Traditionally, at the end of the year, the Institute for Social and Economic Research (ISER) analyses main events that have affected or will affect the future development of Ukraine. We estimate that year 2016 was more successful than previous two years.

General economic trends

Economic growth renewed. After three quarters, the positive trend of GDP growth was registered: +0.1%, +1.4%, +1.8% by quarters respectively, - and that was for the first time after 14 quarters of decline. Altogether, during nine months the economy grew by about 1.3% (hereinafter - compared with corresponding periods of 2015):

-         industrial production growth - by 2.1% in 11 months;

-         restoration of agricultural growth - by 2.9% in 11 months;

-         increased capital investments - by 16.4% in 9 months;

-         growth in construction - by 14.1%, including housing - by 13.0% in 11 months.

Personal incomes rose gradually, wages in October 2016 (counting for inflation) increased by 5.0% compared to October 2015.

Exports of goods to EU member states increased by 4.4% in 9 months.

Recovering macroeconomic stability, inflation lowered by almost four times compared to 2015 - from 43% to about 12%. Abrupt devaluation of hryvnia stopped. Devaluation rate did not exceed inflation rate (while in 2015 hryvnia has devaluated by 1.5 times).

Financial markets

Council of the National Bank was created, which allowed to ensure full functionality of the Bank and to drive monetary policy, including the adoption of basic principles of monetary policy for the year 2017 and the medium term. In addition, net profit of the National Bank was transferred to the state budget.

The outflow of household deposits from banking system slowed. In 11 months, the volume of household deposits increased by 4.5% (up to UAH 416.1 billion), and the corporate sector increased its deposit portfolio by 8.1% (up to UAH 337.6 billion). Despite the decrease in deposits volume by 1% in November, the overall trend remains positive.

Interest rates lowered: the NBU discount rate - from 22% to 14%; interbank market rate - down to 13.8%, weighted average rate on loans for corporate sector in national currency - from 20% to 12.3%; rates on household deposits in national currency - down to 14.2%, in foreign currency - down to 5%.

The legislative framework for reformation of financial market was created, including adopted laws "On consumer credit", "On financial restructuring", and the first reading - draft laws "On insurance" (new version), "On amendments to some legislative acts (concerning regulated markets and derivatives)" etc.

Measures on liberalising currency regulation were being undertaken. The amount of mandatory sale of foreign currency revenue was reduced to 65%, and permission on dividend payments abroad granted. A number of other requirements were simplified: regarding the amount of currency withdrawal, limits on currency purchase or sale, etc. In 11 months hryvnia devaluated by 7.5%, and foreign exchange reserves increased by 1.7 billion to 15.4 billion.

State finance

The Law "On State Budget of Ukraine in 2017" approved. Required deadline of draft budget submission to Verhovna Rada (September, 15) was met. Although the final decision had been carried out 20 days later, and the tradition of "night voting" repeated, nevertheless, Ukraine begins the year 2017 with the new budget. Key budget parameters: income - UAH 731.03 billion, expenditures - UAH 800.03 billion, loans to be issued -  UAH 14.76 billion, loans repayments - UAH 6.21 billion, the deficit - UAH 77.55 billion (3% of GDP).

Work on improving transparency of public finance continued. The system of public e-procurement ProZorro fully implemented, and it was awarded international World Procurement Awards-2016. Portal of public finance operates.

First steps taken to introduce medium-term budget planning. Government Priorities Plan for 2016 declares the necessity of budget planning implementation, starting in 2018. Draft Strategy on reforming of public finance management for 2017-2021 years was drawn.

Reform of Customs Service started, including "one window" service, inter-regional customs offices created, etc. Mobile teams were organised for detecting and preventing of customs offences. Approaches to determining customs value improved.

The legal foundation for anti-corruption tax reforms was created through amendments to the Tax Code, adopted in 2016. One of the major steps is the improvement of VAT administrating (adding props of foreign trade goods classifier to the invoice, acknowledging the right for a tax credit based on registered invoice, defining rules to lock tax invoice, etc.). These changes are expected to help to get rid of converting centres and overcome the abuse of officials in VAT administrating.

Investment policy

During three quarters of 2016 Ukrainian economy attracted UAH 204.5 billion of capital investments (16.4% increase over the corresponding period of 2015). Investment growth occurred in almost all economy areas.

The output of capital from Ukraine slowed to USD 0.5 billion compared to USD 0.89 billion in 2015.

Government Office was created for attracting and supporting investments.

Ukraine went up by three positions in Doing Business-2017 ranking (80th position out of 190 countries).


Energy dependence on Russia is liquidated. Already a year Ukraine doesn’t buy Russian gas at the company-monopolist “Gazprom”. Now NJSC “Naftogaz of Ukraine” and other Ukrainian importers can choose from several dozens of suppliers.

The share of private importers of natural gas
to Ukraine has risen to 26% (although, the private importers constituted only 1% in 2014). The gas market for commercial customers was liberalised, moreover, the share of private providers, which was 78% in 2015, also increased during 2016.

NJSC “Naftogaz” became profitable for the first time in many years
and did not need financial injections from the state budget.

As part of the restructuring plan for “Naftogaz” to separate of transportation and storage (pumping, screening) of natural gas, the CMU adopted a decree “On the establishment of JSC “Trunk pipelines Ukraine”.

Contracts for transportation and storage of natural gas were signed between Ukrainian operator JSC “Ukrtransgaz” and by Engie Company (France)
and its subsidiary in Ukraine – Ltd. “Engie Energy Management Ukraine”. We hope that for the EU gas traders it will be a signal about the positive results of the reform of the energy sector, and will encourage them to entry the Ukrainian gas market, which will contribute its de-monopolization. Large European companies also will bring modern technologies in Ukraine, European business culture and practices that will force Ukrainian players to change.

The Law “On NKREKP” entered into force,
one of whose tasks is to create preconditions for the sustainability of public regulatory effect on the activity of natural monopolies in the energy sector.

The PJSC “Ukrgazvydobuvannya” declared an ambitious plan to increase its gas production to 20 billion cubic meters by 2020. The corresponding Concept of increase of domestic production is approved by the CMU.

International policy

After the referendum in the Netherlands, where the population voted against its ratification, the fate of Ukraine Association Agreement with the EU remains undefined.

The process of a visa-free regime between Ukraine and the EU is not complete.

about Ukraine's integration into Euro-Atlantic structures is growing in the EU.

Republican Donald Trump won the US presidential election.
It was a surprise for the Ukrainian government and showed that our international policy is formed under the influence of an external factor more than under the national interests.

The success of Ukrainian diplomacy was the adoption of UN Resolution “Human rights situation in the Crimea and the city Sevastopol (Ukraine)”, which recognises the Crimea as the temporarily occupied and the Russian Federation as the state-occupier.

Continuation of the EU sanctions against Russia to July 2017
can be considered as the success of Ukraine.


The Strategy public management reform in Ukraine for 2016-2020 years and an action plan for its implementation are adopted.

The new Law “On civil service”
has come into force; more than 30 regulation acts for its implementation adopted.

The Commission on Senior Civil Service started to work
, competitions to fill posts of the category “A” (CSA Heads, RSA Heads, state secretaries in the ministries) announced.

The portal of e-services started to work.
It already proposes the first 15 e-services from the MEDT.

A competitive selection of candidates for directors of public enterprises introduced, including for the state enterprise “Ukrposhta”, PJSC “Ukrzaliznytsia”, NPC “Ukrenergo”.

E-declaration system was introduced.

Regional development

Throughout three quarters of 2016 volume of capital investments increased in 21 regions. Upgoing trend of investments was most noticeable in Kharkivska and Khersonska oblasts – by 50%, Kirovohradska and Odeska oblasts - by 60% and Mykolayivska oblast – by 80%. Main industrial areas were also among the regions with positive dynamics of investment. This gives the ground to expect the resumption of industrial growth in 2017, in particular, in Dnepropetrovska, Zaporizka, Poltavska industrial areas, etc.

Local budgets also registered significant income growth during 2016, Jan-Sep.  Major increase was recorded for personal income tax – by UAH 18.3 billion, land tax – by UAH 6.7 billion, entrepreneur unified tax – by UAH 11.4 billion, and excise tax – by UAH 3 billion.

SocialPolicy / Healthcare

Measures for the verification and monitoring of the reliability of information for charging and receiving social payments, benefits, subsidies, pensions, etc. introduced. Namely, the appropriate department in the Ministry of Finance created the software developed, a test of payments for internally displaced persons, pensions, subsidies conducted.

Taxation of pensions, the amount of which does not exceed 10,740 UAH cancelled.

The minimum wage will be increased by almost half – to 3,200 UAH in 2017.

The situation with the procurement and supply of drugs that nearly two years have not carried out (preventive vaccines, serums for emergency treatment of rabies, poisoning, etc., medication for children with cancer) has stabilised.

A series of standards for social services, including the State standards of social crisis services and emergency intervention, the State standards of palliative care, the State standards of accompaniment of families (individuals) who are in difficult circumstances, etc., were approved. These rules allow identifying persons in need of social assistance for specified areas, establishing a specific list of services, to develop individual plans for anyone who receives such assistance. In fact, this is a specialised methodological framework for the implementation of social work in many areas.

Internally displaced persons (IDPs)

A central executive body – the Ministry of temporarily occupied territories and IDPs – was created.

A Single information database of IDPs was launched.

Accounting procedures for IDPs simplified
, stamps for certificates and other cancelled, perpetuity of paper’s action.

The rights of persons with disabilities

Important official documents, which are intended to regulate certain aspects of socialization of persons with disabilities adopted: Presidential Decree “On measures to ensure the observance of the rights of persons with disabilities”, the Cabinet of Ministers Resolution “Some aspects of the pilot project “Establishment of a system to provide early intervention services” for child development, preservation of its health and life”, and so on.

Optimizing of education institutions and transition to education in supporting schools has begun. Such establishments became available for children with disabilities. 332 children, who previously studied for individual learning, went to supporting schools in 2016.

The term person with disabilitiesofficially introduced to use instead of disabled”.