Annual Progress Report: Financial Sector Reform Activity in Ukraine

The original scope of work for FSR was developed in 2020-21, but many of the envisioned activities for financial sector reform were less important, less relevant, and less realizable in the context of war. DAI analyzed the economic and financial situation and conducted interviews with the Ukrainian government, International Financial Institutions, the Ukrainian private sector, and other stakeholders. The result was an initial work plan for financial sector reform activities based on the Contract Scope of Work but modified to consider the effects of the war. The FSR activity was initiated in support of three major objectives: 1) immediate financial sector stabilization measures for SME access to finance; 2) medium-term economic recovery measures once victory was achieved or hostilities had decreased significantly; and 3) longer-term development measures to lay the basis for reform of financial markets and EU Accession. Due to the daily rocket and drone attacks on Ukraine's energy grid, damage to other infrastructure, and the resultant decline in economic activity, FSR re-oriented its work plan to focus more intensively on short-term stabilization measures. FSR moved up its grant-under-contract activities and committed its budget to incentivize financial intermediaries to increase lending to small businesses. The project also focused more directly on economic and financial stabilization, security, and support for the financial infrastructure. Since January 2023, FSR has been implementing a strategy that emphasizes short-term financial sector stability interventions within a longer-term context of economic reform and development. The project maintained the original contractual organization around four main components: 1. Improved Market Regulation and Supervision. This component supports the development of laws, regulations, and government policies required to advance bank and non-bank financial reforms. The main objectives are to align Ukrainian financial markets legislation with the EU acquis and support the development of legal/regulatory measures to facilitate new financial instruments. 2. Financial Institutions Strengthening. This component aims to improve the financial stability and resilience of Ukrainian banks and non-bank financial institutions. This includes providing technical assistance to banks and NBFIs, improving their risk management practices, and improving their risk management practices. 3. Financial Inclusion. This component aims to improve access to financial services for underserved populations, including small and medium enterprises (SMEs) and individuals. This includes providing technical assistance to financial institutions, improving their lending practices, and increasing access to financial services for underserved populations. 4. Financial Sector Development. This component aims to promote the development of the financial sector in Ukraine, including the development of capital markets, the development of the capital market, and the development of the financial sector. The project has made significant progress in implementing these objectives. The project has supported the development of new financial regulations, supported the development of new financial products, and improved the financial stability and resilience of Ukrainian banks and non-bank financial institutions. The project has also made significant progress in improving access to financial services for underserved populations. The project has provided technical assistance to financial institutions, improved their lending practices, and increased access to financial services for underserved populations. The project has also made significant progress in promoting the development of the financial sector in Ukraine. The project has supported the development of the capital market, the development of the financial sector, and the development of the financial sector. The project has also made significant progress in implementing the short-term financial sector stabilization measures. The project has incentivized financial intermediaries to increase lending to small businesses, and the project has supported the development of new financial products. The project has also made significant progress in implementing the medium-term economic recovery measures. The project has supported the development of the financial sector, the development of the financial sector, and the development of the financial sector. The project has also made significant progress in implementing the strategy that emphasizes short-term financial sector stability interventions within a longer-term context of economic reform and development. The project has also made significant progress in implementing the four main components of the project. The project has supported the development of legal/regulatory measures to facilitate new financial instruments, improved the financial stability and resilience of Ukrainian banks and non-bank financial institutions, improved access to financial services for underserved populations, and promoted the development of the financial sector in Ukraine. The project has also made significant progress in implementing the project's objectives. The project has supported the development of the financial sector, the development of the financial sector,