ABOUT UKRAINE

Area

579,300 square kilometres

Location

Ukraine borders on Poland, Slovakia, Hungary, Moldova and northern Romania in the west, on Belarus in the north and on Russia in the east and south, where it meets the Black Sea. There are innumerable rivers, including the Dnepr and its tributaries.

Currency

Ukrainian hryvnia (UAH)

Capital

Kyiv

Government

Head of State

Petro Poroshenko (2014)

Head of Government

Volodymyr Groysman (2016)

Ruling Party

Petro Poroshenko Bloc  and the Peoples Front lead a loose coalition with several mother parties.

Political Structure

The country has an executive president who is elected by universal suffrage for a five-year term. Parliament has 450 members elected for five-year terms by proportional representation.

Last Elections

In presidential elections in May 2014, Poroshenko won with 54.7% of the vote. His nearest rival was Yulia Tymoshenko who received 12.8% of the vote. Parliamentary elections were held in October 2014. The Petro Poroshenko Party won 132 seats, the Peoples Front took 82 seats, the Self Reliance Party received 32 seats, the Opposition Bloc took 29 seats, the Radical Party of Oleh Lyashko won 22 seats and the Fatherland Party took 19 seats. Parliament elected Groysman as Prime Minister in April 2016. Separatists in eastern Ukraine held their own elections in October 2014. Western nations described the poll as "illegitimate".

Political Stability and Risks

In 2014, voters in Crimea overwhelmingly supported a referendum to leave Ukraine and become part of Russia. Crimea's parliament subsequently declared independence from Ukraine. In 2015, the government agreed to grant pro-Russia separatist regions greater autonomy, sparking large-scale protests in Kiev. Parliament's decision was a condition of the Minsk peace agreement. Fighting broke out again in 2017, leading the government to formalise an economic blockade of the rebel-held eastern regions.

International Issues

The Minsk agreement, signed by Russia and Ukraine in 2015 reduced tensions but both sides failed to implement several aspects of the deal. Russia argues that Kiev has turned to terror by sponsoring a "criminal" incursion into Crimea. Ukraine has signed an association agreement with the EU and voted to drop the country's non-aligned status in order to work towards NATO membership. An EU-Ukraine free trade deal came into effect in 2016. The government also unveiled a wide-ranging reform plan to prepare Ukraine to apply for EU membership in 2020 but political infighting slowed the process.

Today, popular discontent and international pressure is mounting again as government opponents are convinced the President is trying to avoid commitments to address endemic corruption. Government officials are accused of trying to curb the independence of a new National Anti-Corruption Bureau of Ukraine (Nabu) which was set up with western support.

Government Finance

The complex security situation in eastern Ukraine has led to a sharp rise in military spending. In 2016, the budget deficit was 2.2% of GDP. The deficit in 2017 widened to 2.8% of GDP. For 2018, a deficit equal to 2.4% has been agreed.

Kiev has successfully concluded months of negotiations with its major creditors to accept a 20% write-off on US$18 billion of the country's bonds. The restructuring was a requirement for the IMF to agree to a four-year financial support programme, totalling about US$40 billion. Russia launched legal proceedings over non-paymentof US$3 billion debt in 2016. The government received US$1.0 billion in new funds from the IMF in April 2017.

Ukraine's public debt amounted to UAH 2,442 billion in 2017 - equivalent to 84.4% of GDP. A major restructuring of Ukraine's debt took place in 2015 and early 2016. The government has admitted that it loses around US$10 billion every year through graft.
Spending on social security and welfare accounted for 39.4% of government expenditure in 2017, followed by spending on general public services (16.0%).