March economic review in 2026. How to unleash bank lending to boost the Ukrainian economy?

Since March 2022, the Centre for Economic Strategy (CES) has been preparing monthly reviews of Ukraine’s economy during a full-scale war.  The special topic of the February review is: «How does attacks on the energy system affect business activity?».

All previous reviews can be found under the link.

Energy outages in February weighed on business activity, but the electricity situation improved in March thanks to repairs and favourable weather. External risks increased amid the Iran war, pushing up oil and gas prices and weakening the hryvnia. Credit growth reached a record high, increasingly driven by market-based lending. But access to long-term finance remains constrained by war-related risks. The banking system is highly liquid but risk aversion in wartime and high real interest rates keep the credit-to-GDP ratio far below regional peers.

Key changes in the Ukrainian economy in March:

• Sectoral analysis: Business sentiment and business activity deteriorated in February amid essential electricity outages. The energy situation improved in March thanks to repairs and sunny weather. The sowing campaign for summer crops has started, and the condition of winter crops is good. The Iran war has driven up fuel and gas prices and increased the risk of supply disruptions. Limited access to loans almost does not impede the increase in production.
• Fiscal sector: In February, tax revenues amounted UAH 154 bn, adding 15% compared to January, but the plan was still not met. The biggest increase was in CPT by 3.2 times due to its seasonality. Total spending of state budget in January 2026 showed significant reduction in both monthly and annually terms. The “5-7-9%” business support program leads economic activity expenditures  in 2026, with UAH 18 bn planned for it – the same amount as in 2025.
• Monetary sector: Consumer inflation accelerated to 7.6% y-o-y in Feb 2026 as the winter energy shock — driven by a 30% electricity supply deficit — passed through to production and logistics. Externally, the onset of the Iran war on February 28 triggered a global oil shock and a “safe haven” flight to the US dollar, causing the hryvnia to weaken significantly against the USD in the following weeks.
• Special topic: Credit growth is record high by January 2026, driven increasingly by market-based lending as the influence of the “5-7-9%” subsidised program declines. New lending remains highly concentrated in Trade, Processing, and Agriculture, with a 30% uptick in medium-term loans to support energy autonomy and defense-adjacent production. Despite NPLs falling to a 15-year low of 13.9%, bank lending still only finances 5% of capital investments, and long-term credit remains stagnant due to persistent war-related risks.

See our report below for further details.

Expert discussion and Q&A:

• Nataliia Butkova-Vitvitska, Member of the Management Board at Oschadbank, in charge of Micro, Small and Medium Business;
• Sergiy Nikolaychuk, First Deputy Governor at the National Bank of Ukraine;
• Andrii Teliupa, Adviser to the Minister of Economy of Ukraine.

Moderator: Maria Repko, Deputy Executive Director of the Centre for Economic Strategy.

Key points of the discussion:

The government continues to stimulate the economy through its affordable loans programme. The stable volume of such funding enables businesses to meet the strong demand for investment and working capital. Andrii Teliupa, Adviser to the Minister of Economy of Ukraine, spoke about this: 

“We are gradually and consistently working to increase lending. Our main tool has traditionally been our largest programme under the “Made in Ukraine” policy — “Affordable Loans 5-7-9%”. And currently, for the third year running, the funding has remained unchanged — 18 billion hryvnias in compensation, which allows us to provide around 95-100 billion hryvnias per year. 

And we are seeing significant demand, as over the past year, around 25,000 Ukrainian enterprises have taken advantage of this programme.”

Furthermore, the banking sector is seeing a significant increase in the volume of support for small and medium-sized businesses. Risk-sharing instruments from international partners help achieve these results. This was noted by Nataliia Butkova-Vitvitska, Member of the Management Board at Oschadbank:

“All three types of programmes encourage companies to obtain financing, but the key solution is programmes with guarantee mechanisms. We currently have such programmes in place with the EBRD and the EIB, each targeting different objectives. And if we are talking about the extent of these programmes’ impact, in terms of figures, without these programmes we would have lent, roughly speaking, 7 billion hryvnias in the micro, small and medium-sized business segment last year, whereas with these programmes we lent 15 billion. In other words, we doubled the funding.”

The National Bank of Ukraine is recording a significant recovery in the corporate lending market. Current growth rates even exceed those of previous years. Despite challenging conditions, the banking system is demonstrating substantial growth in the volume of loans granted to businesses, both in hryvnia and in foreign currency. This was reported by Pervin Dadashova, Director of the NBU’s Financial Stability Department:

“In absolute terms, hryvnia-denominated business loans grew by over 35% last year. And this growth is continuing this year. Foreign currency business loans also grew by around 20% year-on-year last year. These are, in fact, very high figures. Historically speaking, we had not seen such figures for a long time following Russia’s invasion in 2014. It was only in 2021 that we saw such positive momentum, which, unfortunately, was once again interrupted by Russia’s invasion.

The fact that we have managed to return to these figures, despite the war making conditions far more difficult than they were in 2021, is, in fact, a major achievement.”

This event has been funded by the UK International Development from the UK government; however, the views expressed do not necessarily reflect the UK government’s official policies.