The World Bank’s (WB) Board of Executive Directors approved a $3.4bn Development Policy Operation (DPO) program for Ukraine. The financing consists of a $1.04bn WB loan, backed by guarantees from Japan and the UK, and a $2.4bn grant from a special WB vehicle, the Facilitation of Resources to Invest in Strengthening Ukraine (F.O.R.T.I.S.) Fund, created earlier to channel US contributions to the G7’s ERA mechanism for Ukraine. The WB said that the decision followed Ukraine’s significant reform progress in setting conditions for private investment and job creation, as well as advancing cross-border market integration with the EU.

Exports of finished and semi-finished steel from Ukraine rose 19% m-o-m to 358 kt in May (+17% y-o-y), bringing 5M26 exports to 1.4 Mt (-4.0% y-o-y). Iron ore exports increased 3.5% m-o-m to 2.2 Mt in May (-6.6% y-o-y) and fell 26% y-o-y to 10 Mt in 5M26.

Ukraine’s merchandise trade deficit provisionally totaled $4.6bn in May, narrowing slightly from $5.1bn in April, but widening from $2.8bn in May 2025. In 5M26, the merchandise trade deficit stood at $22.9bn, up from $14.3bn in 5M25.

The Ministry for Regional Development published on Jun. 19 a draft order proposing a 30% increase in railway freight tariffs starting in August, alongside the unification of tariffs for empty wagons across cargo classes. The higher tariffs are expected to generate UAH 8.6bn in additional revenue for Ukrainian Railways already in 2026, helping to partially cover this year’s estimated liquidity gap of around UAH 26bn.

• Russian forces make further marginal gains in Donetsk region and step up attacks on Kharkiv front; Ukrainian forces proceed with counterattacks along Dnipropetrovsk region border. • Ukrainian UAVs hit Moscow oil refinery twice last week. • Ukrainian forces continue targeting road, rail and ferry supply routes to Crimea, exacerbating fuel shortages and power blackouts on the peninsula.

Ukrainian banks’ net stock of UAH loans (adjusted for NPLs) increased by 33% y-o-y to UAH 920bn in May, marginally slowing from 34% growth in April as a deceleration in net corporate loans (+30% y-o-y to UAH 582bn, vs. +34% in April) was offset by accelerating retail lending (+37% y-o-y to UAH 339bn, up from +35% in April). The hryvnia deposit base expanded by 18% y-o-y to UAH 2,252bn last month, after growing by 16% in April, while FX deposits increased by 4.7% y-o-y to $21.1bn, in line with April’s growth.

The NBU Board kept the policy rate unchanged at 15.0% for the third consecutive meeting, in line with its current forward guidance. The Bank said the decision keeps monetary conditions sufficiently tight, given continued strong demand for UAH-denominated assets, while risks related to the Middle East conflict and external financing have diminished. The NBU also noted that inflation expectations remain stable, albeit elevated among certain surveyed groups. At the same time, the NBU said fundamental inflationary pressures continue to intensify, particularly due to stronger-than-expected secondary effects from higher energy prices. The Bank reiterated its readiness to raise the key rate if necessary to keep inflation expectations under control and return inflation to a steady disinflationary path toward the 5% target. The final decision will be based on the updated macroeconomic forecast to be released in July. The central bank’s assessment of key inflation risks remained largely unchanged and centered on the ongoing war, including intensified damage from Russian attacks, higher fiscal financing needs and, consequently, imports, as well as persistent labor shortages and outward migration. On the upside, the NBU highlighted the potential for stronger military and financial support from partners and renewed international efforts to end the war. The NBU will publish minutes of the latest Monetary Policy Committee meeting on Jun. 29. The next rate-setting meeting, which will include updated macroeconomic forecasts and revised forward guidance, is scheduled for Jul. 30.

Crude steel production in Ukraine jumped by 22% m-o-m to 629 kt in May, narrowing the y-o-y contraction to -1.0% from -26% in April and bringing 5M26 output to 2.9 Mt (-6.1% y-o-y). Metinvest’s Zaporizhstal JV produced 209 kt of crude steel in May, up 33% m-o-m but down 25% y-o-y, and 1.2 Mt in 5M26 (-11% y-o-y), accounting for 33% of total monthly output and 40% of YTD production.

Ukraine is on track to manufacture around 10 million unmanned aerial vehicles (UAVs) in 2026 and has the capacity to double that level of production, President Volodymyr Zelensky said following meetings during the G7 summit in France.

Fitch Ratings affirmed Ukrainian Railways’ (RAILUA) long-term issuer rating at Restricted Default (RD) ahead of the Jul. 9 maturity of its $703m 2026 Eurobond, which is expected to be missed following the suspension of coupon payments in January.

President Volodymyr Zelensky had a meeting with US President Donald Trump and Secretary of State Marco Rubio on the sidelines of the G7 summit in France. Zelensky said he again raised with the US side the possibility of licensing production of antiballistic systems and interceptors in Ukraine, without providing other details. The US side did not comment on the discussion. On a related note, Foreign Minister Andrii Sybiha reported a separate meeting with Rubio, saying the prospective US-Iran deal “creates an opportunity to reenergize US-led peace efforts” to end Russia’s war against Ukraine. Referring to Ukraine’s recent battlefield successes and intensifying long-range strikes against Russia, Sybiha said “we see a growing momentum toward peace through strength.” In separate comments, Zelensky expressed hope that the US could use its leverage to organize high-level Ukrainian-Russian talks before winter. “We don't want to go through [another winter of mass Russian strikes] again. And Russia has ‌to know ... they ⁠will also not have a simple one.” Lastly, G7 leaders pledged in a post-summit statement to “accelerate this new momentum” in Ukraine’s favor by increasing the delivery of additional air defense capacities and long-range capabilities as well as exploring the possibility of licensing weapons production to Ukraine. The statement also pledged unspecified stronger sanctions against Russia, including measures targeting its oil and gas sectors, now that a US-Iran agreement has been reached.

LSE-listed MHP, Ukraine’s largest poultry producer, reported 1Q26 EBITDA of $87m including the IFRS 16 effect, down 28% y-o-y, and $79m excluding IFRS 16, down 29% y-o-y, despite a 31% y-o-y increase in sales to $1.0bn.

The EU on Monday formally launched accession negotiations with Ukraine and Moldova by opening talks on the first of six negotiating clusters that candidate countries must complete before joining the bloc. European Commissioner for Enlargement Marta Kos said the remaining five negotiating clusters with Ukraine could be opened by the end of the summer, potentially as early as July, which would establish the full set of legislative and policy requirements Kyiv must meet on its path toward membership. Deputy Prime Minister Taras Kachka said Ukraine aims to meet the EU’s accession benchmarks by 2028, adding that the opening of formal negotiations would provide additional momentum for the required reform agenda. Separately, NBU Governor Andriy Pyshnyi said that Ukraine’s banking and insurance sectors are currently 78% and 55% aligned with EU regulations, respectively, and that the central bank plans to achieve full harmonization by 2028.

Ukraine’s underground gas storage (UGS) inventories increased by 9.8% m-o-m in May, to 11.2 bcm, up 67% y-o-y, as average daily injection more than doubled m-o-m to 32 million cubic meters per day (mcm/d), though remaining slightly below last year’s level. Cross-border net inflows stood close to zero in May, down from 0.5 bcm in April, keeping 5M26 net inflows at 2.1 bcm, up 2.5x y-o-y.

Recent battlefield developments have looked increasingly favorable for Ukraine, with Russia’s offensive slowing sharply this year. Ukraine has also intensified strikes on Russia’s energy and military infrastructure, aiming to increase pressure on Moscow and push it toward meaningful talks. Despite this, there are no visible signs as yet that Russian leadership is revising its stance. We therefore keep the extended war scenario as our base case for 2026-2027 but also maintain our alternative scenario that assumes a ceasefire and sustainable settlement later this year, especially as its probability no longer looks negligible in view of recent battlefield dynamics.

• Frontline changes remain marginal overall, but Russia maintains offensive pressure in key Donetsk region sectors. • Ukrainian forces are reported successfully counterattacking the Russian bridgehead in Dnipropetrovsk region and maintaining pressure on Russian logistics in southern Ukraine. • Russia conducts another mass attack on Kyiv after President Trump’s calls with the Ukrainian and Russian leaders.