The European Council revised the EU’s long-term budget for 2021-2027 at a meeting yesterday, including the addition of a EUR 50bn support package for Ukraine for 2024-2027 (Ukraine Facility). The package envisages EUR 33bn of concessional loans and EUR 17bn of grants and includes three pillars: EUR 39bn in loans and grants for direct budget support, EUR 8bn in grants to support investments and provide access to financing for business projects, and EUR 3bn in grants for technical assistance and loan interest coverage (breakdown of loans and grants for each pillar may change). Pursuant to last-minute amendments, the program will be discussed by the European Council each year and may be reviewed in two years on the Council’s request.

WSE-listed Ovostar Union, one of the largest shell egg producers in Ukraine, reported 2023 operating results. The bird flock totaled 7.7 million hens (+6.9% y-o-y) as of end-2023, including 6.4 million laying hens (+6.7% y-o-y). Shell egg production inched down by 1.0% y-o-y to 1,531 million eggs, with volume sales declining by 10.4% y-o-y to 970 million eggs. Domestic sales fell by 21% y-o-y to 626 million eggs while exports jumped by 19% y-o-y 344 million (35% of total volume sales). The volume of shell eggs processed increased by 15% y-o-y to 492 million eggs in 2023. Sales of dry egg products rose by 15% y-o-y to 2.5 kt and sales of liquid egg products grew by 20% y-o-y to 12.8 kt.

Ukraine received $390m in financial aid from Japan yesterday, channeled through the World Bank and including a $300m loan and a $90m grant. The money is intended to reimburse Ukraine’s non-military state budget expenditures such as reconstruction and social assistance

Power market operator Guaranteed Buyer paid UAH 5.8bn to renewable power producers in January, including UAH 5.5bn to partially settle its 2023 debt and thus cutting the latter to UAH 31.8bn, and UAH 0.3bn for January supplies. The company received UAH 5.5bn ($144m) from the power transmission system operator Ukrenergo, which funded the payment using a EUR 150m state-guaranteed loan received from the EBRD in December. The latest transfer increased 2023 monthly settlement rates as follows: to 65% for June (vs. 45% reported at end-2023), to 82% from 48% for July, to 85% from 56% for August, and to 78% from 47% for September, raising the full-year rate to 71% from 55% in 2022. The January settlement rate provisionally totaled c. 98%.

The European Commission proposed yesterday to renew the suspension of import duties and quotas on Ukrainian exports to the EU for another year, from July 2024 to June 2025. The draft regulation, however, introduced reinforced safeguard mechanisms for imports of Ukrainian poultry, eggs and sugar. If imports of these products to the EU exceed the respective 2022-23 averages, import tariffs on the excess amount of these products would be applied. The proposed regulation is to be approved by the European Parliament and European Council.

EU High Representative for Foreign Affairs Josep Borrell said yesterday EU member states have thus far collectively committed to provide at least EUR 21bn ($22.7bn) in military assistance for Ukraine in 2024, with additional inputs still pending. He said this would mark a notable acceleration in military supplies, coming close to the military aid volume of EUR 28bn the EU member states and EU institutions together provided for Ukraine in the first two years of the Russian invasion in 2022 and 2023.

The Ministry of Finance placed UAH 1.6bn ($41m) of hryvnia-denominated bonds at a primary auction yesterday.

Electricity prices for households may double this year to slightly below UAH 6.0/kWh (with VAT), according to parliament deputy Sergiy Nagornyak, a representative of the presidential party who sits on the Verkhovna Rada’s energy committee. Nagornyak said increasing the tariff was necessary to free up capital for state power plant operators Energoatom (nuclear) and Ukrhydroenergo (hydro), adding that the measure was supported by Ukraine’s international partners.

Ukraine’s direct and guaranteed public debt stood at $145.3bn as of end-2023, up 3.2% m-o-m and 31% y-o-y (+$34bn), translating into an est. 84.8% of 2023E GDP, up from 78% in 2022.

EU member countries have reportedly supported a plan that envisages setting aside profits arising from the frozen assets of Russia’s central bank as a first step towards deploying them for Ukraine’s reconstruction.

The long-time rumors about President Volodymyr Zelensky’s impending dismissal of top Commander-in-Chief of the Armed Forces Valeriy Zaluzhny heated up again yesterday, with multiple media outlets, lawmakers and political bloggers reporting it. One publication wrote that Zelensky offered Zaluzhny to resign during a meeting but Zaluzhny refused. Other media quoted anonymous sources as saying the presidential office was contemplating a broader reshuffle of the security and defense sector leadership.

The Ukrainian Energy Ministry disclosed some limited statistics on domestic electricity consumption and production in 2023, reporting that industrial power consumption jumped by 26% y-o-y to 2.26 TWh in November and 38% y-o-y to 2.3 TWh in December, while household consumption increased by 11% y-o-y last month. The Ministry also said that nuclear power plants produced 10% more than planned in 2023, hydroelectric power plants exceeded last year’s production target by 37%, thermal power generators underperformed by 24%, and combined heat and power plant output was 10% lower.

WSE-listed Astarta Holding, Ukraine’s largest sugar producer, published its 4Q23 operating update, reporting sugar sales of 81 kt, down 2.7% q-o-q but up 30% y-o-y, delivered at an average sale price of $663/t, down 9.2% q-o-q and 5.4% y-o-y. Grain and oilseed sales surged by 7.6x q-o-q and 2.1x y-o-y to 537 kt, including 285 kt of wheat and 174 kt of corn. Wheat selling prices averaged $237/t, up 36% q-o-q but down 7.6% y-o-y, while corn averaged $215/t (+62% q-o-q, -18% y-o-y). Soybean oil sales totaled 10 kt in 4Q23 (+10% q-o-q, -3.0% y‑o-y) while soybean meal sales jumped by 53% q-o-q and 24% y-o-y to 45 kt. The average selling price of soybean oil fell by 2.2% q-o-q and 35% y-o-y to $812/t and that of meal declined by 7.3% q-o-q to $486/t (+1.4% y-o-y). Lastly, 4Q23 raw milk sales stood at 28 kt (+8.4% q-o-q, +5.3% y-o-y), averaging $434/t in price (+24% q-o-q and 16% y-o-y). Separately, Astarta reported 2023 sugar production of 377 kt, up 34% y-o-y and marking a five-year high.

A Ukrainian appeal court upheld a UAH 4.7bn ($128m) claim against Ferrexpo Poltava Mining. The company plans to appeal the ruling with the Supreme Court of Ukraine.

Russia’s grinding advances continue but still fail to progress beyond local tactical gains; Ukrainian forces conduct successful counterattacks in the south

The NBU Board left its key rate unchanged at 15% p.a. following a meeting yesterday, thus terminating its cutting cycle that saw the key rate slashed by 1,000bp, from 25% in June 2023. The NBU said a flat rate was consistent with its goal to maintain exchange rate stability and moderate inflation.