Seb Country Analysis Feb 2009 Ukraine

Ukraine SEB MERCHANT BANKING – COUNTRY RISK ANALYSIS

February 26, 2009

Analyst: Jenny Nordgren. Tel: +46 8 763 96 05. E-mail : [email protected]

Fierce political infighting complicates economic policies to support the ailing economy. Sticking to the IMF-program will be key to avoid severe adverse effects on the exchange rate and financial stability that may result in a banking sector collapse adding substantial costs to the sovereign.

Country Risk Analysis

Index

^=Åçää~éëáåÖ=ÉÅçåçãóK=qÜÉ=râê~áåá~å=ÉÅçåçãó=Ü~ë=ÄÉÉå=Üáí=Ü~êÇ=Äó=íÜÉ=ÖäçÄ~ä= ÅêÉÇáí=Åêáëáë=~åÇ=~=ëÜ~êé=Ñ~ää=áå=ÇÉã~åÇ=Ñçê=~åÇ=íÜÉ=éêáÅÉ=çÑ=ëíÉÉä=Ó=râê~áåÉÛë=ã~áå= ÉñéçêíK=qÜáë=Ü~ë=íêáÖÖÉêÉÇ=~= Industrial Production ëÜ~êé=ÇÉíÉêáçê~íáçå=áå=râê~áåÉÛë= Annual percentage change 100=0 íÉêãëJçÑJíê~ÇÉ=~åÇ=ëáÖåáÑáÅ~åí= 120 ëäçïÇçïåë=áå=Å~éáí~ä=áåÑäçïë= 110 êÉëìäíáåÖ=áå=~=ëÜ~êé=Ñ~ää=áå=êÉ~ä= dam=çÑ=NQ=B=áå=nQ=OMMUK=qÜÉ= 100 Ççïåíìêå=áë=äÉÇ=Äó=~=ëÜ~êé= 90 Åçåíê~Åíáçå=áå=íÜÉ=ã~åìÑ~ÅíìêáåÖ= ~åÇ=ÅçåëíêìÅíáçå=ëÉÅíçêë=ïÜáäÉ= 80 íÜÉ=~ÖêáÅìäíìê~ä=ëÉÅíçê=ÅçåíáåìÉÇ= 70 íç=ÖêçïK=qÜÉ=ëäìãé=~ÅÅÉäÉê~íÉÇ= áå=g~åì~êó=~ë=áåÇáÅ~íÉÇ=Äó=~= 60 Jan Apr Jul Oct Jan Apr Jul Oct ëíÉÉé=Ñ~ää=áå=áåÇìëíêá~ä= 07 08 éêçÇìÅíáçå=Äó=PQ=B=EvçvF=~åÇ=~= ÇÉÉé=êÉÅÉëëáçå=áë=ÉñéÉÅíÉÇ=íÜáë=óÉ~êI=ïáíÜ=ëçãÉ=çÄëÉêîÉêë=éêçàÉÅíáåÖ=~=Åçåíê~Åíáçå=çÑ= ÉîÉå=ãçêÉ=íÜ~å=NM=BK=qÜÉ=áåÑä~íáçå=ê~íÉ=Ü~ë=ÅçãÉ=Ççïå=Ñêçã=áíë=éÉ~â=çÑ=PN=B=áå=j~ó= Äìí=êÉã~áåë=ÜáÖÜ=~í=OO=B=ÉåÇ=çÑ=OMMUK== = bñÅÜ~åÖÉ=ê~íÉ=éêÉëëìêÉK=qÜÉ=ÉñÅÜ~åÖÉ=ê~íÉ=Ü~ë=ÄÉÉå=ìåÇÉê=ëÉîÉêÉ=Ççïåï~êÇ= éêÉëëìêÉ=ëáåÅÉ=ãáÇJOMMU=ÇìÉ=íç=~=ïáÇÉåáåÖ=ÅìêêÉåí=~ÅÅçìåí=ÇÉÑáÅáí=~åÇ=ä~êÖÉ=Å~éáí~ä= çìíÑäçïëK=qÜÉ=ïÉ~âÉåáåÖ=çÑ=íÜÉ=Üêóîåá~=Äó=ãçêÉ=íÜ~å=SM=B=ëáåÅÉ=gìäó=Ü~ë=í~âÉå= éä~ÅÉ=ÇÉëéáíÉ=ÜÉ~îó=áåíÉêîÉåíáçå=Äó=íÜÉ=`Éåíê~ä=_~åâ=êÉÇìÅáåÖ=ÑçêÉáÖå=ÉñÅÜ~åÖÉ= êÉëÉêîÉë=Ñêçã=rpa=PUÄå=áå=pÉéíÉãÄÉê=íç=rpa=OUÄå=ÉåÇ=çÑ=g~åì~êóI=çÑ=ïÜáÅÜ=rpa= OÄå=ïÉêÉ=äçëí=áå=g~åì~êóK=qÜÉ=ÉñÅÜ~åÖÉ=ê~íÉ=áåíÉêîÉåíáçåë=áå=ÅçãÄáå~íáçå=ïáíÜ=ëÜ~êé= ÜáâÉë=çÑ=ÅÉåíê~ä=Ä~åâÛë=êÉÑáå~åÅáåÖ=ê~íÉ=~åÇ=~Çãáåáëíê~íáîÉ=êÉëíêáÅíáçåë=ëìÅÜ=~ë= äáãáíáåÖ=ÑçêÉáÖå=ÉñÅÜ~åÖÉ=ë~äÉë=ÉñÅÉéí=íç=Åçãé~åáÉë=ïáíÜ=éÉåÇáåÖ=áãéçêí=é~óãÉåíë= Ü~îÉ=ÜÉäéÉÇ=ëí~ÄáäáëÉ=íÜÉ=ÉñÅÜ~åÖÉ=ê~íÉ=~êçìåÇ=UJUKR=~Ö~áåëí=íÜÉ=rp=Ççää~ê=ëáåÅÉ=ãáÇJ aÉÅÉãÄÉêK=cìêíÜÉê=ãÉ~ëìêÉë=íç=ëìééçêí=íÜÉ=ÉñÅÜ~åÖÉ=ê~íÉ=~êÉ=ÅìêêÉåíäó=ìåÇÉê= ÇáëÅìëëáçåI=áåÅäìÇáåÖ=íÜÉ=~Ççéíáçå=çÑ=~=ä~ï=ëíáéìä~íáåÖ=íÜÉ=çÄäáÖ~íçêó=ë~äÉ=çÑ=RMB=çÑ= Éñéçêí=éêçÅÉÉÇë=íÜêçìÖÜ=íÜÉ=ÉñÅÜ~åÖÉ=ã~êâÉíK=eçïÉîÉêI=íÜÉ=ÉñÅÜ~åÖÉ=ê~íÉ=áë=äáâÉäó= íç=êÉã~áå=ìåÇÉê=Ççïåï~êÇ=éêÉëëìêÉ=ÇìÉ=íç=ïÉ~â=Éñéçêí=éêçëéÉÅíë=~åÇ=ÅçåíáåìÉÇ= äçï=áåÑäçï=çÑ=Å~éáí~äK=

Source: Reuters EcoWin

important your attention is drawn to the statement on the back cover of this report which affects your rights.

SEB Merchant Banking Country Risk Analysis February 26, 2009

fjc=âÉó=íç=ÅçåíáåìÉÇ=ëí~ÄáäáíóK=râê~áåÉ=ï~ë=çåÉ=çÑ=íÜÉ=Ñáêëí=ÅçìåíêáÉë=íç=ëÉÉâ=~åÇ= êÉÅÉáîÉ=Ñáå~åÅá~ä=~ëëáëí~åÅÉ=Ñêçã=íÜÉ=fjc=êÉëìäíáåÖ=áå=OQJãçåíÜ=ëí~åÇ=Äó=~ÖêÉÉãÉåíI= áåÅäìÇáåÖ=~=äç~å=çÑ=rpa=NSKQÄå=áå=kçîÉãÄÉêK=eçïÉîÉêI=íÜÉ=fjcJéêçÖê~ã=Å~ääáåÖ=Ñçê= ÖêÉ~íÉê=ÉñÅÜ~åÖÉ=ê~íÉ=ëí~ÄáäáíóI=~=Ä~ä~åÅÉÇ=ÄìÇÖÉí=Ñçê=OMMV=~åÇ=~=êÉëíêìÅíìêáåÖ=çÑ=íÜÉ= Ä~åâáåÖ=ëÉÅíçê=Ü~ë=~äêÉ~Çó=êìå=áåíç=éêçÄäÉãë=~ÑíÉê=íÜÉ=m~êäá~ãÉåí=~ÇçéíÉÇ=íÜÉ=OMMV= ÄìÇÖÉí=ïáíÜ=~=ÇÉÑáÅáí=çÑ=P=B=áå=ä~íÉ=aÉÅÉãÄÉêK=qÜáë=Ü~ë=êÉëìäíÉÇ=áå=~=ÇÉä~óÉÇ= ÇáëÄìêëÉãÉåí=çÑ=íÜÉ=fjc=äç~åÛë=ëÉÅçåÇ=é~óãÉåí=çÑ=rpa=NKVÄå=éä~ååÉÇ=Ñçê=ãáÇJ cÉÄêì~êóK=eçïÉîÉêI=íÜÉ=ÇÉíÉêáçê~íÉÇ=ÉÅçåçãáÅ=ëáíì~íáçå=~åÇ=íÜÉ=êáëâ=çÑ=ëçÅá~ä=ìåêÉëí= áåÅêÉ~ëÉ=íÜÉ=ÅÜ~åÅÉë=Ñçê=~=ÅçãéêçãáëÉ=íç=ÖÉí=íÜÉ=fjc=éêçÖê~ããÉ=Ä~Åâ=çå=íê~ÅâK=^ë=~= ÅçãéäÉãÉåí=íç=íÜÉ=fjc=ÑìåÇáåÖI=íÜÉ=~ìíÜçêáíáÉë=Ü~îÉ=íêáÉÇ=íç=ëÉÅìêÉ=ÉñíÉêå~ä= Ñáå~åÅáåÖ=çÑ=íÜÉ=ÉñéÉÅíÉÇ=ÄìÇÖÉí=ÇÉÑáÅáíI=áåÅäìÇáåÖ=ïáíÜ=oìëëá~I=íÜÉ=brI=íÜÉ=rp=~åÇ= íÜÉ=tçêäÇ=_~åâK=kÉîÉêíÜÉäÉëëI=~åó=ÉñíÉêå~ä=ÄìÇÖÉí=ëìééçêíI=ÉñÅÉéí=Ñêçã=éÉêÜ~éë= oìëëá~I=ÇÉéÉåÇë=çå=íÜÉ=fjcJéêçÖê~ã=ÄÉáåÖ=çå=íê~ÅâK=qÜáë=áåÅêÉ~ëÉë=íÜÉ=êáëâ=çÑ= `Éåíê~ä=_~åâ=Ñáå~åÅáåÖ=çÑ=íÜÉ=ÄìÇÖÉí=ÇÉÑáÅáí=ïáíÜ=éçíÉåíá~ä=~ÇîÉêëÉ=ÉÑÑÉÅíë=çå=íÜÉ= áåÑä~íáçå=~åÇ=ÉñÅÜ~åÖÉ=ê~íÉK=få=~ÇÇáíáçåI=íÜÉ=Åçëí=çÑ=Ä~åâ=êÉÅ~éáí~äáò~íáçå=áë=Éëíáã~íÉÇ= Äó=íÜÉ=fjc=íç=~åçíÜÉê=QKR=B=çÑ=dam=Erpa=RKRÄåFK==qÜÉ=b_oa=~åÇ=íÜÉ=tçêäÇ=_~åâ=Ü~ë= êÉÅÉåíäó=~ååçìåÅÉÇ=íÜ~í=íÜÉó=~êÉ=êÉ~Çó=íç=éêçîáÇÉ=bìêç=RMMãå=~åÇ=rpa=TRMãå= êÉëéÉÅíáîÉäó=Ñçê=Ä~åâ=êÉÅ~éáí~äáò~íáçå=~åÇ=ÑçêÉáÖå=Ä~åâë=Ü~îÉ=êÉéçêíÉÇäó=áåàÉÅíÉÇ= rpa=OÄå=áåíç=íÜÉáê=râê~áåá~å=ëìÄëáÇá~êáÉëK= = fåÅêÉ~ëÉÇ=êáëâ=çÑ=ÇÉÑ~ìäíK=mìÄäáÅ=Ñáå~åÅÉë=êÉã~áå=ëíêçåÖ=ïáíÜ= Box 1: The gas agreement äçï=éìÄäáÅ=ÇÉÄí=íç=dam=~í=NO=B=~åÇ=ãçÇÉê~íÉ=ëçîÉêÉáÖå= ÉñíÉêå~ä=êÉÑáå~åÅáåÖ=åÉÉÇë=çÑ=äÉëë=íÜ~å=rpa=OÄå=íÜáë=óÉ~êK= An agreement was reached on January 18 ending a bitter gas dispute eçïÉîÉêI=íÜÉ=êáëâ=çÑ=Ä~åâáåÖ=ëÉÅíçê=Åçää~éëÉ=~åÇ=ïáÇÉëéêÉ~Ç= between Russia and Ukraine. Under Åçêéçê~íÉ=ÇÉÑ~ìäíë=Äó=íÜÉ=Ñáå~åÅá~ääó=ëíêÉëëÉÇ=ä~êÖÉ= the agreement, Ukraine will pay West Åçêéçê~íáçåë=êáëâ=~ÇÇáåÖ=ëìÄëí~åíá~ä=ÑáëÅ~ä=~åÇ=Ñáå~åÅá~ä= European market prices, adjusted for transportation costs. The prices will éêÉëëìêÉ=Ñçê=íÜÉ=ëçîÉêÉáÖåK=mêáî~íÉ=ëÉÅíçê=ÑçêÉáÖå=ÇÉÄí=Ñ~ääáåÖ= be set quarterly via a formula taking ÇìÉ=íÜáë=óÉ~ê=áë=Éëíáã~íÉÇ=íç=rpa=PSÄåK=eÉåÅÉI=râê~áåÉÛë= account of prices for crude oil and íçí~ä=ÑçêÉáÖå=ÇÉÄí=çÄäáÖ~íáçåë=íÜáë=óÉ~ê=~ãçìåíë=íç=rpa= heavy fuel oil with a nine-month lag. During 2009, Ukraine will get a 20 % PUKRÄå=ïÜáÅÜ=Å~å=ÄÉ=Åçãé~êÉÇ=íç=íÜÉ=`Éåíê~ä=_~åâÛë=ÑçêÉáÖå= discount on European import prices ÉñÅÜ~åÖÉ=êÉëÉêîÉë=çÑ=rpa=OUÄåK== in return for keeping transit fees for = Russian gas being transported through Ukraine unchanged at USD cáÉêÅÉ=éçäáíáÅ~ä=áåÑáÖÜíáåÖK=qÜÉ=éçäáíáÅ~ä=áåÑáÖÜíáåÖ=ÄÉíïÉÉå= 1.7 per 100 km per 1,000 cubic íÜÉ=íïç=ÑçêãÉê=lê~åÖÉ=oÉîçäìíáçå=~ääáÉë=Ó=mêÉëáÇÉåí= metres compared USD 2.5-3 vìëÅÜÉåâç=~åÇ=mêáãÉ=jáåáëíÉê=qáãçëÜÉåâç=J=Ü~ë=ÄÉÉå=ÖçáåÖ= elsewhere in Europe. In addition, gas çå=ëáåÅÉ=íÜÉ=lê~åÖÉ=oÉîçäìíáçå=áå=OMMQK=mÉêëçå~ä=~ãÄáíáçåë= will be exported to Ukraine directly via Gazprom rather than by the ~ë=ïÉää=~ë=~=Åçåëíáíìíáçå~ä=ëóëíÉã=çÑ=“ÅçJÜ~Äáí~íáçåÒ=Ü~îÉ= intermediary RosUkrEnergo. êÉëìäíÉÇ=áå=ÑáÉêÅÉ=ÅçãéÉíáíáçå=~åÇ=êÉåÇÉêÉÇ=ÇáÑÑáÅìäíáÉë=Ñçê= ÅçÜÉêÉåí=~åíáJÅêáëáë=éçäáÅáÉëK=fåÇáÅ~íáîÉäóI=íÜÉ=m~êäá~ãÉåí=Ü~ë= Based on this agreement, Ukraine is expected to pay USD 360/tcm during îçíÉÇ=íç=Çáëãáëë=íÜÉ=`Éåíê~ä=_~åâ=ÖçîÉêåçê=ïÜáÅÜ=ã~ó= Q1 2009 compared to USD 180/tcm íÜêÉ~í=`Éåíê~ä=_~åâ=áåÇÉéÉåÇÉåÅÉK=qÜÉ=ãáåáëíÉê=çÑ=cáå~åÅÉ=J= paid last year. However, considering sáâíçê=móåòÉåóâ=Ó=Ü~ë=~äëç=êÉëáÖåÉÇ=áå=çééçëáíáçå=íç=íÜÉ= the sharp drop in oil prices, the gas price will drop sharply from the Q2 ÉÅçåçãáÅ=éçäáÅáÉë=ä~áÇ=çìí=áå=íÜÉ=ÄìÇÖÉí=Ñçê=OMMVK=c~ÅáåÖ= resulting in an average price around éêÉëáÇÉåíá~ä=ÉäÉÅíáçåë=áå=g~åì~êó=OMNM=éçäáíáÅ~ä=áåÑáÖÜíáåÖ=áë= USD 200/tcm, assuming crude oil äáâÉäó=íç=êÉã~áå=ÑáÉêÅÉ=ÇìêáåÖ=íÜáë=óÉ~êK=mêÉëáÇÉåí= prices average USD 55/barrel according to the IIF. vìëÅÜÉåâçÛë=~ééêçî~ä=ê~íáåÖ=Ü~ë=Ñ~ääÉå=ëáÖåáÑáÅ~åíäó=~åÇ=áë= åçï=Ççïå=íç=PJQ=BK=mj=qáãçëÜÉåâç=~åÇ=íÜÉ=çééçëáíáçå= äÉ~ÇÉê=v~åìâçîáÅÜ=~êÉ=ÄçíÜ=ëìééçêíÉÇ=Äó=~êçìåÇ=OR=B=çÑ=íÜÉ=îçíÉêë=~åÇ=~êÉ=äáâÉäó=íç= ÄÉ=ÑêçåíêìååÉêë=áå=íÜÉ=mêÉëáÇÉåíá~ä=ÉäÉÅíáçåëK= =

2

SEB Merchant Banking Country Risk Analysis February 26, 2009

oáëâ=çÑ=ëçÅá~ä=ìåêÉëíK=o~éáÇäó=áåÅêÉ~ëáåÖ=ìåÉãéäçóãÉåí=ê~íÉëI=Ñ~ääáåÖ=êÉ~ä=ï~ÖÉë= ~åÇ=éÉåëáçåë=~åÇ=ï~ÖÉ=~êêÉ~êë=áåÅêÉ~ëÉ=íÜÉ=êáëâ=çÑ=ëçÅá~ä=ìåêÉëíK=^=åìãÄÉê=çÑ= ÇÉãçåëíê~íáçåë=Ü~îÉ=ÄÉÉå=ÜÉäÇ=áå=háÉî=~åÇ=açåÉíëâ=Å~ääáåÖ=Ñçê=íÜÉ=mêÉëáÇÉåíÛë= êÉëáÖå~íáçå=~ë=ïÉää=~ë=éêçíÉëíë=~Ö~áåëí=Ä~åâë=éçäáÅáÉë=áåÅäìÇáåÖ=êáëáåÖ=áåíÉêÉëí=ê~íÉë= ~åÇ=íÜÉ=`Éåíê~ä=_~åâÛë=Ä~å=çÑ=É~êäó=ïáíÜÇê~ï~ä=çÑ=Ä~åâ=ÇÉéçëáíëK= = oìëëá~=ëíê~íÉÖáÅ~ääó=áãéçêí~åíK==qÜÉ=lê~åÖÉ=êÉîçäìíáçå=áå=OMMQ=ÄêçìÖÜí=ÜçéÉë=çÑ=áå= íÜÉ=tÉëí=çÑ=râê~áåÉ=ãçîáåÖ=íç=íÜÉ=tÉëíI=áåÅäìÇáåÖ=k^ql=ãÉãÄÉêëÜáé=~åÇ=ÅäçëÉê= áåíÉÖê~íáçå=ïáíÜ=íÜÉ=brK=eçïÉîÉêI=äçï=éìÄäáÅ=ëìééçêí=Ñçê=k^ql=Éåíêó=~ãçåÖ= râê~áåá~åë=~åÇ=ëÉÉãáåÖäó=Ñ~ÇáåÖ=áåíÉêÉëí=çÑ=íÜÉ=åÉï=rp=~Çãáåáëíê~íáçå=Ü~ë=êÉÇìÅÉÇ= éêçëéÉÅíë=çÑ=É~êäó=k^ql=ãÉãÄÉêëÜáéK=qÜÉ=br=Ü~ë=~äëç=ÄÉÉå=êÉäìÅí~åí=íç=ÖáîÉ=~åó= éêçãáëÉë=çÑ=br=ãÉãÄÉêëÜáé=Äìí=ïáää=áåëíÉ~Ç=ä~ìåÅÜ=íÜÉ=“b~ëíÉêå=m~êíåÉêëÜáéÒ= ÇÉëáÖåÉÇ=íç=Çê~ï=ëáñ=éçëíJpçîáÉí=ëí~íÉë=J=^êãÉåá~I=^òÉêÄ~áà~åI=_Éä~êìëI=dÉçêÖá~I= jçäÇçî~=~åÇ=râê~áåÉ=J=ÅäçëÉê=íç=íÜÉ=brI=ïáíÜçìí=ÜçäÇáåÖ=çìí=~å=ÉñéäáÅáí=éêçãáëÉ=çÑ= ãÉãÄÉêëÜáéK=qÜáëI=áå=ÅçãÄáå~íáçå=ïáíÜ=oìëëá~Ûë=ëíê~íÉÖáÅ=áãéçêí~åÅÉ=Ó=åçí=äÉ~ëí=áå= íÉêãë=çÑ=Ö~ë=ëìééäó=Ó=ÅçìäÇ=Éñéä~áå=íÜÉ=~éé~êÉåí=ëÜáÑí=áå=ÇçãÉëíáÅ=éçäáÅáÉë=íçï~êÇë= b~ëíK= = J G=====J= = = qÜÉ=râê~áåá~å=ÉÅçåçãó=áë=Ñ~ÅáåÖ=ÅçåëáÇÉê~ÄäÉ=ëíêÉëë=áå=íÜÉ=ï~âÉ=çÑ=íÜÉ=ÖäçÄ~ä=ÅêÉÇáí= Åêáëáë=~åÇ=ëÜ~êé=Ñ~ää=áå=ëíÉÉä=éêáÅÉë=êÉëìäíáåÖ=áå=~=ëÜ~êé=Åçåíê~Åíáçå=çÑ=êÉ~ä=dam= ÖêçïíÜK=^=ïáÇÉåáåÖ=ÅìêêÉåí=~ÅÅçìåí=ÇÉÑáÅáí=~åÇ=ä~êÖÉ=Å~éáí~ä=çìíÑäçïë=Ü~îÉ= íêáÖÖÉêÉÇ=~=ëÜ~êé=ÇÉéêÉÅá~íáçå=çÑ=íÜÉ=ÉñÅÜ~åÖÉ=ê~íÉI=ÜìêíáåÖ=íÜÉ=Ä~åâáåÖ=ëÉÅíçê=ïáíÜ= ä~êÖÉ=ìåÜÉÇÖÉÇ=ÑçêÉáÖå=ÅìêêÉåÅó=äÉåÇáåÖ=ERU=B=çÑ=íçí~ä=äç~åëFK=mçäáíáÅ~ä=áåÑáÖÜíáåÖ= ëÉíë=ÜìêÇäÉë=íç=íÜÉ=áãéäÉãÉåí~íáçå=çÑ=íÜÉ=fjcJéêçÖê~ã=ÇÉä~óáåÖ=íÜÉ=ëÉÅçåÇ= ÇáëÄìêëÉãÉåí=éä~ååÉÇ=Ñçê=áå=ãáÇJcÉÄêì~êóK=eçïÉîÉêI=íÜÉ=ÇÉíÉêáçê~íÉÇ=ÉÅçåçãáÅ= ëáíì~íáçå=~åÇ=íÜÉ=êáëâ=çÑ=ëçÅá~ä=ìåêÉëí=ê~áëÉ=íÜÉ=éêçÄ~Äáäáíó=çÑ=êÉ~ÅÜáåÖ=~= ÅçãéêçãáëÉ=çå=ÑáëÅ~ä=éçäáÅÉëK=píáÅâáåÖ=íç=íÜÉ=fjcJéêçÖê~ã=ïáää=ÄÉ=âÉó=íç=~îçáÇ= ëÉîÉêÉ=~ÇîÉêëÉ=ÉÑÑÉÅíë=çå=íÜÉ=ÉñÅÜ~åÖÉ=ê~íÉ=~åÇ=Ñáå~åÅá~ä=ëí~Äáäáíó=íÜ~í=ã~ó=êÉëìäí=áå= ~=Ä~åâáåÖ=ëÉÅíçê=Åçää~éëÉ=~ÇÇáåÖ=ëìÄëí~åíá~ä=Åçëíë=íç=íÜÉ=ëçîÉêÉáÖåK=qÜáë=Ü~ë= íêáÖÖÉêÉÇ=ëÉîÉê~ä=ÇçïåÖê~ÇÉë=çÑ=râê~áåÉÛë=ëçîÉêÉáÖå=ê~íáåÖ=~åÇ=ÑìêíÜÉê=ÇçïåÖê~ÇÉë= Å~å=ÄÉ=ÉñéÉÅíÉÇ=ëÜçìäÇ=íÜÉ=fjc=åÉÖçíá~íáçåë=ÄêÉ~â=Ççïå=ÅçãéäÉíÉäóK= = = Key ratios

2009

Population

45.5

GDP/capita ($)

3494

GDP (change) Inflation `ìêêK^ÅÅK=Ä~ä~åÅÉLdam

Resilience 12 10 8 6

Macro balance

-6.3%

4

Liquidity

2 0

19% -1.5%

Reserves/imports (months) Budget balance/GDP

How to read the chart? Moving out from the center reduces risk.

4

Absence of event risk

-3.0%

Government debt/GDP

12%

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mÉÉêëW 19%

Ukraine

Information Average EM

Russia

Graph: Ukraine shows no particular strengths but is generally weaker than the average emerging market country as illustrated by the red solid line falling uniformly inside the blue broken one.

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SEB Merchant Banking Country Risk Analysis February 26, 2009

= Key data: 2004 2005 2006 GDP (bill.US$) 64.9 86.1 107.8 GDP/capita (US$) 1372 1836 2314 GDP (real change) 12.1% 3.0% 7.4% Investments/GDP 23.2% 23.4% 26.4% Budget balance/GDP -3.2% -1.8% -0.7% Govt debt/GDP 24.7% 17.7% 13.6% CPI inflation (%) 9.0% 13.5% 9.1% Money demand (%) 23.3% 40.2% 25.0% Stock prices (%change) 131% 131% 28% Interest rates 9% 10% 9% Exch. Rate ($) 5.3 5.1 5.1 Trade/GDP (%) 115% 102% 96% Oil price (Brent $) 38 54 65 Billions US $ Export of goods 39.7 44.3 50.2 Imports of goods 34.8 43.6 53.3 Other: 2.0 1.8 1.5 6.9 2.5 -1.6 Current account (% of GDP) 10.6% 2.9% -1.5% FDI 1.7 7.5 5.7 Loan repayments -3.6 -5.0 -6.5 Net other capital flows -2.2 4.4 5.3 2.8 9.5 2.9 Balance of payments Reserves 9.5 19.0 21.8 Total debt 23.4 28.7 39.3 o/w short term debt 6.9 10.9 15.2 Sources: Oxford Economic forecasting and SEB estimates

2007 141.2 3055 7.7% 30.5% -1.1% 12.4% 12.8% 37.8% 126% 8% 5.1 96% 73

2008 173.1 3775 2.1% 30.5% -1.2% 12.4% 25.2% 5.3% -25% 12% 5.3 115% 98

2009 136.6 3002 -6.3% 27.8% -3.0% 12.0% 18.6% -6.5%

2010 157.8 3494 1.1% 27.0% -2.0% 11.2% 9.8% 1.2%

2011 189.2 4222 4.5% 27.0% -0.4% 18.5% 6.7% 4.8%

12% 7.4 115% 45

11% 7.1 105% 60

9% 6.6 98% 74

64.0 71.9 2.0 -5.9 -4.2% 9.2 -8.4 15.1 9.9 31.8 61.8 22.7

93.0 106.0 1.1 -11.9 -6.9% 11.3 -9.5 9.0 -1.1 30.7 80.3 25.8

75.0 82.0 5.0 -2.0 -1.5% 5.4 -6.6 1.8 -1.4 29.3 93.9 15.9

82.0 84.3 -0.9 -3.2 -2.0% 6.3 -17.3 19.4 5.2 34.5 99.9 18.1

90.1 95.1 0.8 -4.2 -2.2% 7.5 -17.5 15.7 1.5 36.0 105.0 20.0

Rating history Fitch (eoy) Moody's (eoy) S&P (eoy) Type of government: Next elections Other: Latest PC deal Latest IMF arrangements

B+ BBBBBBB1 B1 B1 B1 B+ BBBBBBParliamentary democracy Presidential elections expected in Jan. 2010 2001/active 2004/SBY

E x c h a n g e R a te

F o r e ig n E x c h a n g e R e s e r v e s 9 .0

40

8 .5

35

8 .0

30

7 .5 USD/UAH

USD (billions)

B+ B1 B

25 20 15

7 .0 6 .5 6 .0

10

5 .5

5

5 .0

0

4 .5 03

04

05

06

07

08

04

05

06

07

08

S o u r c e : R e u te r s E c o W i n

09

S o u rc e : R e u te r s E c o W i n

S to c k m a r k e t ( P F T S In d e x )

Eurobond Maturities (USDmn)

Index

1,400 1,200 1,000 800 600 400 200 0

2009 2010 2011 2012 2013 2014 2015

1300 1200 1100 1000 900 800 700 600 500 400 300 200 100 0

02

03

04

05

06

07

08 S o u r c e : R e u te r s E c o W i n

= = = 4

=

SEB Merchant Banking Country Risk Analysis February 26, 2009

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5