. km, which stretches for 22 km from north to south and for 32 km from west to east. The distance from the city to Kyiv – 387 km; London – 2,513 km; Paris – 2,384 km; Berlin – 1,587 km; Brussels – 2,210 km; Moscow – 828 km; and Washington – 8,230 km.

CLIMATE The climate in Dnipropetrovsk region is moderately con nental with pronounced aridity. The average annual temperature is 8.5°С. The average temperature in July is +23°С while in January it is -5.5°C. The maximum temperature (+40.1°С) was recorded in 1930 and the minimum (-38.2°С) in 1940. The frost-free season varies from 114 to 166 days a year, which creates favourable condi ons for vegeta on. The av- erage annual precipita on is 400 to 490 mm, with the least precipita on falling between March and October and the most between June and July. Dnipropetrovsk is covered with snow in winter but the snow layer is not very deep. The highest wind speed occurs in January and February and the lowest in summer. The average wind speed in January is 5.4 m/s and in July it is 3.7 m/s. Cloud cover is less in August and highest in December. During the last century the temperature in Dnipropetrovsk increased at least by 1.0°С. MINERAL RESOURCES Dnipropetrovsk lies at the intersec on of the Serednioprydniprovskyi block of the Ukrainian Shield (the major part of the city) and the Dniprovsko-Donetsk basin. In the north, the border between these two structures goes along the Livobe- rezhnyi–Yuvileinyi–Samarovka line where the crystalline basement rocks gradually go to the north and northeast. The crystalline basement mostly consists of granite and migma te of the Dnipropetrovsk complex of the Middle Archean. Among the granitoids of the Dnipropetrovsk complex there are remains of Slavhorod rock mass (in the le bank part of the city) consis ng of bio te-amphibolic gneiss and amphibolite of Bezavluk rock mass of the Lower Archean. The sedimentary cover consists of malms, clays, sands, and siltstones as well as secondary koalins and layers of brown coal. Dnipropetrovsk extracts construc on materials and develops small deposits of drinking water. Ragstone deposits in- clude Rybalske and Chaplynske (under development), Liubymivske and Starokodatske (out of use), with explored crystal- line rocks used for making crushed stone, gravel, and rubble stone. 6 Dnipropetrovsk - Demographic, Economic, Fiscal

The sands of the third terrace of the Dnipro River were used within Nyzhniodniprovske deposit as a construc on mate- rial for making plaster and concrete mixtures (currently the deposit is out of use). There are three deposits of Quaternary loams. Only one of them is developed and is situated in Bratske village, which is in the southern suburb of the city. Strokodatske and Pidhorodianske are out of use. In the Ihren residen al area, three drinking water deposits were explored in fractures of the crystalline basement; one of them is in use (fracture water). SOCIAL AND ECONOMIC OVERVIEW Dnipropetrovsk has over 1,100 large and medium-sized businesses including nearly 240 industrial enterprises. The in- dustrial sector of the city includes enterprises opera ng in metallurgy, mechanical engineering, chemical industry, print- ing, and food. Metallurgy is the city’s key industry in terms of output. Metallurgical enterprises signifi cantly contribute to the city’s budget as well as to the na onal foreign exchange reserve (they export 80 per cent of their output). A wide range of products, from cast iron and steel to pipes for various purposes and many kinds of metal products is produced in Dnipropetrovsk. Mechanical engineering in Dnipropetrovsk is represented by more than 70 enterprises that produce thousands of prod- ucts. The chemical industry in the city includes 6 powerful enterprises. Dnipropetrovsk is one of world’s rocket engi- neering centres. Pivdennyi Machine Building Plant Produc on Associa on and Pivdenne Design Bureau have developed and produce environmently friendly Zenit launch vehicles—space vehicles with unique poten al. There are many food and agricultural processing enterprises, including 40 large and medium-sized enterprises . Dnipropetrovsk is justly considered to be a business centre. There are head offi ces of 12 banks, 5 business centres, and the Dnipropetrovsk Chamber of Commerce and Industry. About 10 exhibi ons are held in Dnipropetrovsk every year including interna onal ones. Dnipropetrovsk ranks second a er Kyiv in terms of housing construc on, which is funded from all types of fi nancial sources. Public transport is a vital element for sustaining the city’s everyday life. Passenger transporta on in the city is provided by an underground line, 39 transporta on companies, 1 tram, and 2 trolleybus depots. There is an interna onal airport in Dnipropetrovsk that provides connec ons with 10 ci es, nine of which are in foreign countries. Dnipropetrovsk is Ukraine’s major logis cs centre. The city is a hub of railroads, highways, and air connec ons. Dnipro- petrovsk is the centre of Prydniprovska Railroad. The main traffi c goes through Dnipropetrovsk in the following direc- ons: Donbas–Western Ukraine, Kyiv–Crimea, and Odesa–Moscow. The city has 174 preschool ins tu ons, 171 compulsory educa on ins tu ons of all types (including 25 establishments of a new type—lyceums), gymnasia, and specialized schools. There are 34 non-formal educa onal ins tu ons opera ng in the city. The educa on sector also includes 14 voca onal schools, 22 higher-educa on ins tu ons of I–II accredita- on levels, and 14 higher-educa on ins tu ons of III–IV accredita on levels. Medical aid is provided by 30 general hospitals (6,805 hospital beds), 13 outpa ent departments, 72 ambulance sta- ons of family medicine, 5 health improvement ins tu ons for children, and 2 child care centers.

7 Dnipropetrovsk - Demographic, Economic, Fiscal DEMOGRAPHIC PROFILE Chapter 2

OVERVIEW

Over the 2002–11 period, Dnipropetrovsk’s popula on declined, with the male popula on falling at a slightly faster rate than the female popula on. While the number of births was higher in 2011 than in 2006, the number of deaths was much larger than births in each year, resul ng in nega ve natural popula on growth. Net migra on was nega ve over the 2006–10 period. The largest ou low was in 2008, due largely to a large drop in the number of people moving to the city in that year from other parts of Ukraine. There is an imbalance in the propor on of males and females in the city. As of January 1, 2011, females accounted for 54.7 per cent of the resident popula on while males accounted for 45.3 per cent. Males ac- counted for a larger share of the 0 to 30 age group than females, but this reverses in the over-30 age group. In 2011, the average age of the city’s resident popula on was 40.5 years, which was almost the same as that of Dnipropetrovsk Oblast (40.7 years). OVERALL POPULATION DYNAMICS The popula on of the City of Dnipropetrovsk is shrinking. (See Chart 2.1.) At the me of the census on December 5, 2001, the available popula on was 1,080,846. As of January 1, 2011, the available popula on had fallen to 1,007,210. The number of males declined slightly more than the number of females. The share of females in the city’s available popula on currently stands at 54.6 per cent. (See Table 2.1.) From 2006 to 2010, the natural popula on growth and the net migra on were both nega ve. The largest annual decline occurred between January 2008 and January 2009, mostly due to a migra on ou low.

8 Dnipropetrovsk - Demographic, Economic, Fiscal

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

1,200,000

1,000,000 Total popula on

800,000

600,000 Female Male 400,000

200,000

0 2002 200320042005 2006 2007 2008 2009 2010 2011 Source: Main sta s cs offi ce in Dnipropetrovsk Oblast.

TABLE 2.1. DNIPROPETROVSK POPULATION, 2006‒11

Available Available Males Females Permanent popula on, popula on Year Per cent of total Per cent of total popula on, number of growth, Number of Number of number of males available females available people per cent popula on popula on people 2006 1,049,629 -0.65 479,148 45.65 570,481 54.35 1,039,497 2007 1,041,770 -0.75 474,911 45.59 566,859 54.41 1,031,638 2008 1,031,815 -0.96 469,538 45.51 562,277 54.49 1,021,683 2009 1,019,831 -1.16 463,697 45.47 556,134 54.53 1,009,699 2010 1,013,514 -0.62 460,632 45.45 552,882 54.55 1,003,382 2011 1,007,210 -0.62 457,583 45.43 549,627 54.57 997,078 Source: Main sta s cs offi ce in Dnipropetrovsk Oblast. The resident popula on of Dnipropetrovsk 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 in a par cular year and the number of deaths. 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 5.5 per cent higher than in 2006. (See Table 2.2.) The number of births increased in 2007 and 2008, but declined in 2009 and 2010.

1 All popula on data are shown as of January 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.

9 Dnipropetrovsk - Demographic, Economic, Fiscal

TABLE 2.2. BIRTHS, 2006‒10 (NUMBER OF PEOPLE)2 Year Total number of births Males Females 2006 9,571 4,890 4,681 2007 9,788 4,955 4,833 2008 10,748 5,635 5,113 2009 10,723 5,574 5,149 2010 10,105 5,185 4,920 Source: Main sta s cs offi ce in Dnipropetrovsk Oblast.

The number of deaths increased in 2007, but fell in 2008 and 2009. (See Table 2.3.) The drop in 2009 was substan al—at 8 per cent. The number of deaths rose again in 2010. TABLE 2.3. DEATHS, 2006‒10 (NUMBER OF PEOPLE) Year Total number of deaths Males Females 2006 15,578 8,080 7,498 2007 15,667 8,165 7,502 2008 15,289 7,815 7,474 2009 14,063 7,056 7,007 2010 14,235 7,079 7,156 Source: Main sta s cs offi ce in Dnipropetrovsk Oblast.

Chart 2.2 shows that the number of deaths was larger than the number of births in every year of the sample period. Even though births increased in 2007 and 2008, the increase was not enough to compensate for the number of deaths. Therefore, there was a decline in the natural popula on. CHART 2.2. NATURAL POPULATION CHANGE, 2006‒10 (NUMBER OF PEOPLE)

0

-1,000

-2,000

-3,000

-4,000

-5,000

-6,000

-7,000 200620072008 2009 2010 Source: Main sta s cs offi ce in Dnipropetrovsk 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 Dnipropetrovsk from other parts of Ukraine and the number of people moving out of Dnipropetrovsk to other parts of Ukraine. Over the sample period, net domes c migra on was nega ve in every year. (See Table 2.4.) The annual net domes c ou low of females and males was fairly even.

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

10 Dnipropetrovsk - Demographic, Economic, Fiscal

TABLE 2.4. DOMESTIC MIGRATION, 2006‒10 (NUMBER OF PEOPLE) Into Dnipropetrovsk Out of Dnipropetrovsk Net domes c migra on Year Both Both Both sexes Males Females sexes Males Females sexes Males Females 2006 12,322 5,538 6,784 14,220 6,645 7,575 1,898 1,107 791 2007 11,394 5,018 6,376 15,520 7,230 8,290 4,126 2,212 1,914 2008 7,692 3,375 4,317 15,251 7,110 8,141 7,559 3,735 3,824 2009 10,257 4,702 5,555 13,292 6,330 6,962 3,035 1,628 1,407 2010 11,643 5,445 6,198 14,108 6,776 7,332 2,465 1,331 1,134 Source: Main sta s cs offi ce in Dnipropetrovsk Oblast.

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

TABLE 2.5. INTERNATIONAL MIGRATION, 2006‒10 (NUMBER OF PEOPLE) Into Dnipropetrovsk Out of Dnipropetrovsk Net interna onal migra on Year Both Both Both sexes Males Females sexes Males Females sexes Males Females 2006 451 220 231 405 160 245 46 60 -14 2007 487 235 252 437 186 251 50 49 1 2008 416 200 216 300 126 174 116 74 42 2009 414 200 214 356 155 201 58 45 13 2010 451 220 231 405 160 245 46 60 -14 Source: Main sta s cs offi ce in Dnipropetrovsk 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 to 2010 period. (See Chart 2.3.) This was en rely due to net domes c ou lows. In other words, the net posi ve infl ow of people from interna onal migra on into Dnipropetrovsk is not enough to make up for the net nega ve domes c out- fl ow. This was par cularly evident in 2008, when the city’s net loss was 7,443 people.

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

0

-1,000

-2,000

-3,000

-4,000

-5,000

-6,000

-7,000

-8,000 200620072008 2009 2010

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

11 Dnipropetrovsk - Demographic, Economic, Fiscal Summary of Natural Population Change and Net Migration The decline in Dnipropetrovsk’s popula on between 2006 and 2011 was caused by both decreases in the natural popula on and net migra on out of the city. Overall, the natural decline in the popula on (that is, more deaths than births) caused more of the resident popula on decline in four out of fi ve of the past fi ve years than did migra on out- fl ows. (See Table 2.6.) The excep on was 2008, when a record low number of people moved into Dnipropetrovsk from other areas of Ukraine. 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 -6,007 -5,879 -4,541 -3,340 -4,130 Net migra on -1,852 -4,076 -7,443 -2,977 -2,174 Total resident popula on change -7,859 -9,955 -11,984 -6,317 -6,304 Source: Main sta s cs offi ce in Dnipropetrovsk Oblast. POPULATION DISTRIBUTION BY AGE AND SEX The popula on pyramid in Chart 2.4 shows that the propor on of males is greater in the age cohort from 0 to 30 years, while females dominate in older age groups. The larger female cohort becomes par cularly no ceable a er age 44, where females make up 60.9 per cent of the popula on, and in the over-60 age group, where females make up 65.5 per cent of the popula on. Chart 2.4 reveals a substan al reduc on in the male popula on a er age 50. CHART 2.4. DNIPROPETROVSK RESIDENT POPULATION DISAGGREGATED BY AGE AND SEX, 2011 (NUMBER OF PEOPLE)3 >99 96 92 88 84 80 76 72 68 64 60 56 Male 52 Female 48 44 40 36 32 28 24 20 16 12 8 4 15,000 10,000 5,000 0 5,00010,000 15,000 Source: Main sta s cs offi ce in Dnipropetrovsk Oblast.

Table 2.7 presents popula on data for various age and sex cohorts in Dnipropetrovsk for 2007, 2009, and 2011. The share of people in the youngest age cohort (0 to 14 years) has grown slightly, which suggests an upward trend in the fer lity rate. However, the propor on of younger adults (those aged 15 to 24) fell markedly. The demographic trend in Dnipropetrovsk is one of an aging popula on. The share of the popula on in the over-44 age group grew from 41.3 per cent in 2007 to 42.9 per cent in 2011.

3 Territory of Dnipropetrovsk, excluding other communi es subordinate to the city council. Age and sex distribu on is given as of January 1, 2011, for resident popula on. 12 Dnipropetrovsk - Demographic, Economic, Fiscal

TABLE 2.7. RESIDENT 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 61,741 6.00 61,260 6.08 62,964 6.33 Females 0–14 years 58,031 5.64 57,937 5.75 59,494 5.98 Both sexes 0–14 years 119,772 11.64 119,197 11.83 122,458 12.31 Males 15–24 years 88,067 8.56 77,173 7.66 68,602 6.90 Females 15–24 years 87,625 8.51 76,930 7.64 67,610 6.80 Both sexes 15–24 years 175,692 17.07 154,103 15.30 136,212 13.70 Males 25–44 years 150,471 14.62 151,253 15.01 152,389 15.32 Females 25–44 years 158,061 15.35 156,551 15.54 157,078 15.79 Both sexes 25–44 years 308,532 29.97 307,804 30.55 309,467 31.11 Males 45–60 years 101,091 9.82 101,431 10.07 99,930 10.04 Females 45–60 years 134,401 13.06 135,395 13.44 132,663 13.34 Both sexes 45–60 years 235,492 22.88 236,826 23.51 232,593 23.38 Males over 60 years 66,813 6.49 65,848 6.54 66,950 6.73 Females over 60 years 123,039 11.95 123,611 12.27 127,048 12.77 Both sexes over 60 years 189,852 18.44 189,459 18.81 193,998 19.50 Source: Main sta s cs offi ce in Dnipropetrovsk Oblast.

As of January 1, 2011, the average age of Dnipropetrovsk’s resident popula on was 40.5 years, which was slightly lower than the average age of 40.7 years in Dnipropetrovsk Oblast. The average age of females was 42.8 years and that of males was 37.8 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 Dnipropetrovsk’s dependency ra o in 2011 was 614 dependent people for every 1,000 people of working age.6 This total was made up of 212 people younger than the working age and 402 older than the working age. In 2011, 62.0 per cent (617,847 people) of Dnipropetrovsk’s popula on were of working age, 13.1 per cent (130,966 people) were younger than the working age, and 24.9 per cent (248,265 people) were older than the working age.7 (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 older than the working age was almost 2.75 mes that 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 1.6 mes that for males. This is due to the longer life expectancy for females.

4 Territory of Dnipropetrovsk, excluding other communi es subordinate to the City Council. Age and sex distribu on is given 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, for resident popula on. 7 Age distribu on is shown as of January 1, 2011. 13 Dnipropetrovsk - Demographic, Economic, Fiscal

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

Both sexes Male Female

16.1 32.2 24.9 69.0

14.9

62.0 13.1 11.7 56.1

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

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

Chart 2.6 showss that thethe dependencydepende ra o has been increasing since 2006. This is due to increases in both the depen- dency ra o of those youngernger than the working age and of those older than the working age.

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

700

Overall dependency 600 ra o

500

400 Dependency ra o of those older than working age 300

Dependency ra o of 200 those younger than working age 100

0 200620072008 2009 2010 2011

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

8 Dependency ra o is shown as of January 1 in a respec ve year. 14 Dnipropetrovsk - Demographic, Economic, Fiscal INDICATORS OF DNIPROPETROVSK’S DEMOGRAPHIC SITUATION Table 2.8 compares the demographic situa on of Dnipropetrovsk with that of Ukraine as a whole on fi ve key indicators. The natural popula on growth in Dnipropetrovsk is slightly higher than growth in Ukraine in general—we gave the city a “stronger” ra ng on this indicator. We have also given a “stronger” ra ng on the dependency ra o and the share of the popula on over 60 years of age. The rela vely low dependency ra o implies a higher–than–average number of people of working age in the city. The city is weaker than Ukraine as a whole on the net migra on rate and the balance between the number of males and females. TABLE 2.8. KEY DEMOGRAPHIC INDICATORS Rela ve posi on of Indicator Dnipropetrovsk Ukraine Dnipropetrovsk Rate of natural popula on change in -4.1 per 1,000 people -4.4 per 1,000 people Stronger 2010 Net migra on rate in 2010 -2.2 per 1,000 people 0.3 per 1,000 people Weaker Dependency ra o as of January 1, 2010 598 per 1,000 people 659 per 1,000 people Stronger of working age of working age Share of females in resident popula on 54.67 per cent 53.87 per cent Weaker as of January 1, 2011 Share of popula on over 60 years as of 19.02 per cent 19.33 per cent Stronger January 1, 2010 Source: Main sta s cs offi ce in Dnipropetrovsk Oblast.

15 Dnipropetrovsk - Demographic, Economic, Fiscal ECONOMIC PROFILE Chapter 3

OVERVIEW

Dnipropetrovsk’s economy is dominated by the wholesale and retail trade sector, which accounted for 53 per cent of the output of non-fi nancial enterprises in 2010. From an employment perspec ve, the industrial sector is the largest sector in the city’s economy, employing 31 per cent of all staff employees, with the metal- lurgy and metalworking industry being the largest industry in the sector. Employment in the city is concentrated in large-sized enterprises, with 64 per cent of staff employees work- ing in large-sized enterprises, 26 per cent in medium-sized enterprises, and 10 per cent in small-sized enter- prises. Refl ec ng the importance of trade in the city’s economy, the services sector made up 76 per cent of the total output of non-fi nancial companies in 2010. As the global economic recession hit bo om in 2009, Dnipropetrovsk’s exports fell by 50 per cent. Exports par ally recovered in 2010. Adjusted for infl a on, wages grew by 7.6 per cent annually between 2005 and 2011. 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 Dnipropetrovsk over the 2005–10 period for the largest sectors and industries. The table illustrates just how important the wholesale and retail trade sector is to the city’s economy. Over this period, the wholesale and retail trade sector accounted for between 49 and 64 per cent of all sales in Dnipropetrovsk. This is primarily because of the city’s status as an administra ve center and the existence of processing industries within the city which require and produce intermediate goods that are traded on the local market. The table also shows that the manufacturing and fi nancial and insurance sectors are also important contributors to sales. Within the industrial sector, metallurgy and metalwork is the city’s largest industry.

16 Dnipropetrovsk - Demographic, Economic, Fiscal

TABLE 3.1. SALES OF GOODS AND SERVICES, 2005‒10 (UAH MILLIONS IN CURRENT PRICES)1 Economic ac vity 2005 2006 2007 2008 2009 2010 Total city economy 126,422 148,681 163,869 198,587 184,681 207,990 Industry 21,179 23,253 28,495 33,577 26,219 48,382 Manufacture of food products, 3,473 3,502 3,392 4,749 4,666 5,354 beverages, and tobacco Metallurgy and metalwork 8,029 9,961 12,128 14,099 9,030 12,417 Produc on and distribu on of 5,186 7,480 8,702 9,960 10,622 13,865 electricity, gas, and water Wholesale and retail trade; repair 61,508 81,629 103,232 126,924 106,875 109,279 of motor vehicles and motorcycles Transport and communica ons 5,805 6,505 7,621 9,549 10,363 11,687 Financial and insurance ac vi es 20,955 22,797 5,782 6,773 19,209 27,562 Real estate, engineering, legal, and 2,527 2,955 3,538 5,077 5,335 5,702 accoun ng ac vi es Source: Main sta s cs offi ce in Dnipropetrovsk Oblast. 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 2009.2 Although the trade sector accounted for nearly 58 per cent of sales in Dnipro- petrovsk in 2009, it accounted for only 14 per cent of employment. This diff erence can be explained by the rela vely low labour intensity of the trade sector. However, from an employment perspec ve, it is s ll a key sector in the city’s economy—trailing only the industrial sector in terms of total staff employment. Other key sectors include educa on, transport and communica ons, real estate, and health care and social assistance. TABLE 3.2. NUMBER OF STAFF EMPLOYEES BY ECONOMIC ACTIVITY AND SEX, 2009 (NUMBER OF PEOPLE)3 Economic ac vity Both sexes Males Females Number of staff employees, in total 358,199 162,480 195,719 Agriculture, hun ng, and forestry 1,611 956 655 Industry 109,921 63,312 46,609 Construc on 8,537 6,714 1,823 Wholesale and retail trade; repair of cars, home appliances, 49,527 23,272 26,255 and personal use items Hotels and restaurants 4,318 1,271 3,047 Transport and communica ons 35,814 19,859 15,955 Financial ac vity 18,925 7,300 11,625 Real estate, leasing, engineering, and services to businesses 32,793 16,877 15,916 Public administra on 15,815 4,625 11,190 Educa on 41,235 9,907 31,328 Health care and social assistance 32,020 5,094 26,926 Other economic ac vity 7,683 3,293 4,390 Source: Main sta s cs offi ce in Dnipropetrovsk Oblast. Table 3.3 provides details of staff employment in Dnipropetrovsk’s industrial sector by sex for 2009. The table shows that the metallurgy and metal working, transporta on equipment, and food industries are important employers within the city. Together, these three industries account for about 43 per cent of all industrial employment, while “other produc on” accounts for 23 per cent of industrial employment. It is important to note that the rela ve numbers of men and women employed diff er by sector. For example, women dominate in the tex le and leather industries while men dominate in the produc on of coke, refi ned products, and nuclear fuel industry.4 In the services sectors, women dominate in the hotels and restaurants sector, the public administra on sector, the educa on sector, and the health care social assistance sector.

1 Sales values are given excluding VAT and excise du es. 2 Beginning in 2010, data on the distribu on of wages and employment by sex at the city level are no longer being collected. 3 Yearly average. 17 Dnipropetrovsk - Demographic, Economic, Fiscal

TABLE 3.3. NUMBER OF STAFF EMPLOYEES BY INDUSTRY AND SEX, 2009 (NUMBER OF PEOPLE)

Industry sector Both sexes Males Females Number of staff employees, in industry 109,921 63,312 46,609 Mining industry n/a n/a n/a Food industry and agricultural processing industry 12,354 4,730 7,624 Tex le industry and tailoring 953 15 938 Leather and leather footwear produc on 208 50 158 Wood produc on and woodwork 124 53 71 Pulp and paper industry, publishing business 2,714 1,256 1,458 Produc on of coke, refi ned products, and nuclear fuel 1,466 948 518 Chemical produc on 947 548 399 Produc on of rubber and plas c goods 5,647 2,709 2,938 Produc on of other non-metallic mineral products 1,300 703 597 Metallurgy and metal working 20,623 12,441 8,182 Manufacture of machinery and equipment 7,813 3,838 3,975 Manufacture of transporta on equipment 14,079 5,605 8,474 Other industries (combined) 25,385 21,735 3,650 Produc on and distribu on of electricity, gas, and water 16,308 8,681 7,627 Source: Main sta s cs offi ce in Dnipropetrovsk Oblast. Unemployment Registered unemployment reached a peak in 2008 when enterprises, reac ng to the economic recession, began to lay off their workers. (See Chart 3.1.) At the end of 2008, the number of registered unemployed stood at just over 7,000 people, but by the end of 2009, the number of registered unemployed had fallen to about 6,000 people. This decline in unemployment was a result of somewhat improved economic condi ons by the end of 2009. With economic condi ons improving even further in 2010 and 2011, registered unemployment fell to about 4,100 by the end of 2011. CHART 3.1. NUMBER OF REGISTERED UNEMPLOYED AT YEAR-END, 2005‒11 (NUMBER OF PEOPLE) 8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0 2005 200620072008 2009 2010 2011

Sources: Dnipropetrovsk’s city employment center; main sta s cs offi ce in Dnipropetrovsk Oblast. There are substan al diff erences between the level of offi cially registered unemployment reported by the Dnipropetrovsk City offi ce of the State Employment Service of Ukraine and the level of unemployment that would be measured by the interna onally recognized methodology of the Interna onal Labour Organiza on (ILO). At the end of 2010, registered unemployment documented by the city’s employment center, as a share of the working-age popula on (16 to 54 for women, 16 to 59 for men) in Dnipropetrovsk, was only 0.9 per cent. However, this may signifi cantly understate unem- ployment. While the level of unemployment according to the ILO methodology is not available at the city level, it is available

4 The criteria for domina ng employment in a sector is if that sex makes up at least two-thirds of employment in that sector. 18 Dnipropetrovsk - Demographic, Economic, Fiscal at the oblast level. Therefore, we can compare the oblast unemployment rates es mated according to the ILO methodology with the rates published by the State Employment Service of Ukraine. In 2010, using the ILO methodology, unemploy- ment as a share of the working age popula on (15 to 70) was 7.1 per cent in urban areas in the oblast compared to the 2.0 per cent unemployment rate in urban areas reported by the Dnipropetrovsk Oblast Employment Center. Unemployment in Dnipropetrovsk is somewhat higher among women than men. For example, during the 2005–09 period, 68 per cent of all registered unemployed were women. The gap can be par ally explained by the importance of heavy industry, which is tradi onally male-dominated. The average dura on of registered unemployment declined from 10 months in 2000 to 5 months in 2008. This can be explained by the growing demand for labour during this me period. 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 the City of Dnipropetrovsk in 2009 is illustrated in Chart 3.2.5 The chart shows that staff employment in Dnipropetrovsk is dominated by large-sized enterprises, which in 2009 accounted for 64 per cent of all staff employment in the city.6 The large share of workers in large-sized enterprises is par ally due to the importance of the metallurgy and metalworking industry—where large scale is the most effi cient.

CHART 3.2. DISTRIBUTION OF STAFF EMPLOYEES BY SIZE OF ENTERPRISE/INSTITUTION, 2009 (PER CENT) 10

Large-sized

Medium-sized 26 Small-sized 64

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

In addi on to staff employment,ploymentt, aanothernother iimportantmpportant category of employment is individual entrepreneurs. Chart 3.3 shows that the number ooff iindividualnddiividual entrepreneursenttrepreneurs grewgre steadily between 2005 and 2010. Although growth in the num- ber of individual entrepreneurspreneurs slowedowedd during the recession,rece it remained posi ve. CHART 3.3. INDIVIDUAL ENTREPRENEURS, 2005‒11 (NUMBER OF PEOPLE)7

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0 2005 2006 20072007 2008 2009 20 201010 20 20111 Source: Dnipropetrovsk City State Tax Inspectorate.

5 Beginning in 2010, data on employment by size of employer are no longer being collected at the city level. 6 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. 19 Dnipropetrovsk - Demographic, Economic, Fiscal Key Industries in Dnipropetrovsk

Metallurgy and Metalwork Metals and metallurgy is the city’s core industry in terms of output. Metallurgical enterprises are based in the city and account for over 47 per cent of its industrial output. These enterprises are important contributors to the city’s budget and, with 80 per cent of their output being exported, to Ukraine’s foreign exchange reserve. Metallurgical facili es have been intensively used without proper retooling and repairing. As a result, the average depre- cia on for produc on facili es is about 70 per cent. Thus, in order to help increase output, improve the compe veness of the industry’s products, create a rac ve condi ons for investment, develop export poten al, and strengthen posi- ons of domes cally made products on internal markets, enterprises in this industry have planned and implemented a number of steps. These steps include modernizing produc on facili es, launching new products and progressive tech- nological processes (including those that save resources and energy), making more extensive use of domes c R&D and new fundamental applied research, and improving the city’s ecological situa on. Machinery and equipment manufacturing The future poten al for city’s machinery and equipment manufacturing sector is bright. The sector has over 70 enterpris- es and accounts for nearly 4.5 per cent of the na onal total. Other developed industries are transporta on equipment manufacturing and the manufacturing of electrical and op cal machines. These three industries produce thousands of items: metallurgical and coal-mining equipment, main line electric locomo ves and passenger cars, missile carriers and satellites, combine harvesters and trolley-buses, trams and automated/ robo c systems, electric devices and ba eries, hea ng equipment, paper-making machines and scores of other items. Among the leaders in the industry are such state enterprises as Yuzhny Machine-Building Plant, named a er Makarov, and Elektrovozobuduvannia Dnipropetrovsk, both of which are part of Dnipropetrovsk Research and Produc on Com- plex. Other industry leaders include public joint-stock companies with foreign investment such as Dniprovazhmash, Dnipropetrovsk Switch-Making Factory, VESTA PJSC, and ISTA CJSC. Trade Trade is an important component of Dnipropetrovsk’s economy. Trade accounted for 58 per cent of the total sales of non-fi nancial enterprises in 2009. Both wholesale and retail segments of the trade sector are well developed. Wholesale trade cons tuted 86 per cent of total trade for the city in 2009 and 86 per cent of the total oblast’s wholesale trade volume. This is the result of two main factors. First, Dnipropetrovsk’s well-developed manufacturing sectors pro- duce and consume chiefl y intermediate products, which are traded in bulk. Second, as the administra ve centre of the oblast, the city’s trade sector services a por on of the oblast’s needs as well. The retail sector is also well developed. Retail trade per capita is much higher than the oblast average due to the rela ve- ly higher level of incomes in Dnipropertovsk compared with the oblast, as well as much easier access to loans because of the city’s well-developed fi nancial sector, which is second in volume only to Kyiv. Key Enterprises in Dnipropetrovsk The city has several key large enterprises. (See Table 3.4.) The table shows the name of the enterprise, its basic ac vity, and the income earned from those basic ac vi es in 2010. While the energy company Dniprooblenergo Energy Com- pany PJSC is the largest enterprise in terms of revenues, several metallurgical enterprises, such as Interpipe NTZ OJSC, EVRAZ DMZ Petrovskogo PJSC, and Vesta Dnipro PJSC are also important revenue producers in the city.

7 Data on individual entrepreneurs are as of January 1 for each year. 20 Dnipropetrovsk - Demographic, Economic, Fiscal

TABLE 3.4. ENTERPRISES WITH THE HIGHEST REVENUES, 2010 Average Income from number of Enterprise, organiza on, ins tu on Basic ac vity basic ac vity, employees in UAH thousands 2010 Public joint-stock company EVRAZ DMZ Metallurgy and metalwork, produc- 3,883,597 5,050 Petrovskogo on of cast iron, steel and rolled products Public joint-stock company Dniprometyz Metallurgy and metalwork, pro- 677,296 1,022 duc on of nails, fi ngs, wires, and electric wires Open joint-stock company Interpipe NTZ Metallurgy and metalwork, pro- 5,101,615 6,356 duc on of tubes and pipes Open joint-stock company Dnipropetrovsk Metallurgy and metalwork, pro- 735,112 2,808 Pipe Plant duc on of tubes and pipes Public joint-stock company Dnipropetrovsk Metallurgy and metalwork, pro- 1,120,729 1,434 Steel Works Comintern duc on of tubes and pipes Open joint-stock company Dnipropetrovsk Scrap recycling; selling oxygen; 1,053,806 664 Vtormet produc on of church bells in old Slavic style Open joint-stock company Dnipropetrovsk Metallurgy and metalwork, produc- 145,892 581 Forming Roll Plant on of forming rolls for various purposes Produc on Associa on Yuzhny Machine- Produc on of hydraulic equipment, n/a 7,796 Building Plant, named a er A. Makarov State high-pressure gas cylinders, bicycles, Enterprise home appliances, equipment for light industry and mechanical engineering, tractors, trolleybuses, trams, etc. Public joint-stock company Vesta Dnipro Produc on of storage ba eries 1,317,675 898 Elektrovozobuduvannia Dnipropetrovsk Re- Mechanical engineering, produc on n/a 1,673 search and Produc on Complex of locomo ves, train carriages, and parts Ista Center Closed joint-stock company with Produc on of storage ba eries n/a n/a Foreign Investment Energoavtomatyka Dnipropetrovsk Research Produc on of storage ba eries 305,722 n/a Plant Ltd. Open joint-stock company Dniprovazhmash Mechanical engineering, produc on 433,448 2,585 of equipment for mining and energy industries Open joint-stock company Dnipropetrovsk Produc on of railroad switches, 672,697 1,274 Railroad Switch Plant steel cas ng, melted steel, cast iron, wheels, fl anges, alloys, etc. Open joint-stock company Dnipropetrovsk Mechanical engineering, produc on 206,176 2,405 Standard Unit Plant of units for aircra industry and min- ing equipment Public joint-stock company Dnipropetrovsk Pas- Mechanical engineering, repair- 328,789 781 senger Carriage Repair and Construc on Plant ing and construc on of passenger railroad carriages Open joint-stock company Dniproshyna Chemical and petrochemical indus- 482,779 1,850 try, produc on of res Public joint-stock company Dniprooblenergo Energy 13,201,987 1,192 Energy Company Prydniprovska Thermal Power Plant Energy n/a 1,735 Public joint-stock company Prydniprovskyi Plant Food industry 578,239 1,180 Private joint-stock company Dnipropetrovsk Units and parts for railroad locomo- n/a 1,613 Diesel Locomo ve Repair Plant ves and trams, repair services Source: www.smida.gov.ua.

21 Dnipropetrovsk - Demographic, Economic, Fiscal INFRASTRUCTURE DEVELOPMENT Residential Construction Sector The residen al construc on sector in Dnipropetrovsk has followed a pa ern very similar to residen al construc on around the world. Most indicators of residen al construc on in Dnipropetrovsk grew between 2005 and 2007 before easing back in 2008 and then declining precipitously in 2009. (See Table 3.5.) There was some improvement in 2010, but levels are s ll below the pre-crisis peak. Both declines and consequent revival refl ect the impact of the world recession and recovery. Over the 2005–10 period, real construc on output decreased on average by 14 per cent per year8 and real investment in fi xed capital in housing construc on decreased on average by nearly 1.5 per cent per year. The declines were caused by sharp contrac ons in 2008 and 2009.

TABLE 3.5. MAJOR CONSTRUCTION INDUSTRY INDICATORS IN DNIPROPETROVSK, 2005‒10

Indicator 2005 2006 2007 2008 2009 2010 Commissioning of residen al buildings, total m2 147,197 164,540 181,210 187,547 70,767 100,669 Commissioning of individual homes, total m2 72,840 81,914 91,181 88,383 4,422 45,681 Commissioning of residen al buildings, units 454 485 528 535 37 284 Real construc on output, % change over previous -22.8 13.9 17.3 -32.6 -42.5 -1.6 year Investment in fi xed capital into housing construc- 369,226 472,299 676,050 652,215 369,473 455,484 on, UAH thousands Real investment in fi xed capital in housing con- 23.2 5.7 12.2 -25.0 -49.1 24.1 struc on, % change over previous year Sources: Main sta s cs offi ce in Dnipropetrovsk Oblast; in-house calcula ons. Transport Dnipropetrovsk’s subway line has 6 sta ons. Its tram/streetcar system consists of more than 250 tramcars covering 14 routes. The trolleybus system has 130 trolleybuses covering 18 routes. The city also has more than 10 bus routes and many fi xed-run taxis. From an inter-city perspec ve, Dnipropetrovsk has two railway sta ons (Tsentralnyi and Yuzhnyi), an interna onal air- port, a riverside sta on, and two inter-city bus sta ons (central and ‘Novyi tsentr’). 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 Dnipropetrovsk indicate that retail sales in real terms grew each year between 2002 and 2008, but dropped in 2009 as the recession took its toll. In 2010, real growth once again turned posi ve, but it is one-half what it was prior to the crisis, chiefl y owing to less availability of consumer loans. (See Chart 3.4.) Although average nominal wages are somewhat less in the City of Dnipropetrovsk than in the oblast, per capita retail sales in Dnipropetrovsk are the highest among the ci es of Dnipropetrovsk Oblast. In 2010, per capita retail sales were UAH 13,005—this is 76 per cent higher than the oblast average. Some of this robustness of per capita retail sales can be a ributed to the availability of loans from the city’s well-developed fi nancial sector. Dnipropetrovsk is the most important city in the oblast in terms of wholesale trade and has benefi ted from the increas- ing centraliza on of wholesale trade within the oblast. Its share of the total wholesale trade of the oblast increased from 75 per cent in 2000 to 83 per cent in 2010.

8 The geometric mean is used due to large fl uctua ons in the data. 22 Dnipropetrovsk - Demographic, Economic, Fiscal

CHART 3.4. RETAIL SALES GROWTH IN DNIPROPETROVSK, 2001‒10 (PER CENT, CONSTANT PRICES) 40

30

20

10

0 20200101 20200202 20200303 20042004 20 200505 20 200606 20 200707 2008 2009 20 201010

-10

-20

-30

Sources: Main sta s cs offi ce in Dnipropetrovsk Oblast; in-house calcula ons. SERVICES SECTOR In 2010, services—boosted by the important trade sector—made up 76 per cent of the total output of non-fi nancial companies. Table 3.6 shows the amount of sold services by fi rms in the non-fi nancial services sector for a number of key categories in Dnipropetrovsk’s services sector. Two services stood out as being especially important to the city’s economy in 2010. Transport ac vity represented 27 per cent and mail and communica ons represented 22 per cent of all services sold by the non-fi nancial services sector. While not as large, real estate transac ons, research and develop- ment, and other services also represented a signifi cant amount of services ac vity in the city.

TABLE 3.6. AMOUNT OF SOLD SERVICES9 BY FIRMS IN THE NON-FINANCIAL SERVICES SECTOR BY TYPE OF ACTIVITY IN DNIPROPETROVSK, 2010 (UAH THOUSANDS IN CURRENT PRICES AND PER CENT) Amount of sold Share of total, Economic ac vity services per cent Total 8,388,629 100.0 Transport ac vity 2,253,601 26.9 Organiza on of cargo transporta on 513,971 6.1 Mail and communica ons 1,820,179 21.7 Real estate transac ons 809,007 9.6 Informa on-related ac vi es 216,085 2.6 Research and development 715,327 8.5 Engineering, geology, and geodesics 346,371 4.1 Inves ga on and security 221,555 2.6 Educa on 377,116 4.5 Physical educa on and sport, leisure, and entertainment 209,333 2.5 Other services 906,087 10.8 Sources: Main sta s cs offi ce in Dnipropetrovsk Oblast; in-house calcula ons.

9 Does not include trade and construc on, which are described in other parts of this chapter. 23 Dnipropetrovsk - Demographic, Economic, Fiscal INVESTMENT Fixed Capital Investment Fixed capital investment represents the spending of businesses on the construc on of buildings or the purchase of vehicles or equipment. Chart 3.5 illustrates the accumula on of fi xed capital (in nominal and real terms so that changes illustrated in the chart include changes in prices as well as changes in volumes) in Dnipropetrovsk over the 2005–10 period. Between 2005 and 2008, nominal fi xed capital investment grew by an average annual rate of almost 33 per cent. As the global econ- omy touched bo om in 2009, key export sectors in Dnipropetrovsk’s economy were hit hard. Consequently, investment in fi xed capital in the city was lower than in 2008. In 2010, nominal investment in capital, backed by the economic recovery, increased. However, in real terms, investment in capital in 2010 was roughly at the same level as in 2004 and was 42 per cent below the peak reached in 2007. Capital investments increased to 5,497 million UAH in 2010 a er shrinking to 5,283 million UAH in 2009.

CHART 3.5. INVESTMENT IN FIXED CAPITAL, 2005‒10 (UAH MILLIONS IN CURRENT PRICES AND REAL PER CENT CHANGE OVER PREVIOUS YEAR) 9,000 40

8,000 30

7,000 20

6,000 10

5,000 0

4,000 -10 PER CENT UAH millions UAH

3,000 -20

2,000 -30

1,000 -40

0 -50 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 Dnipropetrovsk Oblast. Direct Foreign Investment Dnipropetrovsk is one of the top two ci es in the oblast in terms of a rac ng foreign direct investment (FDI). Tradi- onally, Dnipropetrovsk had been the dominant recipient of FDI in the oblast. However, the acquisi on of Kryvorizhstal in Kryvyi Rih by a German company in 2005 led to several years in which Dnipropetrovsk ranked number two in the oblast in terms of FDI a racted. Dnipropetrovsk once again assumed the oblast leadership in a rac ng FDI in 2008 and, in 2009, despite the global recession, managed to increase the amount of FDI it received. As of the end of 2011, the city’s FDI reached 28 per cent of the oblast total FDI. (See Table 3.7.)

TABLE 3.7. FOREIGN DIRECT INVESTMENT (FDI) IN DNIPROPETROVSK AT YEAR-END, 2005‒11 Indicator 2005 2006 2007 2008 2009 2010 2011 Foreign direct investments, 695,911 1,236,748 1,116,511 1,131,831 1,328,806 1,547,100 2,223,500 USD thousands FDI growth, USD thousands 127,974 540,837 -120,237 15,320 196,974 218,294 676,400 Share in total oblast, % 11.9 19.0 15.7 16.6 18.8 20.7 27.8

Sources: Main sta s cs offi ce in Dnipropetrovsk Oblast; in-house calcula ons. 24 Dnipropetrovsk - Demographic, Economic, Fiscal INTERNATIONAL EXPORTS AND IMPORTS Exports Dnipropetrovsk Oblast is an important exporter of industrial goods. Although Dnipropetrovsk is not the oblast’s leader in exports, it s ll accounts for a signifi cant share of the oblast’s exports. Over the 2005–11 period, Dnipropetrovsk accounted for nearly 26 per cent of the oblast’s total exports. The global economic recession took its toll on the city’s exports, cu ng them by almost half in 2009. (See Table 3.8.) Despite this steep decline in exports, the city’s exports were not hit as hard as those of other ci es in the oblast and, consequently, the city’s share in the oblast’s exports increased to nearly 30 per cent. In 2010, the economic recovery spurred the city’s exports to grow by 25 per cent. However, exports of other ci es in the oblast expanded more rapidly and, as a consequence, Dnipropetrovsk’s share of the oblast’s exports declined. Imports Dnipropetrovsk serves as the main import hub for foreign goods coming into the oblast and, on average, accounted for 58 per cent of the oblast’s imports between 2005 and 2011. (See Table 3.8.) Many of the goods formally imported into the city are eventually used or consumed elsewhere in the oblast. Imports grew steadily through 2008 before registering a signifi cant decline in 2009. In 2010, improved economic condi ons helped fuel an increase in imports. Although imports rebounded strongly in 2010 and, in nominal terms, exceeded 2007 levels, they were s ll 30 per cent below peak levels from 2008. TABLE 3.8. INTERNATIONAL EXPORT AND IMPORT OF GOODS IN DNIPROPETROVSK, 2005‒11 Indicator 2005 2006 2007 2008 2009 2010 2011 Exports, USD thousands 1,563,990 2,005,402 2,499,167 3,096,965 1,548,733 1,936,377 2,432,516 Imports, USD thousands 1,615,828 2,385,945 3,204,893 4,610,051 2,281,456 3,237,105 3,581,094 Share of oblast exports, % 26.3 28.2 25.5 23.5 29.8 24.2 23.4 Share of oblast imports, % 59.0 64.5 59.2 51.6 56.5 55.5 53.3

Sources: Main sta s cs offi ce in Dnipropetrovsk Oblast; in-house calcula ons. WAGES For much of the 2005–11 period, nominal wage growth for staff employees in Dnipropetrovsk has been quite robust. The dynamics of average monthly wages for staff employees over this period are illustrated in Chart 3.6. Between 2005 and 2008, nominal wage growth for staff employees averaged over 30 per cent per year before slowing to just 2 per cent in 2009. As the economic crisis subsided in 2010, nominal wage growth rebounded to nearly 17 per cent and, in 2011, nominal wages grew even more rapidly, pos ng a 19 per cent gain. It should be noted that nominal wages only represent the “take home pay” of workers—not the purchasing power of their wages. Adjusted for infl a on, wages grew, on aver- age, by 7.6 per cent between 2005 and 2011. CHART 3.6. AVERAGE NOMINAL WAGES, ALL STAFF EMPLOYEES, 2005‒11 (UAH PER MONTH) 3,000

2,500

2,000

1,500

1,000

500

0 2005 200620072008 2009 2010 2011 Source: Main sta s cs offi ce in Dnipropetrovsk Oblast. 25 Dnipropetrovsk - Demographic, Economic, Fiscal

Nominal wages for staff employees in most sectors of Dnipropetrovsk’s economy more than doubled over the 2005–09 period.10 The excep ons were the industrial sector, where the average wage rose by 93 per cent; the construc on sec- tor, where the average wage rose 20 per cent; and the trade sector, where nominal wages for staff employees rose by 48 per cent. Table 3.9 provides details on the dynamics of average monthly nominal wages over the 2005–11 period, as well as de- tails of the diff erences in average monthly nominal wages between the sexes.11 At the aggregate level, the diff erence between average wages for males and females is 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 indus- try by males and females, and in wages for males and females who have similar jobs. TABLE 3.9. AVERAGE NOMINAL WAGES FOR STAFF EMPLOYEES BY SEX, 2005‒11 (UAH PER MONTH)

2005 2006 2007 2008 2009 2010 2011 Employees, total 888.64 1,124.03 1,428.11 1,892.57 1,930.13 2,256.60 2,692.05 Males 1,063.38 1,336.23 1,680.28 2,187.35 2,215.46 n/a n/a Females 738.15 941.31 1,211.03 1,645.08 1,693.25 n/a n/a Source: Main sta s cs offi ce in Dnipropetrovsk Oblast.

Although there are substan al diff erences between the average wages of male staff employees and female staff em- ployees, Chart 3.7 shows that those diff erences have shrank between 2005 and 2009. By 2009, the last year for which sex-disaggregated data are available, the average nominal wage for female staff was just over 76 per cent that of male staff workers. CHART 3.7. RATIO OF AVERAGE NOMINAL WAGES OF FEMALE STAFF EMPLOYEES TO AVERAGE NOMINAL WAGES OF MALE STAFF EMPLOYEES, 2005‒09 (PER CENT) 78

76

74

72

70

68

66

64 2005 20062007 2008 2009 Sources: Main sta s cs offi ce in Dnipropetrovsk Oblast; in-house calcula ons.

Table 3.10 provides details on average nominal wages for staff employees by economic ac vity and by sex for 2009. The table illustrates a key point. The diff erences in average nominal wages between males and females varied greatly depending upon the economic ac vity. For example, the average nominal wage for female staff employees in the trans- port and communica ons sector was only 70 per cent that of male staff employees, while the average nominal wage for female staff employees in the hotels and restaurants sector was nearly equal that of male staff employees. S ll, cau on must be exercised when interpre ng all fi gures in this table because diff erences between wages for males and females may refl ect diff erences in job types between males and females within any given economic ac vity rather than diff er- ences in wages for males and females who have similar jobs.

10 Beginning in 2010, data on wages by sector of the economy are no longer reported at the city level. 11 Beginning in 2010, data on wages by sex are no longer reported at the city level. 26 Dnipropetrovsk - Demographic, Economic, Fiscal

TABLE 3.10. AVERAGE NOMINAL WAGES FOR STAFF EMPLOYEES BY ECONOMIC ACTIVITY, 2009 (UAH PER MONTH)

Economic ac vity Both sexes Males Females All sectors 1,930 2,215 1,693 Agriculture, hun ng, and forestry 1,298 1,369 1,194 Industry 1,736 1,962 1,428 Construc on 1,108 1,131 1,025 Wholesale and retail trade; repair of motor vehicles, 1,208 1,404 1,034 household appliances, and personal use Hotels and restaurants 1,129 1,140 1,124 Transport and communica on 2,600 3,005 2,097 Financial ac vi es 3,618 4,002 3,376 Real estate, ren ng, and services for entrepreneurs 2,119 2,231 2,000 Public administra on 2,667 2,955 2,548 Educa on 1,859 2,265 1,731 Health care and social assistance 1,431 1,595 1,400 Other types of economic ac vity 3,736 6,715 1,518 Source: Main sta s cs offi ce in Lviv Oblast.

Table 3.11 provides details on average nominal wages for staff employees by industry and sex for 2009. The table re- emphasizes the key point made by the preceding table—while there may be large diff erences in nominal wages for male and female staff employees for some industries, these diff erences are small for other industries. For example, the aver- age nominal wage for female staff employees in the manufacture of vehicles and equipment industry was only 56 per cent that of male staff employees, while the average nominal wage for female staff employees in the pulp and paper industry and publishing was 9 per cent higher than that of male staff employees.

TABLE 3.11. AVERAGE NOMINAL WAGES FOR STAFF EMPLOYEES BY INDUSTRY, 2009 (UAH PER MONTH) Economic ac vity Both sexes Males Females Industry, total 1,736 1,962 1,428 Mining industry - - - Food, beverages, and tobacco 1,507 1,635 1,398 Tex le manufacture, produc on of garments, furs, 698 779 675 and fur goods Produc on of leather, leather goods, and other items 632 675 618 Wood processing and manufacturing of wood prod- 1,391 1,389 1,393 ucts, except furniture Pulp and paper industry, publishing 989 949 1,039 Produc on of coke, refi ned petroleum products, and 2,201 2,471 1,689 nuclear fuel Chemical industry 2,068 2,327 1,619 Produc on of rubber and plas c products 1,397 1,523 1,201 Produc on of other non-metallic mineral products 1,035 1,078 950 Metallurgy and manufacture of fabricated metal 2,011 2,251 1,540 products Manufacture of machinery and equipment 1,424 1,606 1,160 Manufacture of vehicles and equipment 1,545 1,934 1,079 Other industries 879 971 748 Electricity, gas, and water 2,585 2,787 2,345

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

27 Dnipropetrovsk - Demographic, Economic, Fiscal CONCLUSIONS The City of Dnipropetrovsk’s economy is dominated by the wholesale and retail trade sector, which accounted for 53 per cent of the output of non-fi nancial enterprises in 2010. From an employment perspec ve, the industrial sector is the largest sector in the city’s economy, employing 31 per cent of all staff employees in 2009, with the metallurgy and metalworking industry being the largest industry in this sector. Given the importance of the metallurgy and metalwork- ing industry—which requires large scale to be most effi cient—employment in the city is concentrated in large-sized enterprises, where 64 per cent of all staff employees work in such enterprises. Like many ci es in Ukraine, Dnipropetrovsk was hit hard by the recession. As the global economic recession hit bo om in 2009, Dnipropetrovsk’s exports fell by 50 per cent. Nevertheless, the city fared be er than other ci es in the oblast, as its share of oblast exports rose from 24 per cent in 2008 to nearly 30 per cent in 2009. In 2010 and 2011 the city par ally recovered from the economic crisis. However, many indicators of the economic performance of the city remain below pre-crisis levels. Infl a on-adjusted wages for workers in the city rose by roughly 7.6 per cent annually between 2005 and 2011, while average (nominal) wages for staff workers grew more slowly than the na onal average. INDICATORS OF DNIPROPETROVSK’S ECONOMIC PERFORMANCE Table 3.12 provides a comparison between Dnipropetrovsk’s economic performance and Ukraine’s economic perfor- mance for nine key economic indicators. Dnipropetrovsk’s economic performance over the past six years has generally been stronger than that of Ukraine as a whole. The city’s staff employment has, on average, increased marginally over this period, while in the country as a whole there was a slight decline. The city’s external performance can be described as somewhat mixed, with growth of both FDI per capita and exports per capita less robust than Ukraine but with the levels of both FDI per capita and exports per capita higher than Ukraine as a whole. Per capita retail sales have also been stronger in Dnipropetrovsk than in Ukraine. The city’s investment performance can be described as strong, with both real per capita fi xed investment and the level of nominal per capita fi xed investment stronger than for Ukraine as a whole. However, despite Dnipropetrovk’s rela vely stronger employment growth, nominal wage growth has been somewhat weaker than for Ukraine. TABLE 3.12. KEY INDICATORS OF DNIPROPETROVSK’S ECONOMIC SITUATION

Rela ve posi- Indicator Dnipropetrovsk Ukraine on of Dnipro- petrovsk Six-year average of employment growth (2005–10), % 0.4 -0.8 Stronger Six-year average of FDI per capita growth (2005–10), % 21.6 33.5 Weaker Six-year average of FDI per capita (2005–10), USD 1,162.1 683.0 Stronger Six-year average of exports per capita growth 10.2 12.3 Weaker (2005–10), % Six-year average of exports per capita (2005–10), USD 2,074.6 1,012.7 Stronger Six-year average of retail sales per capita (2005–10), 9,796.6 4,185.3 Stronger UAH Six-year average of real fi xed capital investment per 4.2 1.6 Stronger capita growth (2005–10), % Six-year average of nominal fi xed capital investment per 5,825.0 3,409.6 Stronger capita (2005–10), UAH Six-year average of wage growth for staff employees 23.4 28.8 Weaker (2005–10), % Sources: Main sta s cs offi ce in Dnipropetrovsk Oblast; State Sta s cs Service of Ukraine; in-house calcula ons.

28 Dnipropetrovsk - Demographic, Economic, Fiscal FISCAL PROFILE1 Chapter 4

OVERVIEW

Budget revenues were UAH 3.0 billion in 2010. Given the city’s popula on of 1 million, this corresponded to revenues of UAH 2,967.7 per capita. Total expenditures in 2010 were UAH 3,061.4 million, equivalent to expenditures of UAH 3,051.1 per capita. From 2008 to 2010, Dnipropetrovsk incurred budgetary defi cits that averaged 1.7 per cent of total revenues. The defi cits were funded through internal sources, with no recourse to bank loans. Offi cial transfers accounted for 28.0 per cent of revenues in 2010, compared to 24.8 per cent in 2005. In 2010, revenues to the Budget for Development (which is earmarked for specifi c socioeconomic purposes) had declined to just 1.3 per cent of total revenues. This was down from 4.7 per cent in 2005. From 2005 through 2010, the ra o of modifi able to total revenues averaged 17.4 per cent; in 2010, this ra o was 19.0 per cent. The city was a contributor to the equaliza on fund each year during the 2005–10 period. BUDGET SURPLUS/DEFICIT The city incurred a defi cit in 2006 and from 2008 to 2010. (See Chart 4.1.) The largest defi cit was in 2010 (UAH 83.9 million), which was equivalent to 2.8 per cent of total budgetary revenues. These defi cits were funded through internal sources.

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 Local Budgets Execu on for the City of Dnipropetrovsk for 2005–10, demographic data from the main sta s cs offi ce in Dnipro- petrovsk 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.

29 Dnipropetrovsk - Demographic, Economic, Fiscal

CHART 4.1. BUDGET SURPLUS/DEFICIT, 2005‒10 (UAH MILLIONS AND PER CENT) 100 5

80 4

60 3 40 2 20 1 0 0 -20 PER CENT

UAH millions UAH -1 -40

-60 -2 -80 -3

-100 -4 2005 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 Dnipropetrovsk 2005–10; in-house calcula ons. REVENUES Over the 2005–10 period, revenue growth averaged 22 per cent using a compound annual growth rate (CAGR). (See Chart 4.2.) Revenues declined 10.1 per cent in 2009 rela ve to 2008, partly as a result of the economic downturn that saw Ukraine’s GDP contract by 15 per cent in real terms.2 The downturn aff ected both the city’s own revenues (taxes and fees), which declined by 7.3 per cent (year-over-year), and central government transfers, which declined by 17.1 per cent (year-over-year). In 2010, posi ve revenue growth of 14.0 per cent was achieved thanks to a growth in the city’s own revenues (10.5 per cent) as well as in offi cial transfers (24.3 per cent).

CHART 4.2. REVENUES, 2005‒10 (UAH MILLIONS)

3,500

3,000

2,500

2,000

1,500

1,000

500

0 2005 200620072008 2009 2010 Source: State Treasury Reports on Local Budgets Execu on for City of Dnipropetrovsk 2005–10.

2 Interna onal Monetary Fund Country Report No. 10/262 (August 2010), p. 33. 30 Dnipropetrovsk - Demographic, Economic, Fiscal

Expressed on a per capita basis, nominal budget revenues grew from UAH 1,050.9 to 2,967.7 over the 2005–10 period, which was equivalent to a CAGR of 23.1 per cent. Adjusted for infl a on, however, per capita revenues expanded by a less rapid CAGR of 7.6 per cent.3 (See Chart 4.3.)

CHART 4.3. PER CAPITA REVENUES, REAL AND NOMINAL, 2005‒10 (UAH) 3,500

3,000 Nominal

2,500

2,000

1,500 Real

1,000

500

0 2005 200620072008 2009 2010

Sources: State Treasury Reports on Local Budgets Execu on for City of Dnipropetrovsk 2005–10; State Sta s cs Service of Ukraine (CPI data); in-house calcula ons.

Similar to other Ukrainian ci es, the largest por on of Dnipropetrovsk’s budgetary revenues consists of tax revenues and offi cial transfers. In 2010, tax revenues represented 64.9 per cent of total revenues and offi cial transfers 28.0 per cent. The balance consisted of non-tax revenues (e.g., administra ve charges, fees, fi nes), which represented 5.7 per cent of total revenues, as well as revenues from capital opera ons (0.5 per cent), and targeted funds (1.0 per cent). (See Chart 4.4.)

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

Offi cial transfers Personal income tax 28.0 43.1

Tax revenues 64.9 Targeted funds 1.0 Revenues from capital Land payments opera ons 15.8 0.5 Non-tax revenues 5.7 Other tax revenues 6.0

Sources: State Treasury Report on Local Budgets Execu on for City of Dnipropetrovsk; in-house calcula ons.

3 The cumula ve infl a on index used for this calcula on was developed using annual CPI data from the State Sta s cs Service of Ukraine for the 2005–10 period. 31 Dnipropetrovsk - Demographic, Economic, Fiscal

Tax revenues consisted primarily of personal income taxes (UAH 1.3 billion in 2010, which was equivalent to 43.1 per cent of total revenues) and land payments (UAH 469.0 million in 2010, equivalent to 15.8 per cent of total revenues). (See Chart 4.5.) Growth in personal income tax revenues averaged 24.4 per cent (CAGR) over the 2005–10 period, and occurred every year with the excep on of 2009 when the economic crisis signifi cantly reduced personal incomes. Growth in land payments was more rapid with a CAGR of 27.2 per cent. This is impressive since land payments in both 2006 and 2007 were lower than in 2005.

CHART 4.5. PERSONAL INCOME TAX AND LAND PAYMENTS, 2005‒10 (UAH MILLIONS)

1,400

1,200 Personal income tax

1,000 Land payments

800

600

400

200

0 2005 200620072008 2009 2010 Sources: State Treasury Reports on Local Budgets Execu on for City of Dnipropetrovsk 2005–10; in-house calcula ons.

From 2005 to 2010, central government transfers4 to the city’s budget increased from UAH 272.2 million to UAH 833.4 million. (See Table 4.1.) This was equivalent to a CAGR of 25.1 per cent. This growth was almost en rely supported by a growth in subven ons. As a share of total budget revenues, transfers rose from 24.8 per cent in 2005 to 28.0 per cent in 2010. The city did not receive any equaliza on grants during this period; in fact, it contributed to the equaliza on fund.

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.” 32 Dnipropetrovsk - Demographic, Economic, Fiscal

TABLE 4.1. STRUCTURE OF OFFICIAL TRANSFERS, 2005‒10 (UAH MILLIONS AND PER CENT)

2005 2006 2007 2008 2009 2010 Total offi cial transfers 272.2 410.0 601.0 809.2 670.7 833.4 Propor on of total 24.8 29.4 28.8 27.9 25.7 28.0 revenues, % Grants 21.5 8.7 38.9 11.5 37.9 0.0 Propor on of total 2.0 0.6 1.9 0.4 1.5 0.0 revenues, % of which equaliza on 0.0 0.0 0.0 0.0 0.0 0.0 grants Propor on of total 0.0 0.0 0.0 0.0 0.0 0.0 revenues, % Subven ons 156.4 323.7 351.8 539.1 542.7 666.5 Propor on of total 14.2 23.2 16.9 18.6 20.8 22.4 revenues, % Funds directed to Budget 7.4 23.7 28.1 38.4 5.7 25.0 for Development Propor on of total 0.7 1.7 1.3 1.3 0.2 0.8 revenues, % "Other grants and 87.0 53.9 182.1 220.2 84.5 141.9 subven ons" Propor on of total 7.9 3.9 8.7 7.6 3.2 4.8 revenues, %

Memorandum: Total revenues 1,099.6 1,396.4 2,083.4 2,903.6 2,611.7 2,977.7 Transfers to the 88.8 84.8 147.8 290.5 240.7 110.9 Equaliza on Fund

Sources: State Treasury Reports on Local Budgets Execu on for City of Dnipropetrovsk 2005–10; 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 budgetary ins tu ons such as libraries and hospitals. All revenues not designated for the Special Fund are put in the General Fund.

33 Dnipropetrovsk - Demographic, Economic, Fiscal

CHART 4.6. GENERAL AND SPECIAL FUND REVENUES, 2005‒10 (UAH MILLIONS)

3,000

General Fund 2,500

2,000 Special Fund

1,500

1,000

500

0 2005 200620072008 2009 2010 Sources: State Treasury Reports on Local Budgets Execu on for City of Dnipropetrovsk 2005–10; in-house calcula ons.

The Special Fund consists mainly of own revenues from budget-funded ins tu ons, subven ons, and revenues from the Budget for Development. (See Table 4.2.) From 2005 to 2010, the Special Fund expanded at just 12.8 per cent (CAGR), compared to 23.5 per cent for the General Fund.

TABLE 4.2. SPECIAL FUND, 2005‒10 (UAH MILLIONS AND PER CENT)

2005 2006 2007 2008 2009 2010 Budget for Development 52.1 36.3 50.7 76.8 14.2 39.3 Property taxes 18.6 27.3 33.5 36.9 42.1 40.8 Own revenues from budget- 46.2 54.1 86.6 113.2 119.7 122.7 funded ins tu ons Targeted funds 17.9 24.1 86.4 58.8 40.4 30.2 Subven ons 41.2 152.3 13.1 157.6 140.9 70.6 Other revenues 0.2 1.6 11.6 27.8 15.6 18.8 Total 176.3 295.7 281.9 471.1 372.9 322.5

Memorandum: Total revenues 1,099.6 1,396.4 2,083.4 2,903.6 2,611.7 2,977.7 Propor on of total revenues, % 16.0 21.2 13.5 16.2 14.3 10.8 Sources: State Treasury Reports on Local Budgets Execu on for City of Dnipropetrovsk 2005–10; in-house calcula ons. Revenues from subven ons made up the largest propor on of Special Fund revenues over the 2005–10 period, averag- ing 28.8 per cent. Similar to other Ukrainian ci es, the special fund included large subven ons from the central govern- ment in 2006, 2008, and 2009, which were earmarked for individual households to repay debts incurred for hea ng, water, and sewage fees. During those years when they were paid, these subven ons amounted to 40.3, 29.2, and 14.2 per cent, respec vely, of all subven ons paid. The city’s own revenues from budget-funded ins tu ons comprised the second largest propor on (on average) of the Special budget, accoun ng for 28.2 per cent of all revenues over the 2005–10 period. These revenues were earmarked for ins tu ons like hospitals and libraries.

34 Dnipropetrovsk - Demographic, Economic, Fiscal

Revenues earmarked for the Budget for Development averaged 15.3 per cent of Special Fund revenues over the 2005–10 period. Internal transfers from the General Fund are carried out by the city at its own discre on. Targeted funds (those earmarked for items selected by city council) represented on average 13.6 per cent of all Special Fund revenues, while revenues from taxes on property were equivalent on average to 10.6 per cent of total revenues. On average, other rev- enues comprised the remaining 3.4 per cent of Special Fund revenues. BUDGET FOR DEVELOPMENT The Budget for Development is a component of the Special Fund. Revenues from the Budget for Development are ear- marked 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. Over the 2005–10 period, the Budget for Development averaged 2.4 per cent of total budget revenues, ranging from a high of 4.7 per cent of total revenues in 2005 to a low of 0.5 per cent of total revenues in 2009. (See Table 4.3.) TABLE 4.3. BUDGET FOR DEVELOPMENT, 2005‒10 (UAH MILLIONS AND PER CENT)

2005 2006 2007 2008 2009 2010 Receipts from asset 24.3 8.1 15.2 8.7 4.5 4.3 sales Revenues from land 18.4 2.3 4.4 27.9 3.5 9.0 sales Investment subven ons 2.0 2.1 3.0 1.7 0.5 1.1 Transfers from the 7.4 23.7 28.1 38.4 5.7 25.0 General Fund Total 52.1 36.3 50.7 76.8 14.2 39.3

Memorandum: Total revenues 1,099.6 1,396.4 2,083.4 2,903.6 2,611.7 2,977.7 Propor on of total 4.7 2.6 2.4 2.6 0.5 1.3 revenues, %

Sources: State Treasury Reports on Local Budgets Execu on for City of Dnipropetrovsk 2005–10; in-house calcula ons.

The largest single component of the Budget for Development was funds transferred from the General Fund (48.1 per cent on average over the 2005–10 period). This is a useful indicator, as it shows that during this period, the city had a stable opera ng performance and managed to fund some of its infrastructure expenditures through its opera ng sur- plus. The next largest components were revenues from asset sales (25.4 per cent) and revenues from land sales (22.3 per cent). It is nevertheless important to recall that the supply of assets and land the city has for sale is fi nite and that these sources of funds could ul mately become depleted. MODIFIABLE REVENUES Modifi able revenues are taxes or levies that the execu ve bodies of local self-governance units may modify at will in terms of the tax base or tax rate. These include local taxes and du es, and income derived from leasing land or build- ings.5 The share of modifi able revenues in Dnipropetrovsk’s budget over the last six years averaged 17.4 per cent of revenues (Table 4.4.)

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. 35 Dnipropetrovsk - Demographic, Economic, Fiscal

Dnipropetrovsk’s modifi able revenues consisted mainly of land payments (73.4 per cent of modifi able revenues on aver- age over the 2005–10 period). The unifi ed single tax on small entrepreneurs accounted for only 17.0 per cent of modifi - able revenues, followed by local taxes and du es (7.3 per cent on average). Receipts from community property leases accounted, on average, for 2.2 per cent of modifi able revenues.

TABLE 4.4. MODIFIABLE REVENUES, 2005‒10 (UAH MILLIONS AND PER CENT)

2005 2006 2007 2008 2009 2010 Land payments 140.7 136.4 138.9 436.3 470.9 469.0 Local taxes and du es 19.9 17.8 26.6 27.9 25.5 25.6 Receipts from community prop- 2.7 4.1 7.5 10.8 14.2 11.7 erty lease Unifi ed single tax on small entre- 47.7 46.7 56.5 62.9 56.5 59.7 preneurs Total 211.1 205.0 229.5 537.9 567.1 566.1

Memorandum Total revenues 1,099.6 1,396.4 2,083.4 2,903.6 2,611.7 2,977.7 Propor on of total revenues, % 19.2 14.7 11.0 18.5 21.7 19.0

Sources: State Treasury Reports on Local Budgets Execu on for City of Dnipropetrovsk 2005–10; in-house calcula ons.

EXPENDITURES Dnipropetrovsk’s expenditures grew at a CAGR of 22.9 per cent from 2005 to 2010, increasing from UAH 1,090.4 million in 2005 to UAH 3,061.4 million in 2010. (See Chart 4.7.) CHART 4.7. EXPENDITURES, 2005‒10 (UAH MILLIONS) 3,500

3,000

2,500

2,000

1,500

1,000

500

0

2005 200620072008 2009 2010

Sources: State Treasury Reports on Local Budgets Execu on for City of Dnipropetrovsk 2005–10; in-house calcula ons.

36 Dnipropetrovsk - Demographic, Economic, Fiscal

On a per capita basis, expenditures increased from UAH 1,042.1 per capita in 2005 to UAH 3,051.1 per capita in 2010, which was equivalent to a CAGR of 24.0 per cent. Adjusted for infl a on, however, per capita expenditures only increased from UAH 918.1 to UAH 1,376.0, which was equivalent to a CAGR of 8.4 per cent. (See Chart 4.8.)

CHART 4.8. PER CAPITA EXPENDITURES, REAL AND NOMINAL, 2005‒10 (UAH) 3,500

Nominal 3,000

2,500

2,000

1,500 Real

1,000

500

0 2005 200620072008 2009 2010

Sources: State Treasury Reports on Local Budgets Execu on for City of Dnipropetrovsk 2005–10; State Sta s cs Service of Ukraine (CPI data); in-house calcula ons.

The bulk of spending in 2010 was on educa on (25.6 per cent), followed by health care (20.2 per cent), and social protec- on and social security (19.7 per cent). (See Chart 4.9.) Along with expenditures on public administra on (4.0 per cent), housing and municipal economy (9.7 per cent), and transport and communica ons (4.9 per cent), these six categories totalled 84.1 per cent of all expenditures.

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

Other expenditures 15.9 Educa on 25.6 Public administra on 4.0

Transport, roads, and communica ons 4.9

Housing and municipal economy Health care 9.7 20.2

Social protec on and social security 19.7

Sources: State Treasury Report on Local Budgets Execu on for City of Dnipropetrovsk; in-house calcula ons.

The fastest growth in expenditures occurredcurrered in tthehe socialsocial protecprootec on aandnd socialsoc security category, which rose from UAH 99.1 million in 2005 to UAH 602.9 millionillion in 2010,22010 0, which wasw equivalentequivalent to a CAGR of 43.5 per cent. (See Chart 4.10.) This growth—which occurred in manyny ci es acrossss Ukraine—wasUkraineU e—was due to a reviewrev of basic social standards introduced by the central government, along with a correscorrespondingpondinding increase in exexpenditures.pendi While expenditures on educa on recorded the second-fastest growth rate over the 20020052005–105–10 pperioderiod (from UAH 251.9 million to UAH 783.2 million, or a 3737 Dnipropetrovsk - Demographic, Economic, Fiscal

CAGR of 25.5 per cent), this item retained its status as the largest single expenditure item. Together, health care, social protec on and social security, and educa on accounted for 65.5 per cent of total expenditures in 2010. Expenditures on housing and the municipal economy, although highly variable, increased by a CAGR of 17.6 per cent over the 2005–10 period and represented 9.7 per cent of total expenditures in 2010. The variability of expenditures on housing and the municipal economy was a result of large payments made to households for the reimbursement of costs incurred from hea ng and other u li es. CHART 4.10. LARGEST EXPENDITURES BY CATEGORY, 2005‒10 (UAH MILLIONS)

Chart 4.10a. Educa on Chart 4.10b. Health Care 900 700

800 600 700 500 600 500 400 400 300 300 200 200 100 100 0 0 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010

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

700 450 400 600 350 500 300 400 250

300 200 150 200 100 100 50 0 0 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010

Chart 4.10e. Construc on Chart 4.10f. Transport, Roads, Communica ons 80 160 70 140 60 120 50 100 40 80 30 60 20 40 10 20

00 200520062007200820092010 2005 2006 2007 2008 2009 2010

Sources: State Treasury Reports on Local Budgets Execu on for City of Dnipropetrovsk 2005–10. 38 Dnipropetrovsk - Demographic, Economic, Fiscal

Total expenditures may also be viewed in terms of opera ng and capital expenditures. The share of capital expenditures as a propor on of total expenditures declined from 13.5 per cent in 2005 (UAH 147.2 million) to 7.9 per cent in 2010 (UAH 241.0 million). (See Chart 4.11.) Expressed on a CAGR basis, capital expenditures rose by just 10.4 per cent over the 2005–10 period, compared to 24.5 per cent for opera ng expenditures.

CHART 4.11. OPERATING AND CAPITAL EXPENDITURES, 2005‒10 (UAH MILLIONS)

3,000

Opera ng 2,500 expenditures

2,000 Capital expenditures

1,500

1,000

500

0

2005 200620072008 2009 2010

Sources: State Treasury Reports on Local Budgets Execu on for City of Dnipropetrovsk 2005–10. INDICATORS OF DNIPROPETROVSK’S FISCAL HEALTH The city’s lack of debt and debt service, low dependence on central government transfers (as demonstrated by the low ra o of budget transfers to opera ng revenues), and an opera ng surplus (evidenced by the ra o of opera ng expen- ditures to opera ng revenues of less than unity) all earn it a “strong” ra ng. (See Table 4.5.) Off se ng these strengths are a number of factors: the city’s rela vely low modifi able revenues earn it a “neutral” designa on, as does its ra o of opera ng surplus to tax revenues being less than the benchmark of 5 per cent (which suggests a lack of tax revenues as a share total revenues). Moreover, the city’s low level of capital expenditures is just strong enough to be characterized as “neutral.” Finally, the fact that the ra o of total expenditures to total revenues are greater than unity (102.8 per cent) means the city is in a defi cit posi on (as evidenced by the defi cit per capita fi gures)—earning it a “weak” ra ng on both counts. Overall, three “strong,” three “neutral,” and two “weak” ra ngs suggest the city is in a “stable” fi scal posi on overall.

39 Dnipropetrovsk - Demographic, Economic, Fiscal

TABLE 4.5. INDICATORS OF THE FISCAL HEALTH OF DNIPROPETROVSK’S CITY BUDGET

Benchmark Posi on 2005 2006 2007 2008 2009 2010 Strong Weak (2010) Defi cit/surplus per capita, 8.6 -3.2 78.7 -22.3 -38.2 -83.6 > 0 < 0 Weak UAH Total expenditures/total 99.2 100.2 96.1 100.8 101.4 102.8 < 95 > 100 Weak revenues, % Modifi able revenues/oper- 20.4 15.4 11.5 19.2 21.8 19.7 > 40 < 10 Neutral a ng revenues, % Opera ng expenditures/ 90.9 92.3 86.6 89.9 93.3 98.3 < 100 > 100 Strong opera ng revenues, % Opera ng surplus/tax 13.2 11.7 21.1 15.3 10.1 2.5 > 5 < 2 Neutral revenues, % Budget transfers/opera ng 26.2 30.7 30.1 28.8 25.8 29.0 < 33 > 50 Strong revenues, % Capital expenditures/total 13.5 12.0 13.7 13.8 8.6 7.9 > 15 < 5 Neutral expenditures, % Debt servicing/opera ng 0.0 0.0 0.0 0.0 0.0 0.0 < 10 > 15 Strong revenues, % Debt servicing/capita, UAH 0.0 0.0 0.0 0.0 0.0 0.0 No n/a No n/a n/a data data Sources: State Treasury Reports on Local Budgets Execu on for City of Dnipropetrovsk 2005–10; in-house calcula ons.

ATTACHMENT 1. MAIN FISCAL INDICATORS OF THE CITY OF DNIPROPETROVSK, 2005‒10 2005 2006 2007 2008 2009 2010 Main budget Per Total, Per Total, Per Total, Per Total, Per Total, Per Total, indicators capita, UAH capita, UAH capita, UAH capita, UAH capita, UAH capita, UAH mil UAH mil UAH mil UAH mil UAH mil UAH mil UAH Revenues Budget revenues, total 1,099.6 1,050.9 1,396.4 1,343.4 2,083.4 2,019.5 2,903.6 2,842.0 2,611.7 2,586.6 2,977.7 2,967.7 Budget revenues growth, n/a 27.0 49.2 39.4 -10.1 14.0 year-over-year, % of which city revenues 827.4 790.7 986.5 949.0 1,482.4 1,436.9 2,094.4 2,049.9 1,941.0 1,922.3 2,144.3 2,137.1 without transfers of which offi cial transfers 272.2 260.2 410.0 394.4 601.0 582.6 809.2 792.1 670.7 664.3 833.4 830.6 of which grants 100.1 95.7 24.1 23.2 186.2 180.5 187.5 183.5 79.4 78.6 84.8 84.6 of which subven ons 164.7 157.4 362.2 348.4 386.7 374.9 583.3 570.9 585.7 580.1 723.6 721.2 of which funds directed to 7.4 7.1 23.7 22.8 28.1 27.2 38.4 37.6 5.7 5.6 25.0 24.9 Budget for Development from the General Fund Share of total revenues, % of which city revenues 75.2 70.6 71.2 72.1 74.3 72.0 without transfers, % of which offi cial transfers, % 24.8 29.4 28.8 27.9 25.7 28.0 of which grants, % 9.1 1.7 8.9 6.5 3.0 2.8 of which subven ons, % 15.0 25.9 18.6 20.1 22.4 24.3 of which funds directed to 0.7 1.7 1.3 1.3 0.2 0.8 Budget for Development from the General Fund, % Main city budget revenue items of which city revenues 827.4 790.7 986.5 949.0 1,482.4 1,436.9 2,094.4 2,049.9 1,941.0 1,922.3 2,144.3 2,137.1 without transfers of which personal income 431.0 411.9 599.7 576.9 939.7 910.9 1,222.0 1,196.0 1,081.2 1,070.8 1,282.6 1,278.3 tax of which tax on owners 18.6 17.8 27.3 26.2 33.5 32.5 36.9 36.1 42.1 41.7 40.8 40.7 of vehicles and other self- propelled machines and mechanisms 40 Dnipropetrovsk - Demographic, Economic, Fiscal

of which land payments 140.7 134.4 136.4 131.2 138.9 134.6 436.3 427.0 470.9 466.4 469.0 467.4 of which payment for 38.9 37.2 39.1 37.6 44.4 43.1 46.7 45.7 11.8 11.7 10.0 10.0 trade patents for some types of entrepreneurial ac vity of which local taxes and 19.9 19.0 17.8 17.1 26.6 25.8 27.9 27.4 25.5 25.2 25.6 25.6 fees of which unifi ed single tax 47.7 45.6 46.7 44.9 56.5 54.8 62.9 61.5 56.5 56.0 59.7 59.5 for small entrepreneurs of which receipts from 2.7 2.6 4.1 3.9 7.5 7.3 10.8 10.6 14.2 14.1 11.7 11.7 lease payments for using integral property complexes and other state property of which payments for 24.0 23.0 29.3 28.2 37.4 36.2 47.3 46.3 51.2 50.7 56.6 56.4 services provided by in- s tu ons subsidized from the budget of which receipts from 24.3 23.2 8.1 7.8 15.2 14.7 8.7 8.5 4.5 4.4 4.3 4.2 the disposal of property owned by the Autono- mous Republic of Crimea and property owned by municipali es of which receipts from 18.3 17.5 2.3 2.2 4.4 4.2 27.9 27.3 3.5 3.5 8.9 8.9 land sales of which other budget 61.2 58.5 75.8 72.9 178.4 172.9 167.0 163.5 179.7 177.9 174.9 174.3 revenues of which offi cial transfers 272.2 260.2 410.0 394.4 601.0 582.6 809.2 792.1 670.7 664.3 833.4 830.6 General and Special Funds revenues General Fund revenues 923.3 882.4 1,100.7 1,058.9 1,801.5 1,746.3 2,432.5 2,380.9 2,238.9 2,217.4 2,655.3 2,646.3 Special Fund revenues 176.3 168.5 295.7 284.4 281.9 273.2 471.1 461.1 372.9 369.3 322.5 321.4 of which Budget for 4.74 2.60 2.43 2.64 0.54 1.32 Development, % Expenditures Budget expenditures, total 1,090.4 1,042.1 1,399.6 1,346.4 2,001.6 1,940.3 2,925.5 2,863.4 2,649.3 2,623.8 3,061.4 3,051.1 Budget expenditures n/a 28.4 43.0 46.2 -9.4 15.6 growth, year-over-year, % Main budget expenditure items of which public adminis- 38.2 36.5 60.4 58.1 68.7 66.6 113.1 110.7 111.4 110.3 122.9 122.5 tra on of which law enforce- 2.7 2.6 3.2 3.1 4.2 4.0 6.0 5.9 5.8 5.7 6.3 6.2 ment ac vi es and state security maintenance of which educa on 251.9 240.7 306.5 294.8 424.8 411.8 634.8 621.4 659.8 653.4 783.2 780.6 of which health care 206.1 197.0 255.5 245.8 340.8 330.3 466.4 456.5 492.8 488.0 618.1 616.0 of which social protec on 99.1 94.7 145.0 139.5 327.2 317.1 376.7 368.7 478.4 473.8 602.9 600.8 and social security of which housing and 132.2 126.3 277.9 267.3 197.0 191.0 398.4 390.0 275.5 272.8 297.1 296.1 municipal economy of which culture and arts 19.3 18.5 27.4 26.4 36.4 35.3 59.8 58.5 60.6 60.0 75.3 75.1 of which mass media 1.8 1.7 2.2 2.1 2.6 2.5 3.7 3.6 3.3 3.3 4.2 4.1 of which physical educa- 9.5 9.0 12.2 11.7 16.6 16.1 25.2 24.7 27.7 27.4 36.1 36.0 on and sport of which construc on 44.5 42.5 47.4 45.6 59.6 57.8 73.2 71.6 16.0 15.9 40.3 40.2 of which agribusiness 0.2 0.2 0.4 0.4 0.3 0.3 0.4 0.4 0.0 0.0 0.7 0.7 and forestry, fi shing, and hun ng of which transport, public 75.6 72.3 78.4 75.4 106.0 102.7 121.4 118.8 128.2 126.9 150.2 149.7 road system, communica- ons, telecommunica- ons, and IT of which other services 5.5 5.3 0.4 0.4 1.2 1.2 2.5 2.4 2.2 2.2 2.3 2.3 related to economic ac v- ity 41 Dnipropetrovsk - Demographic, Economic, Fiscal

of which environmental 1.1 1.1 0.5 0.5 0.6 0.6 0.3 0.3 0.1 0.1 0.0 0.0 protec on and nuclear security of which preven on and 0.7 0.6 0.9 0.8 1.7 1.6 0.7 0.7 0.5 0.5 0.9 0.9 elimina on of emergency situa ons and disaster consequences of which debt service 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 of which targeted funds 16.1 15.4 23.5 22.6 66.4 64.3 92.5 90.6 55.9 55.4 50.2 50.0 of which expenditures not 1.9 1.8 1.5 1.4 5.0 4.8 14.9 14.6 17.5 17.3 23.4 23.3 referred to in main groups of which other budgetary 184.1 176.0 156.4 150.4 342.6 332.1 535.4 524.0 313.6 310.6 247.4 246.6 expenditures General and Special Funds expenditures General Fund expenditures 924.2 883.3 1,098.4 1,056.6 1,754.6 1,700.8 2,438.3 2,386.6 2,269.2 2,247.4 2,744.1 2,734.8 Special Fund expenditures 166.2 158.8 301.2 289.8 247.0 239.4 487.2 476.8 380.0 376.4 317.4 316.3 Structure of the budget expenditures based on economic classifi ca on Opera ng expenditures, 943.1 901.4 1,231.6 1,184.8 1,727.7 1,674.7 2,523.3 2,469.7 2,421.4 2,398.1 2,820.6 2,811.1 total Capital expenditures, total 147.2 140.7 168.0 161.6 274.0 265.6 403.1 394.6 228.9 226.7 241.0 240.2 Budget surplus/defi cit Budget surplus/defi cit 9.0 8.6 -3.4 -3.2 81.2 78.7 -22.8 -22.3 -38.6 -38.2 -83.9 -83.6 as % of revenues 0.8 -0.2 3.9 -0.8 -1.5 -2.8 Total popula on at the 1,046,365 1,039,497 1,031,638 1,021,683 1,009,699 1,003,382 beginning of the year, number of people

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.

42 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 devel- opment 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