Key developments and challenges

The pace of recovery from the crisis has slowed down. As the global economic environment deteriorated, growth of Ukraine’s commodity-based export sectors decelerated. Credit growth has suffered from deleveraging by European banks and tight monetary policy focused on a stable exchange rate.

The business environment has deteriorated further, notwithstanding recent administrative reforms. Illegal corporate raids have increased. Tax administration policies - including delayed VAT refunds, limited ability of companies to deduct investments from corporate tax and advance tax payments - have deterred investors.

The authorities made steps to reform the gas sector. A decision was made to reorganise the national oil and gas company Naftogaz along functional lines into production, transit and distribution units. Licenses to explore shale gas were auctioned to multinational companies, and discussions initiated to widen geographic sources of gas imports.