Ukraine’s current account (C/A) deficit narrowed slightly to $3.1bn in June from $3.4bn in May, bringing the 1H25 shortfall to $15bn, compared to $10bn in 1H24. Meanwhile, the financial and capital account (F/A) surplus, including IMF support, rose to $3.5bn from $1.4bn in May, pushing the 1H25 surplus to $15bn — double the $7.6bn recorded in 1H24. As a result, the overall balance moved to a $0.4bn surplus in June after a $2.1bn deficit in May, and was roughly flat for 1H25, compared to a $2.8bn deficit in 1H24.

Key highlights: Russian forces extended tactical advances in Donetsk region, closing in on Pokrovsk and another nearby stronghold of Kostyantynivka. Russian forces captured around 100 km2 last week and over 500 km2 in July — the third consecutive month of elevated gains. Russia expectedly defied US President Trump’s Aug. 8 peace deadline, conducting new mass aerial strikes against Ukraine, with Trump envoy Witkoff expected to visit Moscow ahead of the deadline. Germany announced the start of new PATRIOT air defense system deliveries to Ukraine.

Fitch Ratings has affirmed its long-term issuer rating on Ukrainian Railways (RAILUA) at CC, reiterating that the company will not be able to repay its $703m Eurobond maturing in July 2026 due to deteriorating financial performance and tightening liquidity, with a debt restructuring likely within the next 12 months.

The Verkhovna Rada has approved amendments to the 2025 budget law, increasing security and defense spending by UAH 412bn ($9.8bn, based on our annual average exchange rate forecast of UAH 42.1:USD). As a result, the central budget expenditure target has been raised by UAH 397bn to UAH 4,365bn ($104bn), while the revenue target increased by UAH 148bn to UAH 2,475bn ($59bn). This implies a central budget deficit target of UAH 1,891bn ($45bn), or 22% of GDP — up UAH 250bn ($5.9bn) from the previous version.

Ukrainian parliament has overwhelmingly approved President Volodymyr Zelensky’s bill to reverse last week’s legislation limiting the independence of the country’s principal anticorruption agencies, the National Anticorruption Bureau (NABU) and Specialized Anticorruption Prosecutor’s Office (SAPO). The bill secured 331 votes in the 450-seat legislature, or more than a two-thirds majority, and Zelensky immediately signed it into law. European Commission President Ursula von der Leyen welcomed the restoration of anticorruption bodies’ powers, stressing that rule of law and anticorruption reforms “remain essential for Ukraine’s progress on the European path.”

Ukraine’s industrial production (IP) dropped by 1.6% y-o-y in May, slowing the pace of decline from -6.4% y-o-y in both April and March and bringing the 5M25 y-o-y drop to -5.1% (vs. -6.1% in 4M25). According to official statistics, seasonally adjusted IP rose by 3.5% m-o-m in May, up from 1.8% in April.

The European Commission announced yesterday that 18 out of the bloc’s 27 member states expressed preliminary interest in accessing EUR 127bn in loans under the EUR 150bn Security Action for Europe (SAFE) instrument established in May. The 18 countries include Belgium, Bulgaria, Czechia, Estonia, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Hungary, Poland, Portugal, Romania, Slovakia and Finland.

Ukraine’s direct and guaranteed public debt totaled $185bn as of end-June, up 2.1% m-o-m and 11.3% YTD.

State power transmission system operator Ukrenergo reported 2024 revenue of $2.5bn (+11% y-o-y), estimated adjusted EBITDA of $453m (+61% y-o-y), and a net loss of $0.9bn (vs. $10m net income in 2023). End-2024 cash rose 79% y-o-y to $369m, mostly held in Ukraine. Total debt increased 13% y-o-y to $2.4bn, and net debt rose 11% y-o-y to $2.1bn, implying a Debt/EBITDA ratio of 5.3x (down from 7.6x in 2023) and Net Debt/EBITDA of 4.5x (down from 6.5x). The company reported it had postponed repayment of state-owned bank loans by one year, but did not provide any update on its Eurobond restructuring.

The Ministry of Finance placed UAH 53bn ($663m) of hryvnia-denominated bonds and $410m of FX paper at primary auctions in July, for a total of $1.7bn in USD terms). With UAH 20bn ($488m) of UAH bonds and $609m of FX bonds repaid ($1.1bn in total), MinFin raised $589m in net proceeds, up from a $319m net repayment in June, reducing the 7M25 net redemption amount to $73m (vs. $0.7bn at end-1H25). The aggregate rollover rate stood at 154% in July (vs. 73% in June) and 93% YTD.

WSE-listed Kernel Holding, Ukraine’s largest sunflower oil producer and grain exporter, announced it has received a notification from Namsen Limited, which is directly controlled by Kernel’s founder and Board chairman Andrii Verevskyi and holds 95.06% of Kernel shares, about a minority shareholder’s intention to exercise sell-out rights and initiate a sell-out procedure at a proposed price of PLN 19.45 per share.

US President Donald Trump said yesterday he was cutting to 10-12 days his recent 50-day window for Russian leader Vladimir Putin to make steps toward ending the war in Ukraine or face US punitive measures such as secondary sanctions. Reiterating his disappointment with Russia over its unwillingness negotiate in good faith and expressing doubt that the Kremlin would have complied with the original 50-day deadline, Trump said he was “not so interested in talking [to Putin] anymore.” Trump said he was going to officially confirm the new deadline by Tuesday.

DTEK Energy has invested UAH 4bn ($96m) to repair its thermal power plants in 1H25, CEO Oleksandr Fomenko said.

Key highlights: Russian forces continue non-stop assaults around Pokrovsk, attempting to encircle the city, and keep advancing in a neighboring Donetsk region sector, reportedly crossing into Dnipropetrovsk region. Ukrainian forces have counterattacked in Sumy region, slightly reducing the Russian bridgehead across the state border. The US announced $330m in new military sales for Ukraine and large deliveries of AI drone strike kits.

President Volodymyr Zelensky said he started negotiations with EU and NATO leaders as well as European government including France and the UK to finance domestic military production and potentially fund higher salaries for Ukrainian soldiers. Zelensky said Ukraine needed $25bn annually to boost production of missiles, drones and jamming equipment and was now also looking to attract financing for military salaries, currently paid solely with domestically raised revenue.

The National Energy and Utilities Regulatory Commission (NEURC) set new price caps for the day-ahead power market (DAHD) effective Aug. 1, 2025, increasing the caps for night and evening peak hours (7-11 p.m.) by 67% to UAH 16,000/MWh (EUR 326/MWh) and leaving the morning, daytime and evening caps unchanged.