1. EBRD - Assisting Ukraine
Through Difficult Times
and Beyond
Presentation at
Lviv International Economic Forum
André Küüsvek
EBRD Director, Ukraine
1 October 2009

2. EBRD in Ukraine
 Largest financial investor in the country with 16
years of experience in the local market
 Clients - leading local and foreign companies
 As of September 2009 the EBRD funded 185
projects in Ukraine for over € 4.5 billion.
 Financing of the working capital, trade and
purchase of industrial equipment

3. EBRD Annual Investments in Ukraine
EBRD Annual Business Volume in Ukraine
(EUR million)
1,000
750
500
789 879
647 667
250 529
300
116
0
2003 2004 2005 2006 2007 2008 8m2009
Net ABV

4. EBRD Cumulative Business Volume in Ukraine –
Allocation by Sector (1 September 2009)
Cumulatively 185 projects for the total amount of EUR 4.5 bln. were signed
Private
sector
Loans 73%
90%
Equity
10% 14%
Industry 18%
Agribusiness Public sector
27%
6%
Municipal Infrastructure
Financial
Institutions 4% Natural Resources
29%
7% Power and Energy
3%
4% Property and Tourism
15% Telecommunications
Transport

5. Prospective EBRD Projects for Ukraine
12% 11%
0% Agribusiness MEUR 132
Energy MEUR 157
8% 13% FI MEUR 239
EUR 1.2
General Industries MEUR 255
9% Infrastructure
billion MEUR 78
Natural Resources MEUR 111
6%
Property MEUR 91
20% Telecoms MEUR 2
Transport MEUR 142
21%

6. 2009 Municipal Financing
Lviv Municipal Transport
 EUR 40 million financing in Roads and Public
Transport Infrastructures with municipal guarantee
 EUR 12 million to Lviv Public Transport Company to
finance rolling stock, refurbish tram depots,
maintenance training and equipment, new
communication and IT systems
 EUR 26 million to Lviv Road Agency for the
rehabilitation of tram lines 2 and 6 (tracks, overhead
lines) and the rehabilitation of the streets and
underlying utilities along lines 2 and 6 and traffic
management

7. 2009 Municipal Financing
Lviv Municipal Transport (cont’d)
 Important Technical Cooperation program (EUR2.6 million) to
support the investment program and institutional reforms:
– Procurement and Implementation Support
– Corporate Development Program
– Credit Enhancement Program for the City
– Transport Regulatory reform advisory
– Traffic Management Design review
 In addition to tangible upgrade of infrastructure, the project has
an important institutional reform objective and a project
management and implementation capacity building for the City
as a whole
 Project seen as a test case for future cooperation and project
development with projects in district heating, road infrastructure,
solid waste in the pipeline

8. 2009 Municipal Financing
Ivano-Frankivsk District Heating
 EUR 12 million loan to Ivano-Frankivsk
TeploKumunEnergo with municipal guarantee
 SEK50 million (appr. EUR4.9 million) of grant co-
financing provided by SIDA
 Carbon Credit Transaction developed (up to EUR
1 million in additional funding)
 Important Technical Cooperation Program
 Institutional Reforms (tariffs, company
corporatisation, IFRS, procurement, …)

9. 2009 Commercial Financing
Galnaftogaz
EBRD acquired a stake worth up to $50 million in OJSC Galnaftogaz,
which operates Ukraine’s leading petrol stations chain OKKO.
The transaction will strengthen the balance sheet and
liquidity position of Galnaftogaz. It will also allow OJSC Galnaftogaz
to continue its development strategy through selective acquisitions
of new stations as well as modernisation of the
existing service stations, including via energy efficiency measures.

10. Benefits of working with the EBRD
 Extensive knowledge of local economy, business environment and practices
 Door opener for FDI
 Experience gained in problem resolution in CEE & CIS
 Excellent working relationships with the Government at the highest levels
 Full range of financial products and tenor tailored to client needs
 Willing to share risks, including political risks (customised to each transaction)
 Preferred Creditor Status in CEE & CIS
 Strong, internationally recognised, financial partner with long-term perspective
and mission
 Sectoral expertise

11. EBRD: general project features
Minimum EBRD financing:  Project makes economic
€5 million sense - no “soft loans”
 Substantial equity
contributions by the project
Minimal project cost sponsor, incl. cash
(or cumulative portfolio costs) :  Usual need for a B lender
€15 million
 Limited refinancing
 Project is tailored to the
needs of the market

12. EBRD Investment Products
Equity / Mezzanine Debt Investment Funds
• Common stock  Senior, subordinated  To date EBRD has
debt, convertible committed EUR 443
• Preferred shares million to 11 real estate
 Mezzanine loans  Syndication funds focusing on
 Minority positions Eastern Europe
 Maturities (Ukraine)
only
 Flexible exit  Denominated in major
strategies currencies
 Flexible, tailor-made
security package

13. EBRD Project Approval Procedure:
• EBRD receives initial information (business plan/financing request) and considers
project concept (Approx. 1 month)
• Formal approval of Project Concept by EBRD Credit Committee
• Due diligence and Project preparation
• EBRD prepares and submits Term Sheet to client
• Final Approval of Project by Credit Committee
• Approval by EBRD Board of Directors (1 month)
• Loan/investment negotiations and signing
Project preparation time: approx. 6 months (depending on preparedness)

14. Ukraine & Financial Crisis.
What’s next?

15. Ukraine: Crisis Impact so far
Ukraine's GDP has dropped by 18 percent in the second quarter of 2009
against the same period last year. The worst production reduction was reported in the:
• construction
• processing industries
• production and distribution of electric energy
• gas and mining industry
It is expected that GDP will record a 3% growth in 2010
The CPI inflation rate will exceed 15% in 2009 and is expected to be around 12.4% in 2010
The volume of industrial output in January- July, 2009 dropped by
30.4 percent against the same period in 2008

16. Ukraine: Crisis Impact so far (cont’d)
The budget deficit exceeded 2. 2 billion U.S. dollars
In January-August 2009 the NBU monetary gold reserves shrank
by 8.5% or USD 2.672 billion, from USD 31.543 billion to USD 28.871 billion.
While Ukraine’s current-account deficit has narrowed in 2008, to $1.2 billion recently,
it remains in negative territory. Part of this deficit is attributable to payments for natural gas
pumped underground in summer and stored for winter. In January-July 2009, imports of
goods exceeded exports by USD 3,131.6 million
The prospects for recovery in the near term remain constrained
by world economic developments.

17. Ukraine: Key immediate steps to be taken
In the financial sector:
• Recapitalisation of the banking sector
• Restore trust in banks so that normal business practices can resume
• Improve corporate governance and transparency
• Develop local currency long-term funding
Energy / Energy Efficiency:
• Improve energy efficiency - increase energy security
• Restoring trust in Ukraine as a reliable partner is key
• Predictability and transparency are key conditions for that

18. Ukraine: EBRD crisis response measures
EBRD stands ready to support Ukraine and is acting:
The EBRD targets to invest over EUR 1 billion in Ukraine in 2009.
Close cooperation with the Government, involve into policy dialogue,
assisting the authorities in putting together a coordinated crisis response.
A strategic EBRD-Government portfolio review meeting took place in early 2009.
EBRD and Ukraine discussed and agreed the list of priority projects to be financed by the
Bank in the public sector
The Bank is actively involved in the talks about the banking sector and in contact with all
relevant parties: banks, authorities, IFIs. In early 2009 a coordination meeting with
participation of 15 foreign banks, the Government and the National Bank to agree key
principles for continued support of foreign banking groups to their Ukrainian subsidiaries,
and to restore lending to real economy.

19. Ukraine: what’s next?
Ukraine is an important country for Europe and for the Bank and this
country is badly affected by the financial crisis. Failure of Ukraine will have
severe economic and political repercussions and can potentially destabilise
the whole region.
Because of its mandate, country knowledge and
reputation, the EBRD is in the unique position to bring together all
relevant parties (external and internal) to jointly work on crisis
mitigation issues. But political will, quick strategic thinking as well
as political consensus are urgently required from the authorities of this
country. Only jointly we can succeed in our efforts.
The authorities should act in full and immediate collective consensus on the urgency
to jointly restore stability and compliance with IMF Programme, which will stipulate
involvement of other IFIs in Ukraine.

20. How to contact us
Tel: +380 44 270 6132
Fax: +380 44 270 6813
Email: kiev@kev.ebrd.com
www.ebrd.com/ukraine
Kiev Resident Office
27/23 Sofiyvska Street
Kiev 01001 Ukraine