The National Bank’s survey-based business activity index, a PMI-type gauge, stood at 50.4 on a 0-100 scale in June, down 1.7pt m-o-m and flat y-o-y. (NBU)

The Ukrainian government approved a “transparent and controlled mechanism” for exports of domestic defense products and technologies, PM Yulia Svyrydenko announced yesterday. To qualify for exports, companies must prove their ability to simultaneously fulfill both state and export orders, and authorization may be denied if the Defense Ministry or other state agency intends to procure the same product for Ukraine’s defense needs. All export applications are to be considered within 30 days. The minimum contract value for finished products is set at UAH 15m ($0.3m). Under the framework, 20% of proceeds from exports of finished products and technologies, and 30% from exports of components, will be channeled to a special state budget fund dedicated to developing Ukraine’s defense industry, Svyrydenko said. The export mechanism applies to Ukraine’s partner countries under the Drone Deal framework and will be valid during the period of martial law. In addition, exports of critical defense goods, to be specified by the Defense Ministry, will be banned, while the Foreign Ministry will maintain a list of eligible export destinations. Lastly, the new mechanism aims to protect Ukrainian technologies by transferring them without assigning intellectual property rights and by imposing controls on their use and re-exports. (x.com/Svyrydenko_Y, mod.gov.ua)

Monthly salaries paid to staff employees in Ukraine averaged UAH 30,961 ($703, EUR 602) in gross terms in May, up 1.5% m-o-m and 23% y-o-y, bringing 5M26 growth to 22% y-o-y. Adjusted for inflation, real wage growth stood at 13% y-o-y in May, up from 12% in April and keeping 5M26 growth at 13% y-o-y, up from 8.0% in 5M25.

The European Commission (EC) approved implementing regulations that distribute 18.3 Mt in annual tariff-free quotas on steel and selected steel products, which replaced previous safeguard measures effective July 1, 2026.

Ukraine and Sweden signed yesterday an agreement for the procurement of 16 JAS 39 Gripen E fighter jets. Swedish Saab separately confirmed signing a SEK 24.6bn ($2.5bn) contract to produce the aircraft for Ukraine, along with spare parts and associated items and equipment, saying the order would be booked in 3Q26 and deliveries take place in 2029-2030. Ukrainian officials said the contract will be financed using the EU’s recently approved EUR 90bn ($103bn) Ukraine Support Loan for 2026-27, of which EUR 60bn ($68bn) is earmarked for defense. On a related note, the Ukrainian government announced yesterday it received a EUR 3.9bn ($4.4bn) disbursement from the USL’s defense component, part of the EUR 6bn ($6.8bn) first tranche intended to finance drone production in Ukraine.

The Ministry of Finance placed a net $64m of domestic government bonds in June, after average monthly net redemptions of $329m in April-May, bringing YTD net placement to $392m and translating into $636m in cumulative budget proceeds. Accordingly, the rollover rate improved to 105% in June from 51% in May and 63% in April, bringing the YTD rollover rate to 107%, including 105% for UAH-denominated bonds and 119% for FX-denominated bonds.

According to minutes of the NBU’s Monetary Policy Committee (MPC) meeting, which preceded the central bank’s rate decision on Jun. 18, eight out of 11 committee members voted to keep the key rate unchanged at 15.0% p.a., while three supported a 50bp hike to 15.5%. The majority justified their decision by pointing to relatively stable inflation expectations, strong demand for UAH-denominated assets, and an improved balance of risks following the unblocking of the EU’s EUR 90bn Ukraine Support Loan (USL), successful completion of the IMF program review, and de-escalation in the Middle East, which drove a correction in global energy prices. These forward-looking positives were expected to offset stronger-than-expected inflationary pressures in May. Meanwhile, the hawkish minority argued that a hike was needed to preserve the attractiveness of UAH-denominated assets amid the hryvnia’s depreciation in recent months and rising inflation. They also noted that, despite recent improvement, the balance of pro-inflationary risks remains skewed to the upside due to persistent geopolitical uncertainty, second-round effects from earlier fuel price increases, and war-related damage. On the rate outlook, seven MPC members agreed that the current rate level is sufficient to bring inflation to target over the policy horizon, provided inflation expectations remain anchored, the FX market stays stable, and demand for UAH-denominated assets remains strong. The other four stressed that the NBU may need to raise the key rate to 15.5-16.0% in the coming months should inflation deviates further from the NBU’s projected path and approaches the psychological threshold of 10%. MPC members agreed that the revised macroeconomic forecast scheduled for July will provide the basis for a more informed decision.

Naftogaz announced a consent solicitation to restructure its EUR 695m Eurobonds maturing in July 2026 and $584m bonds due in November 2028.

• Russian forces make new tactical gains on the Donetsk front while the Ukrainian army continues counterattacking in several southern sectors. • Despite only marginal gains and heavy Ukrainian strikes on Russian logistics in occupied regions, the intensity of Russian ground assaults is not abating. • Ukraine continues to expand its strike campaign against Russia, with the Russian Defense Ministry claiming intercepting over 11,000 Ukrainian long-range drones between Jun. 1-28, double the number of Russian long-range UAVs launched at Ukraine over the period.

Real retail turnover in Ukraine rose by 10.9% y-o-y in May, accelerating from 7.8% y-o-y in April and bringing 5M26 growth to 9.2% y-o-y. Seasonally adjusted retail growth rebounded to 2.4% m-o-m in May from a revised 2.0% drop in April.

Ferrexpo issued an update stating that it has received $7.7m in net proceeds from the sale of the transshipping vessel Iron Destiny and, based on current production rates and an optimized sales mix, now estimates that it has sufficient net accessible cash beyond the previously indicated end-August 2026 liquidity horizon. At the same time, the company reiterated that it continues to pursue an equity raise of at least $100m, which it views as the most viable solution.

Ukraine signed 28 energy deals worth more than EUR 1bn at the Ukraine Recovery Conference in Poland, including grant and loan financing, investment projects and memorandums aimed at preparing for the 2026/27 heating season, expanding distributed generation and strengthening the resilience of the energy system. Among the major deals: • Naftogaz signed a $300m financing agreement with the US EXIM Bank to fund purchases from US suppliers. • Ukrenergo inked a EUR 90m state-guaranteed loan with the EBRD to finance protection of energy infrastructure and creation of a strategic stock of equipment. The agreement also provides for the reconstruction of three substations and construction of a new substation in western Ukraine. • GE Vernova will supply a 650 MW combined-cycle gas turbine (CCGT) to DTEK Holding to improve the flexibility of Ukraine's power system. • EUR 178m in Dutch support for the procurement of critical energy equipment, including gas turbines, transformers and backup equipment, as well as at least EUR 375m under the “Energy Ramstein” framework for the repair and protection of critical infrastructure. (Interfax-Ukraine)

The EU disbursed the first EUR 3.2bn ($3.7bn) tranche of macro-financial assistance (MFA) under its EUR 90bn Ukraine Support Loan (USL) for 2026-27, European Commission President Ursula von der Leyen announced yesterday at the Ukraine Recovery Conference in Poland. She also said that the first EUR 6bn tranche under the package’s defense component would be disbursed in the coming days and directed toward Ukraine’s drone production.

State power transmission system operator Ukrenergo reported 2025 revenue of $2.6bn (+2.6% y-o-y), while net losses narrowed to $256m from $946m in 2024. End-June cash declined 25% y-o-y to $277m, with the majority held in Ukraine. Total debt increased 3.4% y-o-y to $2.5bn, implying a Debt/EBITDA ratio of 7.2x, up from 5.3x at end-2024.

NATO’s key European members plan to use the alliance’s upcoming summit on Jul. 7-8 to “further substantially support Ukraine,” including through additional sanctions on Russia and measures to strengthen the resilience of Ukraine’s energy sector, the leaders of France, Germany, Italy, Poland and the UK said following a meeting yesterday. German Chancellor Friedrich Merz added that Berlin proposed approving another “strong financial commitment” for Kyiv at the summit. On a related note, US President Donald Trump acknowledged Ukraine’s recent battlefield successes, saying during an Oval Office meeting with NATO Secretary-General Mark Rutte that President Volodymyr Zelensky was doing “pretty well” and “holding his own” against Russia. Against this backdrop, Zelensky said in his Wednesday evening address that he had instructed Ukrainian forces to carry out pre-emptive strikes against facilities Russia uses to sustain and intensify the war in order to compel Moscow to resume peace talks. “Our operation, including the one in Crimea, is carefully calculated, and the way it is unfolding fully proves: if Ukraine receives exactly what we discussed with our partners within the G7 … we will promptly create the conditions that will force Russia to choose peace,” he said. Meanwhile in Russia, Foreign Minister Sergei Lavrov reiterated Moscow’s unchanged hardline demands, saying Russia would not accept a ceasefire along the current frontline as a condition for restarting negotiations. Russia remains open to talks at any time, but “there must be a serious proposal on the table,” without temporary solutions, Lavrov said, adding that a visit by Trump’s envoys to Moscow remained under discussion and that Russia was prepared to hear them out. A day earlier, President Vladimir Putin said Moscow was ready for negotiations with Ukraine on the basis of the draft agreements discussed in Istanbul in 2022, Russia’s subsequent conditions articulated in 2024, and current “realities on the ground.”

Ukrainian Railways CEO Oleksandr Pertsovskyi told local media that a 30% freight tariff increase planned from August is expected to be followed by a further 15% hike from January 2027. However, the decision on the second-stage increase will be considered separately, he said.