Ukraine overview

Cityscape in Ukraine

In September 2018 the EBRD Board of Directors has approved a new strategy for Ukraine which sets out the Bank’s priorities in the country for the next five years.

The EBRD will pay special attention to projects that will integrate investment and policy engagement in areas such as privatisation, energy security and efficiency, the financial sector, trade and infrastructure.

The EBRD’s operational and strategic priorities in Ukraine will rest on the following five pillars:

  • Promoting privatisation and commercialisation in the public sector to increase competitiveness and good governance: The EBRD will help stimulate private sector participation across sectors and further commercialisation of public sector firms. The Bank will continue to support the implementation of modern public sector procurement as well as the introduction of proper public governance.
     
  • Promoting the rule of law, fair competition in the private sector and support of companies that use best practice: The EBRD will foster competition and support anti-corruption efforts. Special attention will be paid to improved skills and to the employability of disadvantaged groups.
     
  • Strengthening energy security through effective regulation, market liberalisation, diversified and increased production and energy efficiency:  The EBRD will pledge more resources to create a market structure for sustainable energy and improved energy connectivity. The Bank will assist in the creation of increased resource efficiency and will help promote renewable energy.
     
  • Enhancing the resilience of the financial system by strengthening Ukraine’s banking sector, and by developing capital markets and non-bank finance: The EBRD will promote a stable and efficient banking sector, a greater variety of non-banking financial channels and the use thereof.
     
  • Improving integration by facilitating trade and investment, expanding infrastructure links, and supporting convergence with EU standards: The Bank will invest in improvements to connectivity through better infrastructure. It will also help facilitate increased trade and investment flows.

As well as being a country where the EBRD works, Ukraine  is also a donor and a beneficiary of the Eastern Europe Energy Efficiency and Environment Partnership Fund (E5P) with total contributions of EUR 10 million.

The EBRD’s latest Ukraine strategy was adopted on 3 October 2018

Current GDP forecast for Ukraine’s Real GDP growth in 2019 3.3%

Current GDP forecast for Ukraine’s Real GDP growth in 2020 3.5%

Economic growth remained resilient, despite the risks coming from the twin election cycle. After gaining momentum in 2018, Ukraine’s real GDP growth accelerated from 3.3 per cent in 2018 to 3.6 per cent year on year in the first half of 2019. The economy continued to benefit from robust private consumption, which grew at 11.3 per cent on the back of strong real growth of disposable income. Fixed capital formation increased by 12.0 per cent year on year in the first half of 2019, driven by the booming construction sector. Meanwhile, real export growth is up by 5.6 per cent and imports by 7.8 per cent year on year in the same period. This has led to a widening trade deficit, but the current account remains stable, helped by substantial increases in services and primary income surpluses.
 
Significant private capital inflows on the domestic government securities market led to a 15.0 per cent appreciation of the local currency (relative to the US dollar) in the period January to September 2019. The abundance of foreign portfolio capital inflows helped to increase Ukraine’s official reserve assets to US$ 21.4 billion as of 1 October 2019, covering 3.5 months of imports, despite large debt repayments in the same period. Inflation slowed to 7.5 per cent in September 2019 but remains above the 5 per cent target of the National Bank of Ukraine. The key policy rate has come down from 18.0 per cent in April to 15.5 per cent in October. Bearing in mind the large public sector foreign exchange debt repayments that will fall due in the next two years, the new IMF reform-oriented programme is crucially important for anchoring investors’ expectations and supporting macroeconomic stability. Ukraine’s economic growth is forecast to stay at 3.3 per cent in 2019 and slightly accelerate to 3.5 per cent in 2020.

Ukraine in the EBRD’s 2019-20 Transition Report