Ukraine Policy Based Guarantee

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The policy based guarantee (PBG) supports Ukraine's efforts to address critical structural bottlenecks and governance weaknesses in a challenging economic environment. This operation supports reforms to tackle the structural underpinnings of Ukraine's weak growth recovery and ongoing fiscal vulnerabilities under two key pillars: (i) strengthening factor markets and institutions; and (ii) promoting fiscally sustainable and effective services. Coordinated support from development partners has been critical in advancing the ambitious reforms supported by this operation. The PBG enables Ukraine to diversify its financing sources, mobilize private capital, and meet major financing needs in a challenging environment. The PBG not only enables Ukraine to raise capital from a private market transaction, but also helps de-risk Ukraine in attracting additional necessary financing from Eurobonds. Ukraine's access to international capital markets remains constrained due to deteriorating market conditions, as well as macroeconomic vulnerabilities. These risks are mitigated by the strong voice of Ukrainian civil society in advocating for continued reforms and by Ukraine's strong cooperation with the international community. A new government took office in April 2016 and issued a program and action plan covering a broad reform agenda that is in line with the development objectives of the PBG. The PBG builds on renewed momentum to advance ambitious reforms in the window of opportunity before elections scheduled in 2019.