#1Ukraine: UKIO Investor Presentation MINISTRY OF FINANCE OF UKRAINE September 2021#2Disclaimer IMPORTANT: You must read the following before continuing. In accessing this document ("Information"), you agree to be bound by the following terms and conditions. The Information is not an offer or invitation to, or solicitation of, any such distribution, placement, sale, purchase or other transfer of any securities in the territory of Ukraine. The Information does not constitute or form part of, and should not be construed as an offer or the solicitation of an offer to subscribe for or purchase any securities, and nothing contained therein shall form the basis of or be relied on in connection with any contract or commitment whatsoever, nor does it constitute a recommendation regarding any securities. The Information contains forward-looking statements. All statements other than statements of historical fact included in the Information are forward-looking statements. 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September 2021 2#3Ukraine's economy: dynamics of selected indicators 2015 2019 Real GDP growth (9.8)% 3.2% $ Consumer 43.3% 4.1% inflation (eop) น % Reserves (eop) Primary state budget balance1 State debt to GDP Today 5.4% (Q2 2021) 10.2% (Aug 2021) US$ 13.3bn (eop) US$ 25.3bn (eop) US$ 31.6bn (Sep 1, 2021) 2.0% of GDP 1.0% of GDP 67.1% 44.3% Note 1 Primary state budget balance defined as state budget revenues minus expenditures excl. debt service and minus net lending Note 2 Estimated based on primary state budget balance of UAH 12.7bn during Q2 2020 - Q1 2021 and actual nominal GDP of UAH 4,349bn during Q2 2020 - Q1 2021 Note 3 Estimated based on actual state debt of UAH 2,235bn as of Mar 31, 2021 and actual nominal GDP of UAH 4,349bn during Q2 2020 - Q1 2021 Sources State Statistics Service of Ukraine, NBU, State Treasury September 2021 0.3% of GDP2 (Q1 2021) 51.4%³ (Q1 2021) 3#4Extensive governmental response to tackle Covid-19 impact Economy Stimulus Program Covid-19 funds use 91910 m SMEs support: UAHbn 7m2021 2021(B) Exec.2 Expansion of Affordable Loans "5-7-9%" program to help SMEs affected by the lockdown Healthcare services procurement Vaccines procurement 12.3 17.5 70% 9.2 10.5 88% Social support of population 3.7 3.8 97% Unemployment-related payments 1.1 1.1 100% Other 2.7 3.1 87% Total funds 29.0 36.0 81% Provision of portfolio state guarantees for loans and partial compensation of loan principal Moratorium on tax penalties, tax exemption and relief from tax debt during lockdown¹ One-off stimulating payments of c. US$ 300 per private entrepreneur in December 2020 and during 1H 2021 Population support: One-off pension increase to low-income pensioners and monthly pension top-up for retirees aged 80+ years Allocated c.US$ 230m to pay unemployment and partial unemployment benefits, which includes raising the minimum support payment and providing immediate support to persons, who had just registered as unemployed 300% salaries increase for medical personnel working with Covid patients Transformation of the economy: Investments attraction: involvement of IFIs for the implementation of investment projects Innovation enhancement: digital transformation strategy, R&D stimulation, reform of scientific setup The Great Construction program: reconstruction of roads, modernization of educational and medical institutions, reconstruction of cultural heritage sites Transportation sector reform: spin-off of Ukrzaliznytsia, reorganization of Seaport Authority, heavy investments into transportation infrastructure Sources CMU, Ministry of Finance, Parliament of Ukraine September 2021 Vaccines procurement and rollout Administered Vaccine Available Received³ 1st dose 2nd dose Pfizer 21.1m 5.0m 2.0m 1.6m Sinovac 8.8m 8.8m 1.6m 1.3m Moderna 2.1m 2.1m 1.1m 0.9m AstraZeneca 7.1m 4.9m 1.0m 0.8m Total 39.1m 20.8m 5.8m 4.6m Note 1 Effective during April-May 2020, January 2021 and April 2021 Note 2 Disbursement of funds compared to budget plan Note 3 As of September 10, 2021 Note 4 Including 8.1m dozes reserved for Ukraine under COVAX program 4#5September 2021 1 Solid foundation for long-term economic growth 2 Return to gradual fiscal consolidation 3 Prudent debt management strategy 4 5 Reviving business climate and development prospects Strong focus on ESG considerations 5#6Accumulated economic buffer to curb Covid-19 crisis (1/2) 2020 GDP in current prices US$ 156bn GDP per capita dynamics, US$ 2017 US$ 2,640 +17% US$ 3,097 2018 +18% Comments In 2020, Ukraine's real GDP has declined by 4.0% which is significantly lower than projected by the government (-4.8%) and the IMF (-7.2%). In Q1 2021, the real GDP has contracted by 2.2% followed by the preliminary growth of 5.4% in Q2 2021 YTD 2021, the key economic sector outputs started to return to upward trend while remaining rather mild. Both agriculture (2.5% y-o-y in Jan-Jul 2021) and industrial production (1.8% y-o-y in Jan-Jul 2021) demonstrate increase while construction index remains relatively unchanged (0.2% y-o-y in Jan-Jul 2021) Despite Covid-19, the private consumption remained strong in Q1 2021 after quick return to growth in Q3 2020, while the fixed capital accumulation remains negative Key economic sectors output growth (y-o-y)¹, % Real GDP growth (y-o-y)², % 3.4% 3.2% 2.4% 2.5% (4.0)% (2.2)% 5.4% 4.0% 3.4% 3.4% 2016 2017 2018 2019 2020 Q1'21 Q2 '21 2021E 2022E 2023E Sources State Statistics Service of Ukraine Component contribution into real GDP growth, % 55% 45% 2019 US$ 35% 3,663 25% 15% +2% 5% (5%) (15%) US$ 3,727 (25%) 2020 (35%) September 2021 Jan Agriculture Construction 7.4% 7.0% 6.3% 5.9% 2.8% 2.5% 1.8% 2.3% 2.0% 3.9% 3.8% 1.2% 1.8% 2.5% 0.2% (0.9)% Private consumption (3.2)% (3.8)% (3.9)% ■Gross fixed capital accumulation Industrial production index (5.9)% Jan-Apr Jan-Jul (7.5)% 2016 2017 2018 2019 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 2016 Jan-Apr 8 Jan-Jul 2018 2019 Jan-Oct Jan Jan-Apr Jan-Jul Jan-Oct Jan Jan-Jul Jan-Apr Jan-Oct Jan Jan-Apr Jan-Oct 8 Jan-Jul Jan Jan-Apr 8 Jan-Jul 2020 2021 Jan-Oct Jan Source State Statistics Service of Ukraine Source State Statistics Service of Ukraine Notes 1 2 To the corresponding period of the previous year on a cumulative basis 2021-2023 data according to the latest IMF's projections 6#7September 2021 Accumulated economic buffer to curb Covid-19 crisis (2/2) Comments The key contributors to industrial output increase in Jan- Jul 2021 are production of furniture (+16.4%), plastics and rubber industry (+12.4%), and machinery (+10.4%) Gross fixed capital accumulation remain negative, 7.8% in Q1 2021, on the back of the economic disruption caused by Covid-19 In the H12021, the capital investments increased by 4.2% y- o-y which is expected to solidify Ukraine's prospects for quick economic recovery post Covid-19 outbreak Industry has been the major contributor to capital investments in H12021 accounting for c.38% followed by construction and agriculture with 11% and 10% shares respectively Gross fixed capital accumulation, % (y-o-y)1 استاسيال 40% 27% 30% 21% 22% 18% 20% .15% 17% 13% 10% 5% 0% 19% 13% 7% (10%) (20%) (30%) (40%) (8)% (23)% (27)% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 '16 '16 '16 '16 '17 '17 '17 '17 '18 '18 '18 '18 '19 '19 '19 '19 '20 '20 '20 '20 '21 Capital investments split by sector in H1 2021, % ■Industry Source State Statistics Service of Ukraine Capital investments dynamics UAH bn 326 413 526 584 420 164 191 18% ■Construction 22.1% 18.0% 16.4% 15.5% 38% ■Agriculture 7% US$ 4.2% 6.9bn ■Trade 8% 23 Transport 19 8% 16 16 6.1 7.0 13 10% 11% State administration and security Other (38.2%) 2016 2017 2018 2019 Capital investments, US$ bn 2020 (34.9%) H1'20 H1'21 Real growth, % Source State Statistics Service of Ukraine Source State Statistics Service of Ukraine Note 1 To the corresponding period of the previous year on a cumulative basis BA 7#8September 2021 Comments Despite economic downturn, consumer demand remains firm Over recent years, consumer demand was consistently driven by a number of factors, including steady rise in real wages, improving consumer sentiments (before Q1 2020), growing personal money remittances 30% 20% 10% • Despite the economic crisis caused by Covid-19, real wages growth was mainly resilient and reached 10.2% y-o-y in July 2021, even though the growth pace has slowed due to rising inflation Covid-19 also had a limited impact on the retail trade which grew with double digits: the turnover increased to 13.0% in July 2021, slightly lower than in June 2021 (13.8%) Final private consumption grew by 5.3% and 4.4% y-o-y in Q4 2020 and Q1 2021, respectively, after a 10.0% y-o-y decline in Q2 2020 Private consumption and consumer sentiments evolution 0% (10%) (20%) (30%) (40%) Real wages growth (%) and avg monthly nominal wages (UAH) 16,000 14,345 14,000 12,000 10.2% 10,000 8,000 6,000 4,000 Real wages index - Average monthly nominal wage, UAH 2,000 0 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Source State Statistics Service of Ukraine Retail trade growth (y-o-y)1, % 97.5 100 20% 16% 90 12.2% 11.7% 82.4 15% 14% 80 72.9 70 59.4 60.3 62.2 12.9% 65.1 65.9 10% 12% 10.6% 5% 60 50.6 10% 8.8% 6.9% 5.3% 50 5.34.4% 0% 2.7% 8% 40 (1.8%) (5)% 5.5% 6% 30 (10)% 4% 20 (10.0%) (15)% 10 0 2% (20)% 0% Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2 '16'16'16'16'17'17'17'17'18'18'18'18'19'19'19'19'20'20'20'20'21'21 Consumer sentiments index, eop (lhs) Private consumption growth y-o-y, % (rhs) Source GFK, State Statistics Service of Ukraine 10.3% Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 13.5% 3.1% Note 1 To the corresponding period of the previous year on a cumulative basis Source State Statistics Service of Ukraine Apr-20 8.4% 8 BA Jul-21 13.0%#9September 2021 Revival of external trade in 7m 2021 Comments The international trade has started to recover after disruptions caused by global Covid-19 pandemic: Ukraine's goods trade turnover has increased by 30% y-o-y in 7m 2021 (to US$ 68bn) The total export and import of goods and services have reached US$ 42.2bn and US$ 42.5bn in 7m 2021, respectively Exports of goods and services have risen by 27.5% y-o- y in 7m 2021 with ferrous and non-ferrous metals as well as mineral products being the key drivers of such development Imports of goods and services have increased by 24.6% y-o-y in 7m 2021 with machinery and equipment, chemicals, and mineral products contributing the most Geographic structure of goods trade in 7m 2020 & 7m 20211 Export and import of goods and services dynamics, US$ bn Export Y-o-y change in export, % 7% 66% 102% 14% 43% 26% 32% 50% 11% 12.4 ■7m 2020 ■7m 2021 11.7 9.6 8.5 8.7 5.1 5.3 2.6 1.92.1 1.01.4 1.31.6 0.4 0.5 0.5 0.8 Food and Ferr. and Mineral Machinery Timber Chemicals Industrial Other agri non-ferr. products and and wood goods products metals equipment products Services 0.61.0 1.11.2 1.61.9 5.9 6.4 7.2 7.5 1.62.1 7m 2020 7m 2021 3.5 4.1 16% 4.6 ■ EU countries 5.9 16% 8% 8% US$ 52bn in 36% 38% Asian countries 8.9 7m 2020 ■ Russia 6% 7% US$ 68bn in 11.7 ■ Other CIS 7m 2021 33% Other 32% 18% 30% 30% 32% 50% 27% Import Source NBU Notes 1 Sum of export and import of goods Source NBU 20% 6% 13% Y-o-y change in import, % BA 9#10Firm external position leading to less vulnerability to external shocks September 2021 Comments The trade balance deficit amounted to US$ 0.3bn in 7m 2021 which is much lower than US$ 1.0bn in 7m 2020. The decrease in the deficit is resulting from higher growth in exports (by 27.5% y-o-y) vs imports (by 24.6% y-o-y) The current account (CA) balance demonstrated deficit of US$ 0.9bn in 7m 2021 comparing to US$ 4.1bn surplus year ago mainly due to outflows related to investment income (US$ 10.1bn in 7m 2021 vs US$ 3.7bn in 7m 2020) The financial account continued to record capital inflows (US$ 1.7bn in 7m 2021) which was primarily due to a improvement of global financial conditions for EMs Private money remittances, US$ bn 22.9% 19.9% Balance of payments components, US$ bn BoP, 2.6 2.8 5.9 2.0 1.1 0.8 US$ bn 10.1 9.3 6.1 5.2 4.1 1.7 (0.9) (3.5) (4.1) (3.2) (3.0) (6.5) 2017 2018 2019 2020 7m 2020 7m 2021 ■Current account balance Financial account balance Ukraine's current and trade balance dynamics, US$ bn CA as % (3.1)% (4.9)% (2.7)% 4.0% of GDP 53.9 59.2 63.5 60.6 (1.2%) 33.1 42.2 11.1% (7.8%) 11.9 (8.7%) 11.1 7.3% 9.3 (8.2%) (34.1) (0.7%) 7.3 (42.5) (0.3%) (62.7) (70.6) (62.4) (76.0) 2017 2018 2019 Personal money remittances, US$ bn 2020 7m 2020 7m 2021 2017 Remittances y-o-y change, % 2018 2019 2020 7m 2020 7m 2021 Export of goods and services Import of goods and services Trade balance (% of GDP) Source NBU 10#11September 2021 16% 14% 12% 10% 8% 6% 4% 2% 0% Prudent monetary policy implemented by independent regulator Medium-term consumer inflation target range: 5%+/-1% Y-o-y inflation as of August 2021: 10.2% Comments After a maintaining the soft monetary policy as a response to Covid-19 recession, in March 2021 the NBU started the cycle of the rate hikes to curb the inflation, raising the key policy rates 4 times during March-Sept 2021 by 2.5 p.p. The NBU also will stop applying its anti-crisis monetary measures such as long-term refinancing tenders and interest rate swap auctions at the start of Q4 2021 to boost the efficiency of the monetary transmission mechanism In Jul-Aug 2021, consumer inflation came out lower than had been projected previously, yet was double digit for the first time since 2018. Inflationary pressures were generated by the rise in prices for certain foods and fuels and sustained consumer demand. Inflation expectations of households are also rising, which may lead to further NBU's policy rate hikes CPI expectations for the following 12 months Consumer price index (CPI) change and key policy rate 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 CPI, y-o-y, % Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Key policy rate, % Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 10.2% Jun-21 NBU's medium-term inflation target range UAH/US$ and UAH/EUR exchange rates dynamics Aug-21 5% Mar-18 May-18 Jul-18 Source NBU Banks Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Businesses Jan-20 Mar-20 May-20 Households Jul-20 Sep-20 38 36 34 10.0% 32 30 6.4% 28 7.2% 6.1% 26 24 22 20 П Nov-20 - Financial analysts Jan-21 Mar-21 May-21 Jul-21 Notes 1 Jan-18 Mar-18 May-18 As of Sept 10, 2021 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 EUR Nov-19 Jan-20 Mar-20 May-20 Jul-20 US$ Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 11 BA 26.9 31.71#12September 2021 Accumulated international reserves Comments Gross international reserves increased by 9.2% (m-o-m) and reached US$ 31.6bn as of Sep 1, 2021 (covering 4.4 months of future imports) Maintained high levels of FX reserves and floating FX rate policy are the most influential factors providing strong buffer for Ukraine on the back of the current downturn Allocation of US$ 2.7bn by the IMF was the main contributor of the reserves increase during August 2021. In addition, the international reserves increased on the back of NBU's net FX purchase (US$ 348.3m), and FX domestic placements (US$ 8.8m). Government transactions to repay public debt (US$ 392.3m), and financial instruments revaluation loss (US$ 31.6m) have slightly offset this impact Gross and net international reserves (eop), US$ bn Months of imports 35 30 1125 20 10 10 5 3.4x 4.0x 4.8x 29.0 27.0 22.0 20.8 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 4.4x 31.6 ■Securities (rating A) ■Securities (rating AA) 7% Gross international reserves by instrument (Sep 1, 2021) 17% 21% Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Gross international reserves by currency (Sep 1, 2021) 20393% 5% Aug-21 ■ USD - EUR 9% ■ GBP 5% US$ 31.6bn Sept 1, 2021 ■Securities (rating AAA) US$ 31.6bn Sept 1, 2021 ■ JPY ■ Monetary gold ■ CNY ■Banknotes, current accounts, 78% ■ Gold Source NBU 50% time deposits ■ Other 12#13September 2021 1 Solid foundation for long-term economic growth 2 Return to gradual fiscal consolidation 3 Prudent debt management strategy 4 5 Reviving business climate and development prospects Strong focus on ESG considerations BA 13#142022-2024 Budget Declaration Key indicators of 2022 Draft Budget Law and 2022-2024 Budget Declaration 2020 2021E 2022F 2023F 2024F Key macroeconomic assumptions 4,192 4,809 5,369 5,994 6,651 (4.0%) 4.1% 3.8% 4.7% 5.0% 5.0% 8.9% 6.2% 5.3% 5.0% 14.5% 17.0% 7.8% 6.2% 5.7% 9.5% 9.2% 8.5% 8.0% 7.8% (1.8) (6.2) (8.6) (10.6) (12.1) On September 15, the Government has approved 2022 Draft Budget Law and submitted it to the Parliament On May 31, the Government approved the Budget Declaration for 2022 - 2024 for the first time, and on July 15 it was considered by the Parliament of Ukraine The Budget Declaration for 2022- 2024 is the Government's vision of the budget policy for the medium term. The document defines the main budget indicators and the goals of the state policy with the key Nominal GDP, UAHbn Real GDP growth, % CPI (eop), % PPI (eop), % Unemployment rate, % Trade deficit, USDbn (i) Revenues as % of GDP (ii) Expenditures as % of GDP (iii) Net lending as % of GDP Key state budget indicators, UAHbn Actual Law1 Draft Law2 3Y Budget 3Y Budget Declaration Declaration 1,076.0 1,097.5 1,267.4 1,333.2 1,451.6 25.7% 22.8% 23.6% 22.2% 21.8% 1,288.1 1,335.2 1,441.9 1,497.0 1,614.1 30.7% 27.8% 26.9% 25.0% 24.3% 5.5 9.2 13.5 16.0 17.1 0.1% 0.2% 0.3% 0.3% 0.3% 217.6 246.8 188.0 179.8 179.6 5.2% 5.1% 3.5% 3.0% 2.7% 53.9% 56.9% 50.8% 48.0% 46.4% 7.0% 7.8% 6.9% 6.6% 6.0% 60.9% 64.7% 57.6% 54.6% 52.4% ERVE Overall state budget deficit as % of GDP State debt, as % of GDP performance State-guaranteed debt, as % of GDP indicators. State and state-guaranteed debt, as % of GDP Source Ministry of Finance of Ukraine, State Treasury Service of Ukraine Note 1 As of July 2021 (based on the monthly budget execution report of the State Treasury Service of Ukraine) Note 2 As of September 15, 2021 September 2021 14#152021 state budget to resume gradual fiscal consolidation FY 2020 (Act.) FY 2021 (Plan) Key indicators of 2021 State budget: Total revenues: UAH 1,098bn (+2%) Total expenditures: UAH 1,335bn (+4%) Budget deficit²: 2021 vs 2020 state budget revenues split¹ ■VAT 2021 vs 2020 state budget expenditures split¹ 2021 state budget revenues: UAH 1,098bn 2021 state budget expenditures: UAH 1,335bn 13% FY 2020 (Act.) FY 2021 (Plan) ■Social welfare 5%2% 5% Security and defense 1% 4% 24% 21% 7% 25% ■Interbudgetary transfers ■Personal income tax UAH 246.8bn / 5.1% of GDP in 2021 (per government's forecast 13% 37% UAH 1,076 bn UAH 1,288 bn 20% 44% ■Corporate income tax 12% 10% of UAH 4,809bn GDP UAH 1,098 bn UAH 1,335 bn 21% in 2021) Other tax revenues 9% 22% 21% 11% 10% 10% 12% 13% ■Non-tax revenues 13% 12% Debt service Health Economic activity Education Public administration Other Notes 1 According to State Budget Law 2021 (as of July 2021) and Actual Annual State Budget Execution 2020 2021 State Budget Law: general fund financing, UAHbn 12.7 3.4 2 Budget deficit defined as 98.9 revenues minus expenditures and 369.5 minus net lending 3 Translated at the 2021 budgeted avg 29.1 UAH per 1 USD 4 As of September 15, 2021 5 Other includes financing for the volume of deposits and active operations, i.e. changes in securities used to manage liquidity, changes in the volume of budget funds September 2021 7.6 0.7 24.4 17.8 6.2 0.4 ¦ US$bn³ 220.9 20.0 709.2 517.3 249.0 raised4 180.0 12.0 Domestic debt repayment External debt repayment State budget general fund deficit Other5 Gross general fund financing needs Domestic debt 60.2 raised4 External debt Privatization proceeds BA 15#16September 2021 Jan-Jul 2021 state budget execution UAH m Revenues Jan-Jul 2020 Jan-Jul 2021 % diff. FY 2021 (Law as of Jul) % execution 588,456 681,005 +16% 1,097,547 62% Tax revenues, incl. 422,096 561,152 +33% 949,457 59% Personal income tax and income charge 63,863 75,421 +18% 137,580 55% Corporate profit tax 55,038 69,238 +26% 111,836 62% Fee for the use of mineral resources 15,467 29,462 +90% 41,585 71% Excises 72,416 86,017 +19% 137,546 63% VAT (net of VAT reimbursement) 198,238 278,240 +40% 483,278 58% Export and Import duties 15,332 20,673 +35% 33,934 61% Other taxes and duties 1,741 2,101 +21% 3,697 57% Non-tax revenues 166,361 119,853 (28%) 148,090 81% Expenditures (636,467) (732,441) +15% (1,335,163) 55% General public functions, incl.: (90,792) (104,310) +15% (218,685) 48% Debt service (68,248) (79,018) +16% (159,836) 49% Security and Defense (137,492) (148,484) +8% (285,301) 52% Economic activity (47,917) (62,290) +30% (96,319) 65% Protection of environment (2,262) (2,469) +9% (8,641) 29% Healthcare (42,273) (86,542) +105% (164,330) 53% Intellectual and physical development (4,196) (6,502) +55% (19,444) 33% Education (29,192) (35,587) +22% (64,281) 55% Social welfare (188,386) (191,888) +2% (313,473) 61% Interbudgetary transfers (93,946) (94,356) +0% (164,323) 57% Net lending (3,184) (2,000) (37%) (9,228) 22% Primary state budget balance 17,052 25,582 +50% (87,008) Overall state budget balance (51,195) (53,436) +4% (246,844) 22% BA 16#17September 2021 1 Solid foundation for long-term economic growth 2 Return to gradual fiscal consolidation 3 Prudent debt management strategy 4 5 Reviving business climate and development prospects Strong focus on ESG considerations 17#18As of end-July 2021, Ukraine's total state and state-guaranteed debt (US$ 93.0bn / UAH 2,499bn) split between: 59% of external • debt, 41% of domestic debt 89% of state debt, 11% of state- guaranteed debt Notes 1 Incl. outstanding debt obligations only September 2021 Prudent and proactive debt management strategy State and state-guaranteed debt structure (end-July 2021) State and state-guaranteed debt by currency, US$ bn (In US$ bn) Total (% of GDP) State debt State-guaranteed debt 79.1% 80.9% 71.8% 60.9% 50.3% 60.8% Domestic in FX 5% Eurobonds IFIs 21% 7% Domestic 65.5 71.0 76.3 78.3 84.4 90.3 93.0 bonds Domestic in UAH 40% 4.1 0.7 6% 6% 0.6 6% 8% 9% 10% 14% 13% 17.3 19% 18% 18% 17% 13% 14% 13% Other Bank US$ 32.7 82.3bn 3.2 external US$ 1.8 loans debt 17% 39% 10.6bn 44% 45% 43% 44% 36% 37% 4% 25.0 7.5 Eurobonds 30% IFIs 70% 30% 30% 30% 29% 37% 35% 37% 2015 2016 2017 2018 2019 2020 July 2021 ■UAH USD XDR EUR CAD JPY State debt amortization schedule (01.09.2021)1, US$ bn State debt dynamics, US$ bn Total debt service 82.3 79.9 21.3 14.8 11.4 11.0 8.4 7.1 74.4 67.1% 69.2% 65.3 67.2 60.7 61.5% 3.7 55.6 26.8 52.3% 27.5 35.0 35.4 36.8 53.9% 24.7 44.3% 21.2 1.9 2.5 1.9 12.4 3.6 5.7 7.6 1.8 3.5 44.5 45.5 3.8 3.9 1.6 1.4 34.4 36.0 38.5 39.7 39.3 2.0 3.4 2.2 2.9 2.1 1.7 1.3 2021E 2022E 2023E 2024E 2025E 2026E 2015 2016 2017 2018 2019 2020 July 2021 ■Interest Domestic debt ■Interest - External debt Principal - Domestic debt Principal - External debt State external debt State domestic debt as % of GDP BA Source Ministry of Finance 18#19Switching focus to UAH-denominated issuances on domestic market UAH-denominated issuances grew at Domestic government bonds placements by currency Funds remitted to State Budget UAHbn 99% CAGR over 2017-2020 • After major 3.4x 2019 y-o-y volume increase, 2020 saw further growth of 14% y-o-y in UAH- US$bn denominated securities 9m 20211 kept the positive growth tendency with a major increase of 44% y-o-y for UAH- EURbn denominated issuances In line with MTDS objectives, FX- denominated issuances are kept relatively stable 65.1 32.8 UAH-denominated issuances 258.8 227.6 189.1 US$-denominated issuances 4.3 3.9 3.5 1.8 1.9 EUR-denominated issuances 0.8 0.5 0.4 0.4 0.1 2017 2018 Share of UAH-denominated debt in total state debt 34.4% 33.4% 2019 2020 YTD 20211 41.0% 38.2% 39.7% Dec 31, 2017 Dec 31, 2018 Dec 31, 2019 Dec 31, 2020 July 31, 2021 Notes Source Ministry of Finance 1 As of September 14, 2021 September 2021 BA 19#20Ukraine's domestic government bond holders On August 28, 2020, the NBU has eliminated obstacles for foreign investors to enter the Ukrainian securities market through establishment of the direct access to the purchase and sale of government bonds with the help of a "nominee holder" From now on Ukrainian banks that have accounts with the NBU depository will be able to open depot accounts for its foreign clients for the purpose of buying and selling Ukrainian government bonds Key highlights With a c.51% share, banks are currently the largest holder of domestic government bonds followed by the NBU, which accounts for c.32% of the portfolio¹ At c. 10% of total outstanding Ukrainian domestic government bonds as of September 20211, the portfolio held by non- residents has recently returned on its upward trajectory (after Mar-Nov 2020 decline in line with the EM's capital outflow) Ukraine is making consistent steps to deepen domestic government bond market and to increase share of non- residents in local currency bonds portfolio A link between Clearstream, the international central securities depository, and the depository of the NBU active since May 2019 ensuring streamlined access to Ukraine's domestic government bond market Domestic government bonds held by non-residents (eop) Domestic government bond holders¹ 10% 32% 2% 5% 51% ■ Banks NBU ■Non-residents ■Companies Individuals Nominal and real weighted avg yields at primary auctions, % 19.0%18.6% 4.1 4.4 5.0 4.3 3.9 3.4 3.0 2.6 3.4 3.7 3.6 4.0 3.6 16.7% In US$bn 15.1% 25.7% 10.0% 22.3% 22.8% 11.2% 11.3% 11.1% 11.7% 11.4% 20.1% 11.9% 13.1% 15.3% 14.2% 18.8% 12.0% 16.8% 10.6% 15.3% 9.6% 13.0% 13.99 14.9% 14.5% 10.2% 9.9% 9.4% 8.3% 15.9% 10.8% 10.7% 10.6% 9.0% 14.3% 9.7% 8.9% 8.2% 8.1% 7.5% 7.2% 7.1% 6.4% 5.7% 4.1% 6.6% 4.3% 5.9% 2.1% 6.5% 6.2% 6.3% 2.3% 4.8% 4.5% 5.2% 6.1% 98 106 125 121 106 93 84 75 95 104 98 107 96 Notes 1 1 2 As of September 14, 2021 According to NBU's survey Sep Nov Jan Mar May Jul 20 Sep 19 19 20 20 20 20 20 Nov Jan Mar May Jul 21 Sep 21 21 21 Jan 21 19 Apr Jul 19 19 about inflation expectations of financial analysts for the next 12 months Source Ministry of Finance, NBU Held by non-residents, UAHbn % of total portfolio (excl. NBU) % of total portfolio Oct Jan Apr Jul Oct Jan 19 20 20 20 20 21 Nominal weighted avg yield, % Apr Jul Sep1 21 21 21 Real weighted avg yield, % 2 CPI expectations for next 12 months (y-o-y), %* Source Ministry of Finance of Ukraine, NBU September 2021 BA 20 20#21Pipeline of official concessional external financing Pipeline financing Combined with a proactive response to Covid-19 economic fallout, Ukraine managed to secure a range of concessional financing from its international partners to cover significant portion of external financing needs for 2021 Partner International Monetary Fund INT ERNATION ONETARY FUNI European Union European Investment Bank Programs On August 25th 2021, Ukraine has received US $ 2.7bn (SDR 1.9bn) under SDR allocation program, part of IMF's assistance to member countries in economic recovery from the Covid-19 On June 9th 2020, IMF Executive Board approved 18-month Stand-By Arrangement (SBA) for Ukraine, under which US$ 2.1bn (SDR 1.5bn) was disbursed immediately. The second tranche is expected in the coming months, which should amount to US$ 700m (SDR 500m). The total amount of program is US$ 5.1bn (SDR 3.6bn) that will be directed to support BoP and budget to help address the effects of Covid-19 while moving forward important structural reforms EUR 1.2bn MFA program for Ukraine was adopted within EUR 3.0bn support package to neighboring partners in May 2020. The first EUR 623.5m tranche has been provided on December 9, 2020. The decision on the disbursement of the second tranche of EUR 600m was made on September 15, 2021 following the implementation of the required structural reforms Since 2014, the EU has approved EUR 5.0bn in MFA support for Ukraine, o/w EUR 3.3bn were disbursed during 2014-2018, EUR 1.1bn in 2020 In addition, various European institutions provide significant financial support for Ukraine, e.g. EUR 340m from the EIB within "Early Recovery Programme" disbursed in late 2020 US$ 3.0bn¹ EUR 0.6bn Notes 1 World Bank WORLD BANK GROUP On September 9th, 2021, the World Bank representatives announced its readiness to allocate US$ 230m to Ukraine within the framework of the COVAX global initiative until December 2021 On June 25th, 2021, the first US$ 350m Economic Recovery Development Policy Loan (DPL) was disbursed. The second US$ 350m loan is being structured at the moment Translated from SDR to US$ based on 1.4256 US$ per 1 SDR IMF exchange rate as of September 10, 2021 Total amount of envisaged external financing from the official partners September 2021 US$ 0.6bn c.US$ 4.3bn BA 21#22Status of cooperation between Ukraine and the IMF New US$ 2.7bn SDR allocation program On August 25, 2021, Ukraine has received more than US$ 2.7bn (SDR 1.9bn) under SDR allocation program as part of IMF's assistance to member countries in economic recovery from the coronavirus crisis. The amount is proportional to Ukraine's existing quotas in the Fund (0.0042%) Current 18-month US$ 5.0bn SBA program On May 21, 2020, a Staff Level Agreement on a new 18-month SDR 3.6bn (c. US$ 5.1bn) arrangement under the Stand-By Arrangement (SBA) was agreed and approved by the Executive Board on June 9 It replaced the Staff Level Agreement on a 3-year Extended Fund Facility (EFF) program which was agreed in December 2019 Currently, the Ministry of Finance is working on the completion of the first review of the current program and expects the IMF mission in Sep 2021 The size of the second tranche under SBA program may amount to more than US$ 700m (SDR 500m). More details are subject to the upcoming IMF mission Total SBA program Key priorities under new IMF's 2020 SBA program: Mitigating the economic impact of the crisis, including by supporting households and businesses Ensuring continued central bank independence and a flexible exchange rate Safeguarding financial stability while recovering the costs from bank resolutions Moving forward with key governance and anti-corruption measures to preserve and deepen recent gains Sources IMF, Ministry of Finance Note 1 Translated from SDR to US$ based on 1.4256 US$ per 1 SDR IMF exchange rate as of September 10, 2021 September 2021 Past EFF, SBA and SDR programs Availability date / Reviews SDR m US$ m1 SDR allocation program (US$ 2.7bn) August 25, 2021 [disbursed] 1,928 2,738 Total SDR program 1,928 2,738 SBA 2020 program (US$ 5.0bn, 179% of quota) June 9, 2020 [disbursed] 1,500 2,076 Following reviews 2,100 2,9941 3,600 5,070 SBA 2018 program (US$ 3.9bn, 139% of quota) December 18, 2018 1,000 1,391 Total SBA program 1,000 1,391 EFF 2015 program (US$ 17.5bn, 900% of quota) March 11, 2015 3,546 4,879 July 31, 2015 [1st review] 1,182 1,659 September 15, 2016 [2nd review] 716 1,003 April 3, 2017 [3rd review] 734 996 Total EFF program 6,178 8,537 Note 1 Past tranches translated at NBU XDR/US$ exchange rate as of the date of their receipt, future tranches (SBA 2020 program) translated per the IMF's rate of 0.7014 SDR/USD as of September 10, 2021 BA 222 22#23September 2021 BB BB- B+ B B- CCC+ CCC CCC- CC RD Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 B / Positive credit rating affirmed by Fitch, B / Stable - by S&P Fitch Ratings Rating: B, Positive Last update: Aug 6, 2021, reaffirmed at B, outlook raised to positive Next update: Feb 2022 Key rating drivers of the last review: Track record of multilateral support and a credible macroeconomic policy framework that has underpinned resilience to the coronavirus shock and macroeconomic stability FX reserves consolidation, commitment to inflation-targeting and prudent fiscal policy with noticeable reduction in government debt Expectations for gradual fiscal consolidation and continuation of macroeconomic policies Human development indicators compare favorably with the peer group, a net external creditor position of close to 11% of GDP, and lower general government debt than the 'B' median S&P Global Rating: B, Stable Last update: Sep 10, 2021, reaffirmed at B, outlook stable Next update: Feb 2022 Key rating drivers of the last review: Ukraine's growth, balance of payments, and public finances all outperformed the expectations in 2020 Reserve adequacy has improved, providing a cushion against potential adverse external developments including further delays in the disbursement of concessional loans Stronger macroeconomic management since 2015 and augmented foreign exchange (FX) reserves The ongoing implementation of reforms helps the government access commercial debt markets and receive concessional funding from international financial institutions (IFIs) Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 BB- B+ B B B- CCC+ CCC CCC- CC SD Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 BB Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 23 23 B#24September 2021 1 Solid foundation for long-term economic growth 2 Return to gradual fiscal consolidation 3 Prudent debt management strategy 4 5 Reviving business climate and development prospects Strong focus on ESG considerations BA 24 24#25September 2021 Business climate improvement to accelerate growth potential Ease of Doing Business ranking +88 p. Ukraine's selected pillars in 2020 global ranking Dealing with 20 construction permits 61 Starting a business (+10 p. vs the 64 71 (-5 p. vs the previous report) 76 previous report) 83 80 87 37 Getting credit 61 Registering property 112 (-5 p. vs the previous report) 137 152 Protecting minority 45 investors (+27 p. vs the 2012 2013 2014 2015 2016 2017 2018 2019 2020 previous report) (+2 p. vs the previous report) 63 Enforcing contracts (+6 p. vs the previous report) Source Doing Business Business expectations index by the NBU 121% 120% 117% 117% 115% 113% 111% 109% 112% 108% ▸ 101% 100% Q2 2021 expectations by industry Manufacturing 116.1% Mining 108.6% Retail 115.6% 100% 98% >100% positive expectations - The index has dropped below 100% for the first time since Q1 2016 amid expectations on Covid-19 consequences but has quickly recovered back in Q3 2020 91% Q1 Q2'Q3'Q4'Q1'Q2'Q3'Q4'Q1'Q2'Q3'Q4'Q1'Q2'Q3'Q4'Q1'Q2'Q3'Q4'Q1'Q2' '16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 20 20 20 20 21 21 Source NBU Transport & logistics 104.8% Utilities 102.9% BA 25#26Seizing crisis opportunity for agri exports Overall Ukraine concluded 19 FTAs with 46 countries 2001 FTA with Macedonia 2008 Ukraine entered WTO FTA with EFTA 2012 countries FTA with Montenegro Comments Reinforced by Covid-19, the global demand for basic goods, such as agri and food, remains stable This provides Ukraine an opportunity to elevate basic goods exports to large and developed economies amidst crisis Most of such trade connections have already been set up and developed with conclusion of an increasing number of FTAs while Ukraine has undergone a major shift in trade flows towards the EU market in recent years The EU's share in Ukraine's foreign trade turnover (goods) went up from 35% in 2015 to 38% in 2020 DCFTA (in full force since September 2017) provides further opportunities in the EU markets Ukraine's exports and imports breakdown¹ in 7m 2021 " 5% 4% 7% 11% 19% Exports Imports 4% 8% 4% 15% 49% 11% 2% 23% Agricultural products ■Mineral products Timber and wood products ■Industrial goods Source National Bank of Ukraine ■ Ferrrous and nonferrous metals Machinery and equipment ■ Chemicals ■ Other (incl. informal trade) Ukraine's export prices on selected agri goods (US$/t) 7m 2021 y-o-y increase in export of goods by countries² 2013 FTA with CIS countries Ukraine Corn Price Czech Rep. / +107.7% US$ 864m Poland / +67.6% US$ 2,891m 300 FOB Black Sea Ports 270 261 240 DCFTA with Italy / +65.6% Turkey / +58.5% 210 C⭑ the EU US$ 1,830m US$ 2,084m 180 2017 150 FTA with Relatively strong and reviving prices for Ukraine's main exports USA / +57.6% Canada Romania / +43.2% 1800 Ukraine Sunflower US$ 873m US$ 822m 1600 Oil Export Price 1400 1250 FTA with 2020 Germany / +40.0% Israel, US$ 1,393m China / +36.5% US$ 4,993m 1200 1000 United 800 Kingdom 600 Notes 1 2 Source State Statistics Service of Ukraine Export and import of goods breakdown Only countries, exports of goods to which in 7m 2021 surpassed 2.0% of total Ukraine's export of goods were included September 2021 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Source Bloomberg, as of Sept 13, 2021 BA 26 26#27September 2021 1 Solid foundation for long-term economic growth 2 Return to gradual fiscal consolidation 3 Prudent debt management strategy Reviving business climate and development prospects 4 5 Strong focus on ESG considerations 27 27#28ESG: environmental Ukraine's Paris Electricity production from RES, TWh agreement commitments Ukraine is a Party to the Share or RES in total power output, % 0.9% 1.0% 1.2% 1.7% 3.6% 7.3% 8.3% RES installed capacity dynamics as of eop, MW UNFCCC and is one of the first countries which ratified the Paris Agreement. Ukraine's 1st NDC defines GHG emissions target as 'not exceeding 60% of the 1990 level'. (63% as of end 2019) 10.9 ■ SPPS ■WPPS ■Biomass and Biogas 8.5 7,487 6,673 1,453 1,111 4,723 1,025 5.5 5,823 5,363 1,713 2.6 1.5 1.6 1.9 1,184 3,555 821 389 701 328 290 300 1,225 In April 2021, the draft of 758 359 458 the 2nd NDC were 2015 2016 2017 2018 2019 2020 7m'21 2015 2016 2017 2018 2019 2020 7m'21 published, aiming to reduce GHG emissions by 65% in 2030 compared to the 1990 level. The draft of 2nd NDC targets the share of renewables to account for 30% by 2030 (vs. 25% actual target). Sources SAEE, Ministry of Energy of Ukraine, Ukrenergo Key environmental initiatives / commitments 2016: Ukraine signed the Paris agreement in April (which commits Ukraine to ensuring that greenhouse gas emissions in 2030 will not exceed 60% of the 1990 emissions level) and ratified it in September 2017: the government adopted the Energy Strategy of Ukraine until 2035. It outlines measures to: (i) reduce greenhouse gas emissions, and (ii) restructure the coal sector to reduce its environmental impact June 2020: Government signs Memorandum with green energy producers August 2020: IFC Partnered with Ukraine's National Securities and Stock Market Commission to Boost Green Finance. The SAEE¹ developed a draft Concept for the implementation of a green bond market in Ukraine March 2021: Ukraine approved National Economic Strategy 2030, committing to reach 25% share of renewables as of 2030 June 2021: President signed a law on the launch of "Green Country" project, aimed at increasing the forest area by 1m ha in 10 y. August 2021: Ministry of Energy has developed a bill to change “green tariff”. It involves a replacement of Feed-in-Tariff mechanism to Feed-in-Premium, whereby RES producers are paid a premium price in addition to the wholesale price September 2021 28#29ESG: social Ukraine belongs to High Human Development group within UNDP HDI (which is also used by selected credit rating agencies) and demonstrates consistent improvement since 2015 While life expectancy and education indices perform relatively in line with the regional peers and generally overperform rating peers, the income measure, GNI per capita, is the one pulling the country's ranking down Sources UNDP, Ministry of Education and Science of Ukraine, Ministry of Health of Ukraine September 2021 Ranking position (out of 189) UNPD Human Development Index 2020 Life expectancy, years Exp. years of schooling GNI per capita, US$k UKR 72 UKR 15 UKR 13 Regional peers Rating peers UKR POL HUN 74 32 POL 79 POL 16 35 POL HUN 77 HUN 15 HUN 31 40 40 49 ROU 49 BGR HRV EGY NGA 161 GHA TUR 138 116 ROU 76 ROU 14 ROU BGR 75 BGR 14 56 BGR 23 43 HRV 79 HRV 15 HRV EGY 13 EGY 11 72 EGY NGA 10 NGA 5 GHA 12 GHA 64 NGA 55 54 TUR TUR 78 GHA 5 17 TUR 29 28 28 In order to further enhance the country's human capital, both education and healthcare sectors are currently undergoing reforms with the following key priorities: • Education: (i) affordable and quality pre-school education, (ii) New Ukrainian School, (iii) modern professional (vocational) education, (iv) quality higher education and development of adult education, (v) development of science and innovation Healthcare: (i) implementation of the new financing mechanism "money follows the patient", (ii) introduction of "family" doctors, (iii) primary care, palliative care, and emergency medical care 100% funded by the state, (iv) new methods for procuring and distributing vaccines, (v) new licensing and educational standards for doctors, etc. 29 20#30Ukraine vs peers in governance ratings Sustainable Development Goals Index 2021 Rating: 0 (worst) to 80 79 76 75 74 80 80 69 49 19 63 70 70 performance within UKR POL HUN ROU BGR HRV EGY NGA GHA TUR 100 (best) Analyzes country's 17 goals Open Budget Budget International Partnership Index 2019 63 63 60 60 71 68 64 45 43 21 54 51 ESG: governance WGI and other developments on governance Worldwide Governance Indicators 2019 Government Effectiveness 60 40 20 Voice and Accountability Egypt Nigeria Turkey Rule of Law Higher better Lower worse Regulatory Quality Rating: 0 (worst) to 100 (best) Analyzes country's budget transparency Investor UKR POL HUN ROU BGR HRV EGY NGA GHA TUR 40 Relations IIF INSTITUTE OF INTERNATIONAL FINANCE 40 Index 2020 Rating: 0 (worst) to 42 (best) Analyzes country's investor relations function UKR Sources U.S. Department of State, World Bank, UN, TPPR, International Budget Partnership, IIF 37 36 37 27 26 25 16 20 20 42 POL HUN ROU BGR HRV EGY NGA GHA TUR Regional peers Rating peers • Ukraine Worldwide Governance Indicators (WGI) are published by the World Bank and constitute an important basis for sovereign credit ratings • Ukraine performs in line with its rating peers demonstrating relatively solid performance in Voice and Accountability, Government Effectiveness and Regulatory Quality pillars Besides the mentioned indices, Ukraine has also topped Transparent Public Procurement Rating in 2019 (among 31 countries) and was highly appraised with regard to the fiscal transparency in the U.S. 2020 Fiscal Transparency Report European Open Data Portal named Ukraine as one of the trend-setter in opening up the finance data in Europe because of its online data platform E-data. This platform combines several three portals: Spendings, OpenBudget, ProlFls. September 2021 30 30#31September 2021 非 MINISTRY OF FINANCE OF UKRAINE BA 31