EXECUTIVE SUMMARY ----- (entire report in the attachment)

(1)   The US and other international partners of Ukraine are taking more concrete measures to support Ukraine’s security and territorial integrity.  A key US decision was to supply Ukraine with Javelin anti-
        tank weapon systems.  Some European countries have also said that they may also provide lethal defensive weapons to Ukraine once the US starts delivering Javelins. 

(2)   Ukraine continues to implement its reform agenda although at a slow pace. Currently, the legislation on the establishment of the Anti-Corruption Court was passed by Verhovna Rada in the first reading.
        It is expected that the pertinent committee of the Rada will introduces changes required by the EU, IMF and Venice Commission. 

(3)   The IMF has stated that, in addition to satisfactory legislation on the Anticorruption Court, the fifth tranche release (probably about USD 1.5 billion) will depend on further progress on pension reform,
        energy/gas sector policies, the adequacy of the 2018 fiscal budget, and a revised privatization law.

(4)   Monthly data for January 2018 show that the economy is stabilizing, although with uneven economic performances.  Good economic performance was experienced in retail trade turnover, with a
        growth rate of 9.6% yoy.  The industrial sector also showed good performance in January, with a growth rate of 3.6% yoy, the stronger growth rate in seven months.  Similarly, the agricultural sector
        had a 1.1% yoy increase in output, in contrast to the negative signs of the previous fourth months. Ukraine passenger turnover also performed well in January, increasing by 3.2% yoy.  On the other
        hand, in part due to bad weather, freight transportation turnover declined by -9.3% yoy, and construction output dropped by 1% yoy.

(5)  The consolidated fiscal budget (state and local) for January 2018 had a surplus equivalent to 8.3% of period GDP.

(6)  Consumer inflation in January reached 14.1% yoy, 0.4 percentage points higher than in December (13.7% yoy). 

(7)  In the banking sector, in January 2018 growth of corporate deposits remained significant at 10.2% yoy, while growth of household deposits remained almost unchanged at 19.4% yoy.  Lending

       activities of commercial banks remained weak.

(8)  The UAH/USD exchange rate appreciated by around 3.7% in February ending the month at around 26.8 UAH/USD.

(9)  In January 2018, the current account of the balance of payments had a small deficit of USD 61 million, compared to a surplus of USD 131 million in January 2017.  The financial account also had
       outflows amounting to USD 388 million in January, due to repayments of corporate debt (USD 230 million) and trade credits (USD 204 million).  As a result, international reserves declined by USD
       449 million to USFD 18.6 billion (3.5 months of imports).

NOTE:  The entire Macroeconomic Situation Report for Ukraine for January 2018 can be found in the attachment to this e-mail and at the link below.