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 2.5%

Current GDP forecast for Ukraine’s Real GDP growth in 2020 3.0%

Economic recovery accelerated to 3.3 per cent in 2018 on the back of robust domestic demand. Private consumption increased by 8.9 per cent, benefiting from the 12.5 per cent growth of real wages which came on top of a cumulative 30 per cent growth in 2016-17. An increase in average pensions, rising inflows of remittances and strong consumer credit growth of 24.2 per cent also helped to boost private consumption. Remittances increased by 17.5 per cent in nominal US dollars in 2018, reaching 8.3 per cent of GDP. Inflows from Poland, amounting to one-third of all remittances in 2018, nearly doubled in the period 2016-18. Recovery in investment continued, with fixed capital formation growing at the rate of 14 per cent. After a modest recovery in 2017, the growth rate of exports of goods and services turned negative in 2018, while imports rose by just 3.2 per cent, in spite of strong domestic demand, partly because of a substantial reduction of gas imports. Credible monetary policy has helped maintain a relatively stable exchange rate and a gradual reduction of inflation to 8.8 per cent year-on-year in February 2019. In December 2018, the IMF Executive Board approved a new 14-month Stand-By Arrangement for US$ 3.9 billion. With US$ 1.4 billion made available upon the approval of the IMF programme, as well as funds received under the EU’s Macro-Financial Assistance (MFA) and the World Bank’s Policy-Based Guarantee (PBG), international reserves of the National Bank of Ukraine reached a five-year high by end-2018. A deceleration of growth in the main trading partners and domestic political uncertainties arising from the twin elections are expected to cause a temporary slowdown of real growth to 2.5 per cent in 2019. Reinvigorated pursuance of the reform agenda in the aftermath of the elections, combined with monetary easing, would facilitate sturdier corporate activity, with real growth strengthening to 3.0 per cent in 2020. With large foreign debt repayments in 2019-2020 posing a major downside risk, maintaining cooperation with official creditors remains vital for a continuation of the economic recovery.

Ukraine in the EBRD’s 2018-19 Transition Report