Digest of Economy & Markets, International Support, Politics & Culture
Markus CIUPEK
Dr.-Ing. | ?? ????Entrepreneur & Investor Empowering Manufacturing in Ukraine ???? | Co-Owner, Time & Space Ukraine | Mentor & Resilience Expert | Public Speaker | Author | Connecting ????????????Businesses
Welcome to the 23rd edition of "Ukraine Through My Eyes"!
Our newsletter continues to grow, with more and more readers joining us each week – thank you for your continued support! We are proud to announce that we’ve reached almost 1,500 subscribers!
This week, Ukraine’s 2025 State Budget was approved, with UAH 2,223 billion (26.3% of GDP) dedicated to defense and security. With the economy projected to slow, real GDP growth is expected to drop to 2.7% in 2025. The question remains: Will this funding be enough to secure Ukraine’s future, or will more be needed?
International backing remains strong. At the Crimean Platform Summit, over 60 global leaders reaffirmed their commitment to Ukraine. Major U.S. tech companies like Microsoft and Google have fully exited the Russian market, reinforcing sanctions against Russia.
On the local front, Vinnytsia’s Dry Port has opened, boosting trade with Europe, while the Veterans' Circle Festival in Kyiv will bring veterans and civilians together to celebrate Ukraine’s culture.
As Ukraine rebuilds and defends its future, we ask: Is the current support enough to sustain the nation’s resilience?
We hope you enjoy this edition and look forward to your feedback.
Wishing you a peaceful week ahead!
Слава Укра?н? - Разом сильн?ш? - до перемоги!
??? Yours sincerely, Markus Ciupek
“Own Business”: How Investments in Private Businesses Help Develop the Country
The "Own Business" grant program from the Ministry of Economy of Ukraine is part of the government’s "eRobota" initiative and provides effective support for micro and small businesses.
Grants for veterans and their spouses are a separate focus of the "Own Business" grant program, offering essential support for Ukraine’s defenders. Additionally, the "CREATE!" grant program, which supports female entrepreneurs in the manufacturing sector, was initiated by the Ministry of Economy of Ukraine with financial backing from the Ukraine-Moldova American Enterprise Fund and is implemented by the KSE Foundation.
As of August 2024, grant recipients under the "Own Business" program have paid 3 billion UAH in taxes. Over the past two years, 19,500 Ukrainians have benefited from the program, with the state investing 4.7 billion UAH in their businesses. This government financial support is expected to create around 37,000 jobs across various sectors.
The most active regions are:
The Dry Port in Vinnytsia Received the First Cargo
The "Lemtrans" group has built a new container terminal in Vinnytsia, which has already received its first cargo.
The terminal, which offers a wide range of logistics services, will serve as an alternative to the Odessa ports. With its new railway infrastructure, container yard, storage facilities, and weighing system, the "dry port" will ensure fast delivery, handling, and dispatch of goods.
Additionally, the terminal will provide Vinnytsia with more opportunities for cooperation with other regions of Ukraine and European countries. This will allow for regular shipments to Odessa, Poland, and eventually to Germany, Belgium, France, Italy, and the Netherlands.
Source: Vinnytsia Mayor Serhiy Morgunov, Facebook, 09/09/2024
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The NBU Eased Currency Restrictions for Businesses Starting September 10
The purchase and transfer of foreign currency to cover carbon dioxide emissions is one of the areas that has changed. According to the NBU, state-owned companies can now buy foreign currency and transfer it to non-residents to purchase quotas to cover or offset CO2 emissions related to aviation.
Payments for operations under reinsurance contracts with foreign nuclear insurance pools have also been adjusted. These changes allow for all necessary payments stipulated by the reinsurance contracts (in addition to the previously allowed reinsurance premiums or payments). This includes the payment of a break-even bonus, which is a mandatory condition defined by the reinsurance contract.
Another modification concerns the acquisition and transfer of foreign currency by resident legal entities involved in e-commerce for the purpose of paying VAT in the EU. The National Bank will now allow e-commerce companies to purchase and transfer foreign currency overseas to pay VAT when customers from EU countries purchase items made by Ukrainian producers. The e-commerce entity must be registered as a taxpayer in the EU to perform these transactions.
Source: NBU, 09/09/2024
After Ukraine’s Successful Debt Restructuring, Fitch Upgraded the Country’s Hryvnia Rating
Following the conclusion of the Eurobond debt restructuring, the rating agency Fitch Ratings upgraded Ukraine's long-term issuer default rating (IDR) from CCC- to CCC+ in local currency and affirmed the long-term IDR in foreign currency at RD (Restricted Default). Additionally, Fitch assigned CCC foreign-currency issue ratings to the Bond A series (2029, 2034, 2035, and 2036) and Bond B series (2030, 2034, 2035, and 2036).
Fitch also revised its June forecast for total public debt in 2024, lowering it from 92.5% to 89.6% of GDP.
However, the protracted nature of the conflict, which may continue until 2025, means that the ratings for new bond issues and Ukraine's long-term IDR still reflect significant credit risk. As a result, the country is expected to maintain a sizable budget deficit (17.5% of GDP in 2024 and 15.3% of GDP in 2025) with financing uncertainties arising in 2025.
Source: UBN, 05/09/2024
The Average Salary in Ukraine Has Increased to Almost UAH 21 Thousand, with IT Employees Earning the Most
The State Statistics Service reported a 10.1% increase in the average salary of officially employed workers in Ukraine in the second quarter of 2024, bringing it to UAH 20,964.
This follows a 10.1% increase in the first quarter, when the average salary was UAH 18,903. The highest official salaries were paid to IT professionals, who earned an average of UAH 50,188 in the IT and telecommunications industry— a 37.1% increase from the previous year. The air transport industry ranked second, with an average salary of UAH 43,387, a 46.3% increase from the previous year. The finance and insurance sector ranked third, with an average salary of UAH 39,891, marking a 21.6% increase from the second quarter of 2023.
On the lower end of the spectrum, the lowest average salaries were below UAH 13 thousand. Workers in the creativity, art, and entertainment sectors received an average salary of UAH 12,791, while those in libraries, archives, museums, and other cultural institutions earned an average of UAH 12,802. Educators had an average salary of UAH 15,076.
Source: State Statistics Service, 09/09/2024
The Government Approved the Draft State Budget of Ukraine for 2025, Which Will Be Submitted to the Verkhovna Rada for Consideration
The draft State Budget of Ukraine for 2025 has been approved by the government and is expected to be submitted to the Verkhovna Rada for consideration. The budget prioritizes Ukraine’s defense, with financial resources for the security and defense sector increasing to UAH 2,223 billion (~EUR 49.4 billion) in 2025, which represents 26.3% of the country's projected GDP.
Social protection is also a priority, with funding fully allocated for war veterans, IDPs, persons with disabilities, benefits and subsidies, and pension transfers.
“The defense of Ukraine will be ensured. Financing the security and defense sector is a key priority laid down in the draft State Budget of Ukraine for 2025. Expenditures to ensure effective opposition to the enemy will increase. We will direct all internal revenues and borrowings to the needs of the defenders of Ukraine. Assistance to citizens, support for veterans, and social services are also in the focus of the Government for the next year," emphasized Serhiy Marchenko, the Minister of Finance of Ukraine, during the Cabinet of Ministers meeting.
The government expects Ukraine's real GDP growth to slow from 3.5% in 2024 to 2.7% in 2025. Nominal GDP for 2025 is projected to be nearly 8.5 trillion UAH (~EUR 189 billion), corresponding to a growth of 13.1%. The GDP deflator is expected to change by 10.1%, and government forecasters plan to accelerate the consumer price index from 7.9% at the end of 2024 to 9.5% by the end of 2025.
Source: The Ministry of Finance of Ukraine, 13/09/2024
Exports of Ukraine Increased by 10% and Imports by 12% from January to August
Ukraine imported goods worth over $45.1 billion between January and August 2024, a 10% increase compared to the same period last year. Exports grew by 12% to $27.5 billion, compared to the volume for the same eight months in 2023. The economy has adapted to martial law conditions, which has impacted foreign trade indicators. Taxed imports totaled $37.8 billion, with a 7% increase in the tax burden per kilogram of taxed imports.
Ukraine’s main import partners are China, Poland, and Germany. The top export destinations were Poland, Spain, and China. The leading goods exported from Ukraine were food products ($16 billion), metals and metal products ($2.9 billion), and mineral products ($2.2 billion).
During the eight-month period, 189.3 million UAH were paid to the budget through customs clearance of export goods subject to export duties, representing a 60% decrease from the same period last year.
Source: State Customs Service of Ukraine, 13/09/2024
A School Will Be Rebuilt in the Village of Zeleny Gai in Mykolaiv Oblast
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In March 2022, a Russian airstrike destroyed the school. Reconstruction efforts have been undertaken by partners of Ukraine, including Taiwan, the public group #Ukraine Resilience (the charity fund Neo-Eco Ukraine), and the Lithuanian Fund for the Development of Cooperation and Humanitarian Aid.
Modular construction will be used in the rebuilding of the school, which will reduce waste, expedite assembly, and ensure the building's flexibility for the future. There are also plans to construct a shelter alongside the new school.
It is anticipated that pupils will be able to return by 2026. The school will serve as a community hub for locals and provide apprenticeships.
Source: Mykolaiv region site, 09/09/2024
DTEK to Build Batteries for Energy Storage with a 140 Million Euro Investment
To improve Ukraine's energy security, DTEK is investing 140 million euros in the development of energy storage technologies. The organization plans to construct 200 MW of installations to create a reliable and "green" energy system.
The batteries are scheduled to be commissioned by September 2025, at which point they will begin offering Ukrenergo auxiliary services.
The proposal includes the construction of several facilities across Ukraine. In collaboration with other energy market players, DTEK won the Ukrenergo auction on August 22, paving the way for the growth of the energy storage industry and the development of balancing capacity.
DTEK has made energy storage systems a strategic priority.
"Despite the war and limited access to the foreign capital market, we continue to invest in Ukraine. This is not only about restoring what was destroyed, but also constructing new facilities. Our priority remains unchanged — the development of green energy in Ukraine, the accelerated integration of our energy system into Europe, and the improvement of our country's energy security," noted DTEK CEO Maksym Timchenko.
Source: DTEK's press office, 13/09/2024
The Cabinet of Ministers Reduced the Cost of Loans for Small and Medium-Sized Businesses Under State Support Programs
The Cabinet of Ministers has adopted a resolution to enhance financial state support for micro, small, and medium-sized businesses as part of the state programs "Affordable Loans 5-7-9%", "Affordable Financial Leasing 5-7-9%", and "Affordable Factoring".
The resolution aims to reduce interest rates for businesses by combining state support with partner programs from authorized banks. The Entrepreneurship Development Fund (FDF) will also improve the mechanism for providing guarantees to these banks. Additionally, the World Bank's environmental and social standards will be implemented for loans to agricultural enterprises starting December 1, 2024, within the 5-7-9 program.
The government's decision regulates the fulfillment of international cooperation conditions for attracting affordable financing for Ukrainian businesses, including through partnerships with the World Bank, the International Bank for Reconstruction and Development, and the International Development Association. The "Affordable Loans 5-7-9%" program is implemented by the Federal Tax Service, which has cooperation agreements with 46 authorized banks.
Source: The Ministry of Finance of Ukraine, 13/09/2024
More Than 10 Digital Giants from the USA Announced Their Exit from Russia
Since September 12, over ten of the largest American IT corporations have declared their intention to completely withdraw from the Russian market and implement more stringent sanctions against Russia. This was mentioned in a communiqué from the Ukrainian Ministry of Foreign Affairs.
Specifically, American businesses have imposed the following sanctions on Russia:
"We appreciate our partners' decisive actions after extensive consultations," the Ministry of Foreign Affairs stated.
Russians are also no longer eligible for services or technical support from the Israeli website builder Wix as of September 12.
Source: Ministry of Foreign Affairs, 13/09/2024
The EBRD Provided PrivatBank with Portfolio Guarantees for Business Lending Worth €400 Million
The agreement between the banks stipulates that the EBRD will assume up to 50% of PrivatBank's credit risk for each loan within the portfolio of newly issued loans to private borrowers, up to a maximum of €400 million, according to the bank's press office.
It is highlighted that the agreement covers lending in several areas: projects to ensure energy independence for business clients, condominiums, and private individuals; micro, small, and medium-sized businesses; businesses affected by military actions; women-owned businesses; veteran-owned businesses; relocated businesses; and businesses supported by grants from international donors.
Thanks to the new agreement with the EBRD, PrivatBank will be able to increase support for Ukrainian companies and expand financing for projects in food production, energy efficiency, and energy production.
Source: PrivatBank, 13/09/2024
An Agreement Was Reached on the Fifth Revision of the Financing Program with the IMF
The International Monetary Fund (IMF) and Ukrainian authorities have reached a Staff-Level Agreement (SLA) to provide financing in the amount of SDR 834.8 million (about 1.1 billion US dollars). The IMF's mission regarding the fifth review of the Extended Fund Facility (EFF) program with Ukraine has completed its work. The IMF emphasized that the skillful policies of the Ukrainian authorities, the high adaptability of the population and businesses, and stable external financing have made it possible to support macroeconomic and financial stability.
The IMF forecasted that economic growth in Ukraine will slow down in the second half of 2024 due to Russian attacks on energy infrastructure, the war's impact on the labor market, and reduced business activity expectations. The real GDP growth forecast for 2024 is 3%, with inflation reaching 9%. Solving the problem of electricity shortages before winter is critical and requires coordinated efforts, including participation from international partners. Economic growth in 2025 is predicted to be between 2.5% and 3.5%, but the risks remain extremely high.
To maintain financial stability and increase preparedness for potential shocks, the priority is to strengthen the system of bank rehabilitation, contingency planning, and bank management. Opportunities for further easing of monetary policy until the end of the year have decreased due to rising inflation risks. Adequate monetary policy, combined with managed exchange rate flexibility, should help prevent excessive fluctuations and imbalances in exchange rates and inflation expectations.
Source: NBU, 11/09/2024
Up to UAH 8 Million (EUR ~177,778) for the Development of Defense Innovations: Brave1 Increases Grants for Defense Tech Developers
Applications from the defense tech cluster Brave1 are now being accepted for a new funding program. Ukrainian developers can now receive grants of UAH 4 million (EUR ~88,889) and UAH 8 million (EUR ~177,778) for the advancement of defense technology. In addition, Brave1 continues to offer grants of UAH 500,000 (EUR ~11,111), UAH 1 million (EUR ~22,222), and UAH 2 million (EUR ~44,444).
Who is eligible to apply: Members of the Brave1 cluster and Ukrainian manufacturers whose innovations have passed a defense inspection and received a minimum overall rating of 6 and a rating of 5 for the current level of development readiness are eligible to receive UAH 4 million (EUR ~88,889). To qualify for UAH 8 million (EUR ~177,778), the project must receive an overall rating of at least 7 and a rating of at least 6 for development readiness.
Grant money can be used for R&D, product development, and the acquisition of machinery and components.
It is worth noting that the Brave1 award program was introduced in July 2023. Since then, 299 awards have been granted, 262 of which totaled USD 4.9 million, and UAH 67 million (EUR ~1.49 million) has been distributed through 37 grants.
Source: Brave1, 10/09/2024
Support of Ukraine's Partners During the Crimean Platform 2024: Stable Friends and Unexpected Statements
The fourth summit of the Crimean Platform took place in Kyiv on September 11-12, aimed at increasing international pressure on Russia due to its illegal occupation of the Crimean peninsula. Over 60 representatives from various countries and international organizations attended the summit, including the presidents of Lithuania, Latvia, Croatia, Moldova, the Czech Republic, as well as representatives from Great Britain and the US. The participants adopted a joint statement expressing their commitment to restoring Ukraine's sovereignty and territorial integrity, including the deoccupation of Crimea, by providing political, financial, and military assistance to resist Russian aggression.
Turkey's President, Recep Tayyip Erdogan, made a controversial online speech, stating that Turkey's support for Ukraine's territorial integrity remains unwavering and that the return of Crimea is a requirement of international law.
The leaders at the Crimean Platform 2024 emphasized the importance of global solidarity regarding the Russian-Ukrainian war and the temporarily occupied territories of Ukraine. Latvian Prime Minister Evika Silinia announced a new aid package worth €40 million, including armored personnel carriers for the Armed Forces. Lithuanian President Gitanas Naus?da highlighted the importance of this year's summit, as it coincides with the ten-year anniversary of Crimea's occupation.
Lithuania is investing €10 million in the production of Ukrainian long-range weapons, known as "Palyanytsia", and also hosted a Lithuanian-Ukrainian defense forum to strengthen cooperation and support for Ukraine's defense industry.
Source: Crimean Platform 2024, 12/09/2024
A Festival of Veteran Culture to Be Held in Kyiv
The Veterans' Culture Festival "Veterans' Circle" will take place in Kyiv on September 22. The event aims to bring together military personnel and civilians to share experiences and build relationships.
According to the Ukrainian Veterans Fund, the event's organizer, the festival will provide opportunities for the reintegration and moral support of Ukrainian veterans while also demonstrating respect and solidarity within Ukrainian society.
The event will feature six interactive zones, including:
Books written by veterans will also be presented at the event. Notably, veteran poet Olena Gerasimyuk and other writers will recite original poetry.
The event is free to attend, and guests and participants will receive information about the festival's location and time after registering.
Source: The Ukrainian Veterans Fund, 13/09/2024
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