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The Benche Webinar Ukraine presented by Jenny Nordgren, seb

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This presentation is from a webinar held at the Benche on July 6, 2010. A recorded version of the webinar can be found here

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The Benche Webinar Ukraine presented by Jenny Nordgren, seb

  1. 1. WEBINAR: Ukraine – on track again? 6 July 2010 Jenny Nordgren Country Analyst
  2. 2. Crisis hit Ukraine hard <ul><li>Large external imbalances before the crisis </li></ul><ul><li>Weak banking sector </li></ul><ul><li>Collapsing steel industry – 42 % of exports </li></ul><ul><li>International finance dried up </li></ul><ul><li>Chaotic politics </li></ul>
  3. 3. IMF loan averted a default <ul><li>Massive capital flight </li></ul><ul><li>Sharp FX devaluation </li></ul><ul><li>Substantial IMF loan of USD 16bn in November 2008 </li></ul>
  4. 4. Recovery under way <ul><li>Stronger external demand </li></ul><ul><li>Higher commodity prices </li></ul><ul><li>Low base </li></ul><ul><li>Domestic demand still weak </li></ul>
  5. 5. Political Stalemate Ended <ul><li>Democratic presidential elections </li></ul><ul><li>New majority government </li></ul><ul><li>Decisive actions during the first 100 days in power </li></ul><ul><ul><li>Adopted a budget for 2010 </li></ul></ul><ul><ul><li>Concluded a gas-fleet deal with Russia </li></ul></ul><ul><ul><li>IMF staff level agreement on USD 15bn aid package </li></ul></ul>
  6. 6. Positive momentum <ul><li>Improved investor confidence </li></ul><ul><li>Upgrade of sovereign rating </li></ul><ul><li>Sharp reduction of capital outflows </li></ul><ul><li>Soaring stock market </li></ul><ul><li>Appreciation pressure on the hryvnia </li></ul>
  7. 7. But risks remain - Budget <ul><li>Sharp widening of the fiscal deficit </li></ul><ul><li>2010 Budget unrealistic </li></ul><ul><li>Large corrective measures needed </li></ul>Source: World Bank, July 2010
  8. 8. But risks remain - Energy <ul><li>Energy sector reform – IMF condition </li></ul><ul><li>Raise domestic natural gas prices </li></ul><ul><li>Improve Naftogaz’s financial position </li></ul><ul><li>Socially and politically challenging </li></ul>
  9. 9. Large refinancing needs <ul><li>High external debt </li></ul><ul><li>Mainly owned by the private sector </li></ul><ul><li>Large external debt repayments to IMF 2012-2014 </li></ul><ul><li>Resumed IMF lending is key </li></ul>

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