Financial Sector Transformation Project Quarterly Progress Performance Report

Financial Sector Transformation Project FY 2019 Q2 PROGRESS REPORT

(01 January – 31 March 2018)

Award No: EEM-E-00-00002-00/AID-121-BC-17-00001

Prepared for USAID/Ukraine C/O American Embassy 4 Igor Sikorsky St, Kyiv, Ukraine 04112

Prepared by:

DAI Global LLC Financial Sector Transformation Project 7600 Wisconsin Avenue, Suite 200 33-B Taras Shevchenko Blvd., Europe Bethesda, MD 20814 Plaza Business Center, 6th floor, Kyiv, 01032, Ukraine facebook.com/FSTProject http://www.fst-ua.info

1 Table of Contents

I. ACRONYMS AND ABBREVIATIONS 3 II. CONTEXT UPDATE 4 III. EXECUTIVE SUMMARY 5 IV. KEY ACHIEVEMENTS 7 V. PROGRESS AGAINST TARGETS 14 VI. PERFORMANCE MONITORING, EVALUATION AND LEARNING 16 VII. LESSONS LEARNED 16 VIII. ENVIRONMENTAL MONITORING 16 IX. PROGRESS ON LINKS TO OTHER ACTIVITIES 16 X. PROGRESS ON LINKS TO HOST GOVERNMENT 16 XI. PROGRESS ON INCLUSIVE DEVELOPMENT 17 XII. FINANCIAL INFORMATION 17 XIII. SUB-AWARD DETAILS 17 XIV. ACTIVITY ADMINISTRATION 17 XV. ATTACHMENTS 19 ATTACHMENT A: DELIVERABLES TABLE 20 ATTACHMENT B. PROJECT DOCUMENTS AND PUBLICATIONS 25 ATTACHMENT C. PERFORMANCE DATA TABLE 26 ATTACHMENT D. SUB-CONTRACTOR TABLE 33 ATTACHMENT E: GIS AND FUTURE ACTIVITIES TABLE 34

2 I. ACRONYMS AND ABBREVIATIONS DGF Deposit Guarantee Fund EU European Union FSR State Commission for Regulation of Financial Services Markets GfK Growth from Knowledge GOU Government of Ukraine IFRS International Financial Reporting Standards IMF International Monetary Fund IOPS International Organization of Pension Supervisors IOSCO International Organization of Securities Commissions LC Leasing Company MEDT Ministry of Economic Development & Trade MIA Ministry of Internal Affairs MOES Ministry of Education and Science MOF Ministry of Finance MSP Ministry of Social Policy NABU Independent Association of Ukrainian Banks NBU National Bank of Ukraine NBU-BU National Bank of Ukraine’s Banking University NGO Non-Government Organization NPF Non-state Pension Fund OECD Organization for Economic Cooperation and Development PFU Pension Fund of Ukraine SSMNC Securities and Stock Market National Commission US CFTC U.S. Commodity Futures Trading Commission US SEC U.S. Securities and Exchange Commission UUL Ukrainian Union of Lessors UWF Ukrainian Women’s Fund VRU Verkhovna Rada of Ukraine VR-FBC Verkhovna Rada Finance and Banking Committee

3 II. CONTEXT UPDATE Ukraine is rated by USAID as a “non-permissive environment” or NPE country because of the threat of war with Russia, the conflict in the separatist held territories, and endemic corruption that constrains efforts to institutionalize a market economy.

Project activities this quarter were influenced by the presidential elections scheduled for March 31. FST avoided public events that might be construed as political, and curtailed advocacy efforts on behalf of important financial sector laws. No significant economic legislation was voted upon by the Parliament. An IMF mission arrived in early March to review the implementation of the Stand-by facility, but departed Ukraine without any official pronouncements about progress under the accord. The next disbursement of IMF funds of about $1.3 billion is scheduled for May, but this will most likely be postponed.

The election was a surprise to many. Comedian/actor/businessman Voldomyr Zelenskiy finished in first place in first round voting with approximately 30.5% of the vote, even though he proposed no specific economic or reform program. President Petro Poroshenko trailed significantly in the voting, with just 16.0%, apparently hurt at the polls by charges of continuing corruption and by weak economic performance over the last 5 years. There will now be a run-off election on April 21, with Zelenskiy heavily favored to win. The possible President of Ukraine Petro Poroshenko, presidential implications of a Zelenskiy presidency for reform candidate Volodymyr Zelenskyi generally, and for FST’s agenda of financial sector legal reform specifically, is difficult to judge. The candidate has said little publicly about possible appointments to his government or about his reform agenda. Nevertheless, Zelenskiy is pro-Western and he has condemned corruption. Moreover, the economic policies of his government would be constrained by Ukraine’s commitments to the EU and the need for IMF finance for foreign debt repayment. Parliamentary elections are scheduled for October 2019.

During the quarter, the exchange rate strengthened by about 3% to the dollar, and ended March at UAH27:$1. This was due in part to the disbursement of IMF funds in late December and foreign borrowings, which allowed the NBU to increase reserves to about $20 billion. Inflation is projected at about 9% for 2019, with economic growth at about 3%.

FST has introduced a new elements framework to describe more accurately the purpose, objectives and range of its activities. The diagram is presented below. Project activities and results are categorized according to the framework, and are grouped under these key elements in the deliverables and future activities tables in the annexes. The main components are:

Enabling Environment: Public Confidence & Regulation. Financial markets depend on trust. Trust is the result of two things: knowledge, because you are more likely to have confidence in and use a product or service if you understand it; and protection from manipulation, abuse, or fraud through proper regulation and enforcement.

Access to Finance. This refers to the ability of individuals/enterprises to obtain financing or financial services, including loans, leasing, investment products, insurance, and risk management services. It also includes credit history and reporting, and insolvency procedures.

Financial Disclosure/Transparency. Information moves markets. Disclosure is important to price discovery, to fair competition, to investment and to combating fraud and corruption. This element

4 includes information disclosure systems, tax and accounting, anti-money laundering, advertising, and corporate governance (how a company is managed, shareholder rights, supervisory boards, decision- making).

Financial Infrastructure. This element includes the institutions and practices that are critical to the functioning of markets: clearing and settlement, payment systems, messaging, IT generally, exchanges and brokers, SROs, capital pools (insurance companies, pension funds, private equity, etc.), digital finance.

FST ELEMENTS FRAMEWORK

ENABLING ENVIRONMENT

PUBLIC REGULATION CONFIDENCE SUPERVISION

SME GROWTH FINANCIAL INFRASTRUCTURE ACCESS TO FINANCE

FINANCIAL LEASING CAPITAL MARKETS CAPACITY BUILDING DIGITAL FINANCE (IT, TRAINING) INCLUSION COMMODITY MARKETS (ENERGY, AGRICULTURE) INVESTMENT

FINANCIAL DISCLOSURE / TRANSPARENCY

AML, BEPS FINANCIAL REPORTING

ANTI-CORRUPTION INITIATIVES

III. EXECUTIVE SUMMARY A. Key Achievements

DO1. CORRUPTION REDUCED IN TARGET SECTORS

The Banking and Finance Committee approved the draft AML law No. 9417 for first reading. The draft AML law was developed by the Ministry of Finance, the State Financial Monitoring Service, the NBU and other stakeholders with the assistance of FST domestic and international experts in 2017-2018. Also, the Parliament passed the Law on ratification of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Sharing (so called MLI). Ukraine's ratification of the Convention is one of the steps required for Ukraine to implement the OECD BEPS Action Plan, which will increase tax revenues and curb tax evasion. The Parliament now needs to pass the draft BEPS law developed by the Ministry of Finance and other stakeholders with FST's assistance.

FST continued its efforts to improve financial transparency through implementation of the IFRS/XBRL financial reporting system for the MOF and the three financial sector regulators. In February, FST's sub- contractor Vizor Ltd. gave a presentation to the steering committee (NSSMC, NBU, FSR, and MOF) on the main features and functionalities of the software. Also in February, Vizor conducted training and certification on the software for the technical staff of the Securities Commission (the operator of the

5 hub). In March, Vizor completed the development of the software and installed it on a testing environment of the Commission. Testing will begin in mid-April, and the “Go Live” phase is scheduled for June, 2019. This will improve financial disclosure by an estimated 5000 financial companies

FST completed the methodology to permit a fair, accurate and reliable ranking/comparison of bank consumer lending products (personal loans, credit cards, car loans, mortgages) working with a committee of technical experts from the banks. The next step is to research and develop a tender document to procure the services to create, operate, and promote the digital comparison tool (DCT). The DCT will increase transparency in consumer lending and improve competition among banks based on the total cost of credit. FST consulted broadly with FinTech companies, commercial banks, the NBU and media companies to evaluate potential partners for this activity.

DO4. ECONOMIC GROWTH

FST implemented an active program to build confidence in financial markets through its communication, educational, and legal/regulatory efforts. On January 16, the NBU, supported by the FST Project, held a widely publicized meeting with representatives of the banking and business communities, international financial institutions, government authorities, experts, and media representatives. The NBU Governor Yakiv Smoliy outlined NBU’s key accomplishments in 2018 and presented the Action Plan for 2019. The result of FST support for the NBU’s communications program is enhanced openness by the NBU to the banking and finance community. The Bank’s progress was recognized internationally in March when the Central Bank Publication awarded the NBU its annual Transparency Prize.

FST undertook three new initiatives in consumer protection. The first was to push for a more active regulatory role by the NBU in consumer finance. FST prepared a legal brief arguing that the NBU has broad authority to regulate consumer lending by banks, even in the absence of a law giving it an explicit mandate for consumer protection (draft Law #2456). An action plan was provided to the NBU detailing the steps it could take under existing law. In mid-March, the NBU approved key elements of the action plan, which FST will support. Second, FST initiated a study of complaint resolution mechanisms in the insurance sector as a first step toward establishing a pilot project with a NGO on disputes resolution and arbitration. Third, FST held discussions with law schools in Kyiv, Kharkiv and Lviv to add consumer finance issues to the menu of services provided through their legal clinics to disadvantaged groups. FST will begin the first full pilot activity with Kharkiv law school next quarter and add the others in the fall.

FST also prepared a new curriculum, textbook, and workbook on financial literacy for the 10th form course for secondary students, and submitted the materials to the Ministry of Education for approval of the course as a permanent part of the educational offerings of the Ministry. The youngest respondents in FST’s national financial literacy survey scored the lowest on indices of knowledge, behavior and attitudes. Thus, they are a priority target group to educate about personal finance.

During the quarter, FST and the Ukrainian Union of Lessors conducted eight regional seminars on leasing finance for approximately 575 SME participants. The purpose is to promote leasing finance as an affordable, trustworthy option for SMEs and municipalities. Member companies of UUL provided the speakers for the events, and UUL member leasing companies organized a "market fair" promotional event held simultaneously with the training.

FST continued to work on developing products for exchange trading of oil futures. FST provided comments to the Ukrainian Energy Exchange on its rules and procedures for exchange trading on daily balancing of the gas market, which was established in Ukraine on March 1, 2019. FST also supported the standardization of regulations concerning the gas market to permit futures trading

On March 19, FST and its subcontractor SWIFT kicked-off the project to align the NBU's messaging system with international standard ISO 20022 with a three-day workshop for NBU and commercial bank

6 payments experts. The project aims to modernize Ukraine’s financial payments infrastructure, improve the country’s competitiveness and integrate Ukraine’s payment system with global markets.

On February 27, FST Pension Adviser Natalia Goryuk and consultant Volodymyr Yatsenko presented international experience with Pillar 2 mandatory retirement savings systems at a special session of the Committee on Social Policy, Employment and Pensions of the Verkhovna Rada. About 70 individuals participated, including several MPs. FST’s message is that introduction of Pillar 2 at this time is unwise and could undermine recent progress in stabilizing the pension system.

B. Quantitative Highlights

FST can report on the results of four performance indicators (including two related to leasing). These are:

Media. There were 324 media mentions about the Project and its activities from January 1 to March 31. This brought the cumulative number of media placements for FY 2018-19 to 647, compared to the Project fiscal year target of 900 (source: FST and USAID media monitoring results). Training. The total number of person hours of training provided by FST and completed by management and/or staff of financial intermediaries was 3,111. This was mainly due to 8 training events on leasing finance in the regions. Leasing. FST now has data on the leasing sector for year-end 2018. The number of leasing contracts concluded by lessors last quarter (Q1 FY19) was 3,208, and the value of these leasing contracts was US$162 million (data from the FSR as of December 31, 2018). The FST FY19 full year target for leasing contracts is 11,200, and the target for value of leasing contracts is US$435 million, suggesting that FST will meet or surpass its targets.

C. Activity Administration

As reported last quarter, the Inpredkadry Directorate of the General Directorate for Servicing Foreign Representative Offices Government Enterprise (GDIP) requested all technical assistance projects to obtain a tax code in order to continue further cooperation with GDIP after February 28, 2019. Some donors and international implementing partners raised concerns about the proposed procedure for registration with tax authorities, and asked the Ministry of Economic Development and Trade and the Ministry of Finance to help resolve the tax registration issues. This request is still in process Thus far, GDIP continues to provide services to the international technical assistance projects, including to FST. We will continue to monitor and report on the situation.

D. Subsequent Reporting Period

FST is not proposing any changes to its implementation plan. It is too early to gauge the possible impact of a win in the presidential run-off election by the political novice, Volodymyr Zelenskiy. He has said almost nothing about economic and financial policies. Likewise, the composition of the potential new economic/financial team under a Zelenskiy presidency is unknown. FST will continue to monitor the situation, particularly the independence of the NBU and personnel changes in government counterparts.

IV. KEY ACHIEVEMENTS DO1: CORRUPTION REDUCED FST’s activities to combat corruption focus on financial information disclosure, ethical market conduct, and legal/regulatory reform, especially the areas of money laundering and tax evasion. During this quarter, the Project made notable contributions to improving the environment for internationally accepted business practices in the financial markets.

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Framework Element 3: Financial Disclosure/Transparency The Banking and Finance Committee approved the draft AML law, No. 9417, for first reading by the Rada. The draft AML law was developed by the Ministry of Finance, the State Financial Monitoring Service, and the NBU, with the assistance of FST domestic and international experts in 2017-2018. During the quarter, FST participated in discussions of the draft law at the Rada committee hearings. FST also participated as an adviser in a tripartite NBU/Ministry of Finance/ IMF conference telephone call to review the comments of IMF experts. If approved, the Anti-money Laundering Law will improve substantially the reporting of questionable financial transactions by financial institutions and market professionals (accountants, auditors), and move Ukraine closer to international standards (FATF).

The Parliament passed the Law on ratification of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Sharing (so called MLI). Ukraine's ratification of the Convention is a key step required for Ukraine to implement the OECD BEPS Action Plan. The Parliament now needs to pass the draft BEPS law submitted by the Ministry of Finance. The draft law was prepared with significant input by FST and its subcontractor, EY Ukraine.

FST’s subcontractor, Vizor LTD, made significant progress in developing the software to implement the Financial Reporting System (IFRS/XBRL). FST and Vizor gave a presentation to the inter- ministerial steering committee on the functionalities of the system and the timetable for implementation. Vizor also delivered two weeks of training and certification to NSSMC and SMIDA personnel who will be responsible for maintaining and operating the system. The software development is complete and will be tested using data from selected Vizor two weeks training and certification to NSSMC and SMIDA reporting entities in April/May (Acceptance personnel Test Plan Phase). It is expected that the system will “go live” in mid-June and that any remaining bugs/issues will be corrected by mid-July. Financial reporting using IFRS/XBRL is an official requirement for financial entities, and it is anticipated that more than 4000 annual reports will be submitted by March 2020.

FST is developing a digital comparison tool (DCT) for bank retail loans to consumers (personal loans, credit cards, mortgages, car loans). As part of its monitoring of consumer lending, FST discovered that the range in the total cost of credit for personal loans was very large (from 45% to 200%), that many banks concealed the true cost of credit, and that comparison tools in the domestic market provided misleading information to consumers. The FST comparison tool is expected to bring transparency to the market, lower the spread of interest rates, and improve customer satisfaction via competition. In addition to ranking banks by total cost of credit, the DCT will incorporate qualitative indicators of banks (disclosure, compliance with laws, efficiency) and include consumer education materials.

This quarter FST developed and validated the concept of a DCT for Ukraine, including research on international comparison tools, legal/regulatory analysis, an analysis of existing DCTs in Ukraine, and discussions with key stakeholders (banks, the NBU, fintech and media companies, NGOs). Importantly, FST developed the methodology for retail loan comparisons (description of the main elements and rules, templates, testing) working with a committee of experts from nine commercial banks. In addition, FST has signed non-binding Letters of Cooperation with several banks to provide data to the DCT based on

8 the methodology, best international practices of transparency and disclosure, and verification of data by USAID/FST. These banks represent 90% of the bank consumer lending market.

The next step is for FST to complete the terms of reference for a Ukrainian subcontractor to develop the website/application, implement and operate the comparison tool, and promote the site to consumers. FST will recruit an international expert to review its DCT and its procurement documents, and will conduct a mystery shopping survey to validate its data during the next quarter.

FST continued its effort to implement a transparent system of certification of stock market specialists and asset managers. The current system is out-of-date, does not incorporate international standards or ethics training, and has suspiciously high pass rates (90%). There were seven working group meetings held to discuss a new structure for the examination and certification process. Legal work was also initiated to prepare the basis for the Securities Commission to issue a regulation mandating the new system requirements.

FST subcontractor the Centre for Economic Strategy completed its political economy analysis of state- owned banks and presented the results to senior USAID officials. The report was finalized and is now circulating among senior stakeholders for comment and discussion. FST is considering possible advocacy activities based on the study.

DO4: MARKET DRIVEN ECONOMIC GROWTH FST promotes sustainable, market driven economic growth through a sound, trusted financial sector that intermediates finance to those who can use it effectively. The main areas of FST emphasis are: (1) improving the enabling environment for financial market (public confidence through communications, consumer protection and financial education), and legal/regulatory reform; (2) financial infrastructure development; and (3) access to finance, especially for small and medium producers. FST also promotes and uses financial technology innovations in support of these activities.

Framework Element 1: Enabling Environment

A. Legal and Regulatory

During the quarter, FST undertook three new initiatives in consumer protection. The first and most important was to persuade the NBU that it had the power under existing financial sector laws to do more than it is doing to protect financial consumer rights. FST prepared a comprehensive analysis (legal brief) arguing that the NBU has broad authority to regulate consumer lending by banks, even in the absence of a specific law giving it a mandate for consumer protection (e.g., draft law #2456). An action plan was also provided to the NBU detailing the steps it could take under existing law. In mid-March, the NBU approved key elements of the action plan and created an internal working group on consumer protection.

Second, FST held discussions with law schools in Kyiv, Kharkiv and Lviv to develop a program to advise clients of their legal clinics on consumer financial issues and complaints. The initiative is to build trust in the financial sector through providing free legal advice to vulnerable groups and by conducting related financial education activities. After research and consultations with legal experts, FST decided to approach universities with legal clinics in 3 cities - Kyiv, Kharkiv, and Lviv. The pilot project will include: • providing law students and teachers of Legal Clinics with the expertise in financial legislation and financial consumer issues (materials, lectures, consultations); • providing assistance and materials to the Legal Clinics to promote the new advisory service on financial issues to potential clients; • financial support for managers of the program in each university/clinic; • financial support for additional educational efforts on consumer finance;

9 • reporting forms for measuring results of the programs (names of clients and contact data, number of consultations, results of the advice, follow-up visits/calls, etc.); • a formal evaluation after 6 months.

FST gave a series of lectures to students from the Legal Clinic at Kyiv-Mohyla Academy in March. Lectures in Kharkiv (Yaroslav Mudryi Law Academy) and Lviv (Catholic University) are planned in April and August, respectively. FST will begin the full pilot activity first with Kharkiv law school next quarter and with the others in the fall.

Third, FST initiated a study of insurance industry complaint resolution mechanisms as a first step toward establishing a pilot project with a NGO on disputes resolution and arbitration. The report is due in May; pilot activity would begin in the summer.

B. Education and Awareness

Financial Literacy Course FST prepared new academic materials (curricula, textbook and workbook) for the Financial Literacy Course 10th grade students of comprehensive secondary schools. These materials were submitted to the Ministry of Education and Science for approval as a permanent course to be taught nation-wide. The course is organized into sections around five key competences: Earn, Spend, Borrow, Save and Invest, and Protect. The course is modelled on similar courses taught in European and American high schools and focuses on practical learning: understanding money and how the financial system works; employment and entrepreneurship; financial planning and budgeting; borrowing and lending responsibly; investment and retirement; and how to manage risk and avoid fraud. The Banking University, the National Bank, the DGF, and private sector financial experts reviewed the curriculum and textbook. Communications and Public Outreach FST supported three initiatives by the National Bank of Ukraine to communicate with the public about its goals, objectives and activities. First, on January 16, the NBU held a meeting with its key stakeholders (banks and businesses, international financial institutions, government authorities, experts, and media representatives) to review the past year and present its action plan for 2019. The event featured presentations by the NBU Governor Yakiv Smoliy and the Chairman of the Council of the National Bank of Ukraine, Bohdan Danylyshyn, and NBU meeting with key stakeholders, Jan 16, 2019 was attended by over 160 people. The event included a panel discussion “Institutional Capacity for the Development of the Economy and Financial System,” with discussants from the NBU, Ministry of Finance, the IMF, private banks and business associations. The program ended with a press briefing with NBU Governor Smoliy for 38 media representatives, including 16 TV channels.

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Second, FST supported the NBU’s Economic Information Days in Zhytomyr on February 28 – March 1, 2019. The Kiev School of Economics and the Ukrainian Interbank Payments System Member Association (EMA) also participated. This event was a series of lectures to university students, professors, journalists and members of the business community on key issues of importance to the financial system and to the NBU: inflation targeting and monetary policy, digital finance and payments systems, cyber security and Economic Information Days in Zhytomyr, Feb 28 – Mar 1, 2019 fraud prevention, consumer rights and protection. Special sessions were held for financial journalists to improve their understanding and to provide context to the articles they write. Economic Information Days are planned for eight more cities in Ukraine: Lviv, Uzhgorod, Chernivtsi, Vinnytsya, Odesa, Kherson, Dnipro, and Kharkiv.

Third, FST and the NBU organized and carried out a nationwide awareness campaign centered around Global Money Week in mid-March. A series of educational activities for students and children (ages 7 – 22) were held in Kyiv and in the regions from March 18 until March 29, 2019. Global Money Week is an annual global financial awareness campaign led by Child & Youth Finance International aimed to raise awareness of the importance of financial education and financial inclusion for children and youth.

Global Money Week-2019 key educational activities included the following activities: 1. Lessons / educational events by schools, banks and other financial institutions provided by volunteers based on the materials developed by the NBU and FST. 2. Online games on financial issues were placed on Kahoot! Platform (a free, game-based learning platform allowing play in a group under a teacher’s guidance or as an individual player). Topics include: world currencies; smart savings; personal budgets, and financial literacy. 3. Radio stations tips and insights on how to manage personal finances prepared by FST and the NBU each morning during the Global Money Week (March 18-29, 2019). 4. In Kyiv, activities included the NBU “open house” of tours of its historic building, a financial literacy competition among universities, lectures and workshops for students, debates among university students on the topic traditional banks vs neo-banks, and excursions to the money Big game "What? Where? How Much?" for students, Mar 21, 2019 museum.

11 DGF Financial Literacy Video Contest In February-March 2019, FST and the DGF conducted a Financial Literacy Video Contest for university students on the importance of savings as Contest are to increase youth interest in financial issues and improve financial literacy among students.

Pension Fund of Ukraine FST consultant Volodymyr Yatsenko published two articles in the Economichna Pravda (Economic Truth) on women pensioners and on pension investment. DGF Video-contest, Feb-Mar 2019 1) Why Are Women’s Pensions Lower and Why This will Not Change for Another 200 Years" (January 9, 2019) https://www.epravda.com.ua/publications/2019/01/9/643934/ 2) " The Seven Commandments to a Young Investor by John Bogle" (January 29, 2019) https://www.epravda.com.ua/columns/2019/01/29/644726/

Framework Element 2: Access to Finance

Legal FST continued to support reform to the legal framework to accelerate financial sector development. In January the Project advocated passage of the split law (#2413a), which improves the regulatory environment for non-bank financial institutions, through meetings with parliamentarians and distribution through the NBU of a brochure on the advantages of a new regime. FST’s legislative advocacy activities were placed on hold due to the presidential election (March 31, 2019).

Leasing

FST’s access to finance initiative emphasized leasing finance SPLIT Law Brochure during the quarter. FST and the Ukrainian Union of Lessors conducted eight regional seminars/market fairs on leasing finance for SMEs and municipal economic authorities (Odessa, Mykolaiv, Kropyynytsky, Cherkasy, Zaporizhia, Dnipro, Ivano Frankyisk, Lviv, approximately 575 participants). The purpose of the events was to raise SME awareness of leasing as a financing option for their businesses. The presentations focused on what leasing is and why it is a good alternative to bank financing; the documentation needed to lease; how to calculate the costs and payments under leasing contracts; and how to avoid fraud. The sectors covered were transport, agriculture, and heavy equipment. FST produced two videos and printed materials to support the seminars.

On February 18, Ms. Katarzyna Kaczmarek concluded the three-part training on key aspects of vendor finance for Ukrainian leasing companies. The topic was "Commercial and Communications Strategies in Vendor Brochure “How to choose a reliable lessor?”, March Finance." 2019

12 FST Consultant Thomas Reinke of Germany initiated his assignment to work with the Ukrainian Union of Lessors to develop a five-year strategic plan for self-reliance. The study will include an analysis of the organization (mission, structure, governance), current and prospective activities, UUL personnel requirements under different scenarios, and budgeting and finance.

Capital and Commodity Markets FST continued to work on developing instruments for the exchange trading of oil futures. The essential first step is standardization of the Regulation on the Procedure for Accepting, Shipping, Storing, Releasing and Keeping Records of Oil and Oil Products by Enterprises and Organizations in Ukraine, as approved by Order of the Ministry of Energy and other authorities # 281/171/578/155. Three working groups meetings were held to discuss the development of amendments, based on the legal and technical analysis provided by FST. Three important amendments to the Regulation are required: (1) standardizing and simplifying record-keeping and document flow at oil depots; (2) updating the Regulation in line with current laws; and (3) standardizing a unit of measurement.

Energy exchanges in Ukraine are essentially unregulated. FST provided comments to the Ukrainian Energy Exchange on its rules and procedures for exchange trading in gas on the daily balancing of gas market, which was established in Ukraine on March 1, 2019. Trading is to begin in early summer 2019. Thus, it is important to finalize and gain acceptance of the trading rules, and to implement necessary internal procedures to launch daily trading on the UEEX gas market.

Framework Element 4: Financial Infrastructure

The NBU is transferring its System of Electronic Payments (SEP) to a new system of payment messages based on the ISO 20022 standard. USAID/FST is providing technical assistance to accomplish this through a subcontract with SWIFT. ISO 20022 is a financial messaging standard that has already been applied to many financial processing areas, including trade finance, securities settlement, corporate transactions, payments, remittances, and regulatory reporting. In Ukraine the system will greatly facilitate digital finance transactions, including direct debit and instant money. Implementation of ISO 20022 will also simplify adherence to AML and currency control compliance. The goal of this activity is to modernize Ukraine’s financial payments infrastructure, improve the country’s competitiveness, and integrate Ukraine’s payment system with global markets.

This activity to improve the NBU’s messaging system began with a three-day workshop conducted by SWIFT experts on March 19-21. In addition to personnel from the payments, technology, and legal departments of the NBU, six commercial banks also participated. Five more workshops are scheduled to complete the target of fifteen new payments messages required by the NBU. The next workshop is scheduled for May 13 and 14, 2019.

FST continued its work on pension system architecture. The pension reform law Three day workshop conducted by SWIFT experts; March 19-21, passed in October 2017 included a 2019 provision for the implementation of a mandatory pillar 2 system, which both USAID/FST and the World Bank oppose based in part on weaknesses in the existing regulatory structure and the lack of suitable financial instruments for pension investment. FST presented its views on the proposed Pillar 2 mandatory retirement savings systems at a special session of the Committee on Social Policy,

13 Employment and Pensions of the Verkhovna Rada. About 70 individuals participated, including several MPs.

FST initiated a study of the private pension system in Ukraine, focusing on its performance and its contribution to supplemental income in retirement for pensioners. Preliminary analysis suggests that the private pension funds should be abolished. After 14 years of operation, accumulated funds total only $95 million, administrative and management fees average an astronomic 4%, and only 5% of the workforce participates. The policy paper will be released next quarter, and will propose alternatives to the current system. V. PROGRESS AGAINST TARGETS FST tracks quantitative performance on four quarterly indicators (including two related to leasing). These are: • Media. There were 324 media mentions about the Project and its activities from January 1 to March 31. This brought the cumulative number of media placements for FY 2019 to 647, compared to the Project fiscal year target of 900 (source: FST and USAID media monitoring results). The media mentions mainly focus on access to finance via leasing for SMEs, financial literacy, and pension reform. Most media mentions about USAID/FST activities are on the Internet, but the Project also had short segments (3-5 minutes) on regional television about leasing events in the regions. • Training. The total number of person-hours of training provided by FST and completed by management and/or staff of financial intermediaries this quarter was 3,111. The cumulative number of person-hours of U.S.-funded training provided to support financial sector development during FY 2018-19 is 6,921. The annual FST Project target for person-hours trained is 1,530. • Leasing. The number of leasing contracts concluded by lessors over Q1 FY19 was 3,208, as of December 31, 2018 (the latest official FSR data available). The end of FY19 target for leasing contracts is 11,200, suggesting that FST will exceed the target. The value of leasing contracts concluded over Q1 FY19 was US$162 million, as of December 31, 2018. The end of FY19 target for this indicator is US$435 million, again suggesting FST will meet its target.

Media FST project activities appeared in various media outlets 324 times in January – March 2019. This brought the total number of media placements to 647 over the first two quarters of FY2019.

Media mentions appeared in national and regional Types of media placements in Q2 Printed media outlets from 19 Ukrainian oblasts materials, (Cherkas’ka, Chernihivs’ka, Dnipropetrovs’ka, TV, 14 9 Donets’ka, Ivano-Frankivs’ka, Kharkivs’ka, Khersons’ka, Kirovograds’ka, Kyivs’ka, Lvivs’ka, Mykolaivs’ka, Odes’ka, Poltavs’ka, Ternopils’ka, Vinnyts’ka, Volyns’ka, Zakarpats’ka, Zaporiz’ka, and Zhytomyrs’ka).

Training Internet, FST conducted eight training activities for SMEs 301 and municipal authorities on leasing finance in cooperation with the Ukrainian Union of Lessors. The main goal of these trainings was to raise SME awareness of leasing as a financing option. The events incorporated “market fairs” at which UUL lessors

14 presented their companies and provided hands-on experience with leasing contracts. This provided participants the opportunity to discuss the details of leasing face-to-face with leasing companies.

In addition, FST conducted one training on vendor finance for leasing companies. This training aimed to introduce a concept of vendor finance to leasing companies for further implementation in the industry. Overall, FST conducted nine trainings in the leasing area in Q2.

Trainings for SMEs on Leasing, Q2, 2019 # # # # Oblast of people of men of women of person-hours Kyivs’ka [Vendor Financing] 19 12 7 114 Mykolaivs’ka 51 35 16 229.5 Odes’ka 73 46 27 328.5 Kirovograds’ka 64 36 28 288 Cherkas’ka 48 35 13 192 Zaporiz’ka 84 48 36 378 Dnipropetrovs’ka 83 50 33 373.5 Lvivs’ka 96 67 29 432 Ivano-Frankivs’ka 76 52 24 342 Total 594 381 213 2,677.5

FST also conducted two trainings for 17 IT professionals of the NSSMC and SMIDA on “VT0001- Certified Vizor Application Administration” and “VT0004- Vizor Certified System Administration.” This training was specified in the FST/Vizor subcontract to develop the software for the Financial Reporting System. The course in Certified Vizor Application Administration provided the necessary training for day-to-day operation of the Vizor Portal and Vizor Supervision Center applications. The course in Certified Vizor System Administration provided the necessary training and certification to administer and configure the Vizor Software installation. This included an overview of the infrastructure, installation and rollback of releases, backend configuration, database knowledge, query building, construction and testing of ad hoc queries along with software troubleshooting and Vizor Service Desk Procedures. The total number of person-hours of trainings was 433.5.

FST Events FST conducted several events this quarter with the National Bank of Ukraine in support of public confidence, information disclosure, and financial literacy. This included the NBU Open Day (in January 2019), Economic Information Days in Zhitomir (end February – beginning of March), and Global Money Week 2019 at the end of March. The number of direct participants at FST lectures and activities was 665, of which 59% were women and 41% men.

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VI. PERFORMANCE MONITORING, EVALUATION AND LEARNING FST provided support to the COR and the Mission in the design of indicators for the new CDCS Results Framework. FST helped to complete 11 Performance Indicator Reference Sheets for the “Inclusive, innovative finance expanded” goal on the IR and sub-IR level by providing information on data collection methodology. FST also identified baselines and targets for all the indicators.

Once the mission-wide indicators for the financial sector are finalized and approved, the Project will update its MELP to include all USAID indicators and report on them as required.

VII. LESSONS LEARNED There were no special lessons learned this quarter. Ukraine continues to be a difficult implementing environment but progress can be made with persistence and commitment. VIII. ENVIRONMENTAL MONITORING FST has an approved Environmental Mitigation and Monitoring Plan (EMMP) and updated it previously in FY 2018. No mitigation measures were required this quarter. IX. PROGRESS ON LINKS TO OTHER ACTIVITIES The FST project coordinates its activities with those of other USAID projects and international agencies involved in financial sector reform, economic growth, anti-corruption and related areas. It also participates in events sponsored by its counterparts and partners. During the Quarter, the Project: • Continued IT support to the new DAI/ERA project for the Donbas region. • Provided an opportunity for the new Chemonics Competitiveness Project to present its program and specifically its grants activity at FST’s leasing training/promotion activity in Zaposizhya (February 27) and Dnipro (February 28) • Continued cooperation with EU-Finstar (Financial Reporting System) and EU FINREG (private pensions) projects. • Continued an active role in the IFI working group of financial legislation (IMF, USAID, US Embassy, EU, World Bank, EBRD), and succeeded in getting the AML law placed on the group’s top ten priority financial laws agenda. • Coordinated efforts with Mastercard, VISA, and the World Bank to support a scheduled Financial Inclusion Forum of the NBU in June. • Participated with the Kiev School of Economics and the EMA association in the NBU’s Economic Information Days program. • Formed a working group of nine commercial banks to develop the methodology for the DCT. • Renewed cooperation with the US SEC on legal analysis (comments on draft Law #6303) and on training of regulators (Ukrainian delegation to the annual SEC seminar on regulation for emerging market countries.)

X. PROGRESS ON LINKS TO HOST GOVERNMENT FST has signed Protocols of Understanding with the NBU, NSSMC, the DGF, the PFU and the Ministry of Social Policy. It maintains good working relationships with all of them. The Project also works with

16 other GOU bodies, including the Ministry of Finance and the Ministries of the President and of the Cabinet, and with regional authorities. During the Quarter, the Project:

• Supported the inter-ministerial steering committee (NBU, NSSMC, FSR and the MOF) on the IFRS/XBRL taxonomy for financial reporting. • Continued meetings with factions of the Parliament regarding financial sector reform legislation. • Responded to numerous information requests on international experience from the Ministry of Social Policy • Included regional authorities (oblast and city levels) in its leasing programs.

XI. PROGRESS ON INCLUSIVE DEVELOPMENT FST strives to achieve inclusive development. During its first two years of operation, the Number of men and women participants in Project carried out financial education trainings the events in Q2, 2019 across fourteen oblasts for the elderly, IDPs, the unemployed and orphans. The Project’s Men focus areas include pension reform (elderly 275 Ukrainians) and financial education (younger 41% Ukrainians, as in the 10th form Financial Women Literacy Course). FST’s mandate also includes 390 consumer protection, for all Ukrainians who 59% use the financial system.

FST’s goal is to have equal participation of men and women in its activities. In terms of training, the percentage of women participating in the FST leasing activities this quarter was 213 out of a total of 594, or 36%. In FST’s public outreach events with the NBU the percentage of women was 59% (390/665). FST also strives to give women prominent roles as speakers and commenters in all the events it organizes directly.

FST also has a strong orientation towards including major cities outside of Kyiv in its programs. This quarter the main examples were the eight leasing seminars nationwide, the two initiatives with legal clinics in Kharkiv and Lviv, and the information event with the NBU in Zhytomir.

XII. FINANCIAL INFORMATION DAI/FST will submit a separate financial report. It will include obligations, actual expenditures, cash flow, and pipeline projections (Burn-Rate).

XIII. SUB-AWARD DETAILS See Attachment D XIV. ACTIVITY ADMINISTRATION Constraints and Critical Issues As reported earlier, the Inpredkadry Directorate of the General Directorate for Servicing Foreign Representative Offices Government Enterprise (GDIP) requested all technical assistance projects to obtain a tax code in order to continue further cooperation with GDIP after February 28, 2019.

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Some donors and international implementing partners have concerns regarding the current procedure of registration with tax authorities, and asked the Ministry of Economic Development and Trade and the Ministry of Finance to help resolve tax registration issues. There has not yet been a determination from the Ministry about the procedures to follow. Thus, GDIP continues to provide services to the international technical assistance projects. We will continue to monitor the situation.

A. Personnel FST is recruiting two long-terms CCN experts: Capital and Commodity Markets Senior Expert and Senior Public Confidence/Communication Specialist. The Capital and Commodity Markets Senior Expert will support FST efforts to facilitate development of the commodities (primarily agriculture and energy) and the derivatives markets. The Senior Public Confidence/Communication Specialist is a replacement for Larysa Tatarynova who resigned in December 2018. He/she will lead efforts to strengthen public confidence in the financial sector, primarily focusing on public outreach activities and financial consumer protection. FST is also recruiting for a junior level assistant to support the Communication and Public Confidence Team.

During the quarter, FST also recruited local consultants in the insurance market, securities market, consumer protection, legal regulatory reform, and financial literacy.

B. Contract Modifications and Amendments There were no contract modifications or amendments.

C. Status of Deliverables/Milestones See the Deliverables Table in Annex A.

D. Summary of Future Activities and Geographical Information See the Future Activities table in Annex E.

E. Status of Deliverables/Milestones See the Deliverables Table in Annex A and Performance Data Table in Annex C.

F. Summary of Future Activities and Geographical Information See the Future Activities table in Annex E.

G. Coordination and Partnerships See parts IX and X above.

H. Summary of Construction Activities N/A - The Project does not fund construction activities

I. Summary of Geographical Information See Attachment E.

J. Schedule of Future Events See Attachment E.

18 XV. ATTACHMENTS

A. Deliverables Table

B. Project Documents and Publications

C. Performance Data Table

D. Sub-Contractor Table

E. GIS and Future Activities Table

19 ATTACHMENT A: DELIVERABLES TABLE

FST – Deliverables Completed Q2 2019, January-March 2019

DO1: Corruption Reduced in Target Sectors

Deliverable (Name & Description) Date Contribution to Key Objective Framework Element 3: Financial Disclosure / Transparency 1. Software development for the Financial Reporting Jan-March System. Five stages completed (Project Plan, Detailed 2019 Improved financial markets information disclosure. Official Functional and Technical Specifications, Training Plan, requirement for financial entities to report using XBRL Acceptance Test Plan, Training Delivery Report) 2. Draft Anti-money Laundering Law approved by the Feb 2019 Harmonization of the Anti-money Laundering Law with the Banking and Finance Committee of the Parliament requirements of international standards, including application of a risk-based approach in customer due diligence and sanctions for violations 3. Concept on digital comparison tool for retail loans Feb-Mar Promotion of transparency, financial disclosure, banking developed; methodology for retail loan comparisons 2019 sector competitiveness. developed (rules for conducting comparisons of consumer Cooperation with banks on methodology development loans in four product groups); Letter of Cooperation with banks signed. 4. State-owned banks Feb 2019 Mapping the political economy of SOBs and the influence of Presentation with findings and recommendations of the key groups (PEPs) on NPLs. Transparency political economy analysis on state-owned banks 5. Progress on “Transparent System of Certification of Stock Feb-Mar New system to replace the existing stock market Market Specialists and Asset Managers.” 7 working group 2019 professionals training and examination system based on the meetings held to discuss a new structure for the independent evaluation of candidates and international best examination and certification process practice 6. Selected a vendor for a video on salary legalization for Mar 2019 Combatting the informal economy and the damage it does the pension system. The video will be produced in April-May to the sustainability of the pension system 2019 7. National Bank of Ukraine award for transparency from Mar 2019 To promote transparency and public communication of the Central Banking Publications, London, England central bank, further the independence of the NBU

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DO4: Inclusive, Sustainable, Market-driven Growth

Deliverable (Name & Description) Date Contribution to Key Objective Framework Element 1: Enabling Environment A. Legal / Regulatory 1. Action Plan on consumer protection for the NBU based Jan 2019 - Strengthened consumer protection in the banking sector on the current legal framework submitted and discussed - Support for NBU to implement consumer protection with the NBU activities under current legal framework 2. Pilots on consumer financial protection/complaints Jan 17, Supports capacity development of civil society groups in resolution with legal clinics in Kharkiv launched, advanced 2019 consumer protection in financial services discussions in Lviv, Kyiv Mar 18, 2019 3. Analysis of financial consumer complaints Feb 15, Input report for piloting disputes resolution at the “Civil handling/dispute resolution procedures on the insurance 2019 Liberties’” NGO level market launched B. Public Confidence 1. Public Opinion Survey on Financial Literacy – Jan-Mar - Assessed levels of financial literacy and financial inclusion Completed work on the national, statistically representative 2019 of Ukrainians based on OECD methodology Public Opinion Survey on Financial Literacy and Financial - Provides valuable input to develop a national financial Inclusion in Ukraine literacy strategy, identifying priority topics, audience segments, and possible corrective actions 2. Develop National Financial Literacy Strategy (in Jan – Mar - Better coordinate stakeholders’ efforts to promote financial cooperation with NBU) 2019 literacy in Ukraine - International Financial Literacy Consultant Robert Drake - Highlight individual personal financial wellbeing as the conducted research, received feedback and exchanged objective of financial sector reforms comments on the Strategy Outline Draft with NBU 3. Completed the Financial Literacy Course curriculum and Jan-Mar - Increase financial literacy capacities and consumer textbook, and produced a workbook to support the 10th 2019 protection awareness among Ukrainians students form course for secondary schools; submitted the materials - Promote a more knowledgeable, empowered financial for approval by the Ministry of Education. consumer. 4. NBU Meeting/Open Day with stakeholders Jan 2019 -Promote a dialogue between the NBU and its key partners NBU dialogue with key stakeholders, supported by FST. and clients The event was attended by over 160 people, including -Promote NBU's communications and transparency representatives of the banking and business communities, initiatives international financial institutions, government authorities, experts, and media representatives

21 Deliverable (Name & Description) Date Contribution to Key Objective 5. Economic Information Day Feb 2019 Increase transparency, financial literacy and knowledge of NBU, FST and Kyiv School of Economics launched a new consumer rights protection public outreach initiative, Economic Information Days, in Zhytomyr. The events will focus on lectures to students and academics, journalists, banks and the business community 6. Develop and produce videos, education materials for Feb-Mar - Educate the public on pension issues NBU, DGF, PFU: 2019 - Highlight the importance of contributory service period and Conducted a tender and selected a vendor to produce a contributions for future pensions series of 4 videos on pension issues for the PFU -Inform workers and pensioners about new e-services available on the PFU web-portal 7. At the PFU’s request, FST printed 480,000 copies of Mar 2019 Information for rural areas explaining the basic provisions of brochures explaining pension-related issues for distribution in pension laws and PFU e-services rural areas 8. Conducted educational activities in Kyiv and in the Jan-Mar - Raise levels of financial literacy and consumer protection regions iGlobal Money Week 2019, jointly with NBU, 2019 awareness among younger Ukrainians people MinEdu, DGF, Banking University. - Promote a more knowledgeable, empowered financial consumer 9. Video contest on financial literacy for University students Jan-Mar - Raise levels of financial literacy and consumer protection jointly with DGF as part of the Global Money Week. Videos 2019 awareness among younger Ukrainians are available on the DGF web-site page: - Promote a more knowledgeable, empowered financial http://finlitvideo.fg.gov.ua/’ consumer 10. Selected a vendor to conduct a training for PFU Feb-Mar Increase the capacity of the PFU to communicate with the Communications officers from Kyiv and the regional offices 2019 public on Effective Communications 11.Support for the NBU Educational and Informational Mar 2019 Help increase financial literacy and financial inclusion of Center, planned to be launched in 2022. FST provided Ukrainian citizens expertise to develop a legal charter for the Education Center for Financial Literacy 12. Selected a vendor for a series of regional press- Feb-Mar Raise public awareness (through the media) about new e- conferences on Implementing New E-Services on the PFU 2019 services for people available on the OFU web-site. Support Web-Portal a sound pension system

22 Deliverable (Name & Description) Date Contribution to Key Objective Framework Element 2: Access to Finance 1. Brochure on the Split Law developed for lawmakers Feb 2019 Education and advocacy regarding Split Law enactment 2. Training programs for SMEs on access to finance via Jan-Mar Increase access to finance through training/promotion. 575 leasing 2019 SME representatives participated in 8 regional events on Leasing Finance for SMEs, conducted by Ukrainian Union of Lessors in cooperation with FST. 9 leasing companies, members of UUL, actively participated. More than 50 posts and videos published in regional media newspapers and websites 3. Vendor Finance Training Part 3. Commercial and Feb 18, Training to assist leasing companies in implementing Communication Strategies 2019 communication strategies to successfully launch a Vendor Finance Program. 19 employees of 8 leasing companies, members of UUL participated 4. 2 brochures and 1 video on leasing Feb-Mar Promotion of leasing as a financial option. 2 brochures 2019 (“Leasing vs Loan” and “How to choose a reliable lessor?”) and 1 video on leasing promotion were developed and distributed at the regional leasing training for SMEs 5. Leasing Market progress report Mar 2019 In 2018, leasing companies (members of UUL) demonstrated the following results: $184 million increase in the volume of the leasing portfolio. For 2018, UUL member leasing companies increased the number of contracts they concluded by 32.5% over 2017 In 2018, UUL member Lessors financed: 1772 trucks; 54 buses; 502 tractors; 95 harvesters; 735 other agricultural items; 7490 cars (9.6% of all new car sales in Ukraine). 6. Standardization of the Regulation on the Procedure for Jan-Mar Financial instruments development/risk management. Accepting, Shipping, Storing, Releasing and Keeping 2019 Standardization is a prerequisite for exchange trading in oil Records of Oil and Oil Products by Enterprises and futures Organizations in Ukraine, as approved by Order of the Ministry of Energy and other authorities # 281/171/578/155. 3 working groups meetings on the development of the Instruction were held 7. Comments to Ukrainian Energy Exchange on their rules Jan-Mar Adoption of the trading rules and implementation of internal and procedures for exchange trading on daily balancing 2019 procedures will be the basis for the launching daily trading Gas market, which was established in Ukraine on March 1, of gas futures on the UEEX 2019

23 Deliverable (Name & Description) Date Contribution to Key Objective Framework Element 4: Financial Infrastructure 1 IOS 20022 implementation to transform Ukraine’s Mar 2019 Improve payments infrastructure of the banking system, messaging system for payments facilitate digital finance (direct debit, other transactions) 2. Analysis of Ukraine`s private pension system in Feb-Mar Analysis of the institutions of private pensions and their comparative international perspective 2019 performance in terms of contribution to a fair, balanced, sustainable pension system 3. Support for the NSSMC (and SMIDA) to develop IT Jan-Mar Improve the capacity of the regulator to implement financial infrastructure, information systems 2018 reporting system 4. Pillar 2 "What Is Better: A Centralized or Decentralized Feb 27, Continued monitoring of the Pillar 2 mandatory Accumulative Pension System?" Round table on Mandatory 2019 accumulation pension system as part of the overall pension Pillar 2 Insurance at the Verkhovna Rada Committee on system and financial architecture Social Policy, Employment and Pensions. 5. Memorandum on the Bill on Amending Certain Laws of Mar 2019 Monitoring proposed institutional changes to the solidarity Ukraine Regarding the Occupational Accumulation pension system. Program, developed by the Ministry of Social Policy

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ATTACHMENT B. PROJECT DOCUMENTS AND PUBLICATIONS

1 Presentation, “Financial Literacy, Financial Inclusion and Financial Well-being in Ukraine,” March 31, 2019 2 2 Videos on Global Money Week-2019: Big game "What? Where? How Much" for students; March 21, 2019 https://drive.google.com/file/d/1saVhi5BLuIWWNJNvoFHNTEEwrr32W1sy/view?fbclid=IwAR2E 0yIDKqFLWJKY-oTdF_w8DjmdThIcvYu7Y37MMZ-yhyLc19PZWxXPINg

"NBU: Global Money Week 2019 Events"; March 22-29, 2019 https://drive.google.com/file/d/1AtD9bjQ3q8nvxz81- sKG3RH59aZKdNJW/view?fbclid=IwAR3M_8WbRovLBebml8usJjapJF6e_I2VyibSE2il89IRHZF _JzgBDgUyfIc 3 Presentations on consumer protection for the Information Economic Days in Zhytomyr; February 28, 2019 - Financial Services Consumer Rights Protection: International Experience (for teachers and journalists) - How Can a Consumer of Financial Services Protect Their Rights? (for students) 4 Financial Literacy Course materials for 10th graders, March 2019: Curriculum "Financial Literacy. Finance. What? Why? How?" Textbook "Financial Literacy. Finance. What? Why? How?" Workbook "Financial Literacy. Finance. What? Why? How?" 5 Brochure “Leasing vs Loan”, February 2019

6 Brochure “How to choose a reliable lessor?”, March 2019

7 Video on leasing promotion “Advantages of leasing”, February 2019 https://youtu.be/u_0viovD5bM 8 “Concept presentation on digital comparison tool for retail loans,” February 2019

9 “Methodology for retail loan comparisons,” March 2019

10 Presentation, “The political economy analysis on state-owned banks,” February 2019*

11 Brochure on the Split Law developed for the lawmakers, February 2019

12 Memorandum and Action Plan on consumer protection for the NBU based on the current legal framework submitted and discussed with the NBU, January 2019** * Limited distribution ** Not for distribution

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ATTACHMENT C. PERFORMANCE DATA TABLE

PPR indicators

Context indicators

Quarterly indicators

Frequen Unit of Measure and cy of

Baseline

FY17 FY18 FY18 FY19 FY19 FY20 FY20

Source FY17 Collectio

Actual Actual Actual Actual

Target Target Target Target n Project Purpose: Create a financial sector that supports businesses of all sizes with products which serve a wide range of business needs Unit of Measure: % Source: National Overall non-banking financial 7% 10% as of 0.1 Commission for 9% 11% 8.1% 13% 15% Annual sector as % of GDP as of 2016 09.30.2017 Financial Services Regulation Definition: This indicator directly measures growth of the non-banking financial sector supporting production, consumption and capital formation affecting economic activity in Ukraine (such as finance and leasing companies, moneylenders, etc.)

Justification: Indicates changes in the volumes of assets of non-banking financial sector providing support to production, consumption, and capital formation. Disaggregated by: N/A

Person hours of training Unit of Measure:

completed by management and number (of person 6,921 Annual 0.2 or staff of financial hours) 0 0 0 790 1,530 2,230 3,622 (as of intermediaries supported by Source: project 03.31.2019) USG assistance records

Definition: This standard indicator EG4.2-4 uses the following equation to express the number of USG-supported training hours that were completed by training participants: Hours of USG supported training course x Number of people completing that training course. Inclusive financial markets are defined as supporting equitable access to essential financial services (credit, savings, insurance, leasing, remittances and payment services) of diverse providers (including banks, credit unions, NGOs, non-bank financial institutions, buyers, and suppliers) to low-incomes families and female and male-owned micro-scale enterprises/activities. Justification: Indicates expenditure of USG funds to build country capacity. This will be used to demonstrate financial inclusion and depth of access to finance. Disaggregated by: sex (male/female) Unit of Measure: $33,736.1 $33,298.6 $35,636 Credit to private sector 0.3 million USD mln as of $34,000 mln as of $35,000 as of $37,000 $40,000 Annual (context indicator) Source: NBU 12.31.2016 09.30.2017 09.30.2018 Definition: This indicator expresses the value of financial resources provided to the private sector by the banking system of Ukraine. Justification: Indicates changes in the financial support of production, consumption, and capital formation affecting economic activity in the country. The number reported is the remaining balance as of the end of the reporting period.

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Frequen Unit of Measure and cy of

Baseline

FY17 FY18 FY18 FY19 FY19 FY20 FY20

Source FY17 Collectio

Actual Actual Actual Actual

Target Target Target Target n Disaggregated by: N/A European Business Association Unit of Measure: Score 2,85 3,03 3.07 (EBA) Investment 0.4 from 1 to 5 (best) 2nd half 3.0 2nd half 3.1 2nd half 3.2 3.25 Annual Attractiveness Index (context Source: EBA 2016 2017 2018 indicator) Definition: This context indicator is the Index developed by the European Business Association which measures the confidence of businesses operating in Ukraine (1-3 negative value; 3-4 neutral value; 4-5 positive value)

Justification: Measures the level of satisfaction with the current investment climate in Ukraine Disaggregated by: Year Ratio of foreign currency 46,3% 46.1% 44,6% Unit of Measure: % 0.5 deposits to all deposits as of 46% as of 44% as of 40% 38% Annual Source: NBU (context indicator) 01.01.2017 09.01.2017 09.30.2018 Definition: This context indicator is a proportion of FCD to all deposits in the banking system of Ukraine. This indicator should decrease as confidence in local currency grows.

Justification: Allows to understand the level of confidence in the local currency of Ukraine and the level of currency substitution. Disaggregated by: N/A Cross-Component Indicators 37,180 89,143 Unit of Measure: Males: Males: Number (cumulative) Person hours of US-funded 5,936 17,690 Source: Implementing Quarterl 0.6 training provided to support 0 39,060 Females: 41,060 Females: 42,660 89,143 44,020 partners; reports, y financial sector development 31,244 71,453 activity reporting (as of (as of

09.30. 2017) 09.30.2018) Definition: This indicator measures the number of USG-supported training hours that were completed by training participants and is calculated by using the following equation - number of persons trained multiplied by the number of hours in the training curricula. Indicator is cumulative for each reporting period. A person should meet training completion criteria in order to be counted. Training is considered a project provided if it is conducted by the project directly, is

directly sponsored by the project, or implemented under MOU by partners engaged by the project. Justification: A measure of intensity of trainings provided by the project on financial understanding and awareness. Disaggregated by: Project sub-component, sex, topic, region of Ukraine, international, local; category of participants Unit of Measure:

Number Number of media placements 1,978 3,447 Quarterl 0.7 Source: Implementing 0 250 822 550 900 1250 produced with USG assistance (as of (as of y partners’ reports, 09.30.2018) 03.31.2018) activity reporting Definition: Number of media placements (audio, video, text messages) produced by the project in a given time period. Each airing/printing of the same message is counted separately. Justification: A measure of intensity of project media campaigns

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Frequen Unit of Measure and cy of

Baseline

FY17 FY18 FY18 FY19 FY19 FY20 FY20

Source FY17 Collectio

Actual Actual Actual Actual

Target Target Target Target n Disaggregated by: Project-subcomponent, type of media, region of Ukraine Sub - Component A: Increased Public Confidence in, Understanding, and Use of Financial System Unit of Measure: Score Financial consumer rights from 1 to 5 (best) compliance with relevant EU A8 Source: Implementing 0 1 1 4 1 5 Annual directives and international partners’ reports, standards activity reporting Definition: This indicator measures changes in financial consumer rights protection, which leads to increased public confidence and use of financial system in Ukraine. Assigns score to current state of legislation that implements European Union directives and international standards (higher score means better compliance of the legislation) Justification: A measure of progress towards compliance of financial consumer rights protection with EU standards and international standards. Disaggregated by: N/A Unit of Measure: score Index of financial literacy and 53 A9 Source: public opinion Bi-annual awareness as of 2018 survey Definition: This is a direct measure of public understanding of the financial system and financial services offered by the financial institutions in Ukraine Justification: A measure of progress towards increasing confidence and use of the financial system of Ukraine by public Disaggregated by: N/A Unit of Measure: 17,4% 19,8% Loans to population as % of percentage 16,3% A10 as of August 17% as of 18% as of 19% 21% Annual the total bank loans Source: National Bank 2016 09.30.2017 09.30. 2018 of Ukraine Definition: This is a direct measure of public use of the financial system and financial services offered by the Ukrainian financial sector. Justification: A measure of progress towards increasing the use of the financial system of Ukraine by public. Disaggregated by: N/A This index Unit of Measure: Score 3,4 Trustworthiness and 3,2 component 1-7 (best) WEF A11 confidence in financial system 3.4 WEF Report 3.5 was 3.5 N/A 3.6 N/A Annual Source: WEF Global Report index (context indicator) 2017-2018 discontinue Competitiveness Index 2015-2016 d in 2018 Definition: This context indicator is a part of indexes under pillar 8 of the World Economic Forum Global Competitiveness Index. Justification: This indicator allows to receive independent measure of business confidence in financial system from an internationally trusted source. Disaggregated by: N/A Sub - Component B: Transformed Non-Banking Financial Sector Regulatory Environment Unit of Measure: Score Improvements in the securities B12 (see scorecard from 1 0 1 0 3 2 4 4 Annual and capital markets legislation to 5)

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Frequen Unit of Measure and cy of

Baseline

FY17 FY18 FY18 FY19 FY19 FY20 FY20

Source FY17 Collectio

Actual Actual Actual Actual

Target Target Target Target n Source: Activity reporting Definition: This is a direct indicator of a transition to a more effective regulation of securities and capital markets and of better compliance of this regulation with international practices. This change allows to achieve higher investor confidence and protection thus better servicing the needs of Ukrainian citizens and enterprises in raising the capital. Justification: This is direct measure of the securities and capital markets regulatory environment change Disaggregated by: N/A Unit of Measure: # of Number of new products new products introduced or contracts introduced or B13 developed in capital and 0 1 1 3 7 4 5 Annual contracts developed commodity markets with the Source: Activity assistance of FST reporting Definition: This is a direct indicator of financial products introduced and contracts developed with the USG assistance. Justification: This is direct measure of results which happened due to the securities and the capital markets regulatory environment change Disaggregated by: N/A Unit of Measure: Score from 1 to 9 Ukraine’s compliance with B14 Source: NSSMC 0 0 0 3 0 6 9 Annual IOSCO principles reports, activity reporting Definition: This indicator is a direct measure of change introduced to the laws, rules and regulations, which enable compliance of the National Securities and Stock Market Commission with IOSCO principles in the area of inspection, investigation, and enforcement and allow the NSSMC to use these powers to assist its foreign counterparts. The indicator is based on a scorecard and assigns score to each change introduced, that implements IOSCO principles. Total possible

points - 9 Justification: A measure of progress towards transformation of the non-bank financial sector regulatory environment Disaggregated by: N/A Unit of Measure: Score (Score card from 1 to 9) Operational and IT functions B15 Source: Technical 0 5 3 9 9 0 0 Annual improvements in NSSMC Leads and implementing partners’ reports Definition: This indicator measures the operational and IT functions improvements of NSSMC. The indicator assigns a score to improvements in the area of the NSSMC’s IT system, strengthening of information security process and infrastructure modernization.

Justification: This is a measure of improved efficiency of NSSMC, which is a major partner in the legislative work directed to transformation non-banking financial sector regulatory environment.

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Frequen Unit of Measure and cy of

Baseline

FY17 FY18 FY18 FY19 FY19 FY20 FY20

Source FY17 Collectio

Actual Actual Actual Actual

Target Target Target Target n Disaggregated by: N/A Sub - Component C: Increased Access to Finance for SMEs Unit of Measure: 7,401 Number of leasing contracts 7,502 9,124 3,208 Number as of Quarterl C16 concluded during the reporting 8,500 as of 9,700 as of 11,200 as of 12,800 Source: Regulator, October y period. 09.30.2017 09.30.2018 12.31.2018 surveys 31, 2016 Definition: This is a direct indicator of increased access to finance for SMBs as a result of USG assistance expressed by a number of leasing contracts concluded within the reporting period.

Justification: Indicator of development of the leasing market and improved capacity of leasing companies to finance private sector of Ukraine including SMEs. Disaggregated by: N/A Unit of Measure: 288 Value of leasing contracts 421.1 789 162 Millions of US dollars as of Quarterl C17 concluded during the reporting 330 as of 380 as of 435 as of 500 Source: Regulator, October y period. 09.30.2017 09.30.2018 12.31.2018 surveys 31, 2016 Definition: This is a direct indicator of increased access to finance for SMBs as a result of USG assistance expressed by value of leasing contracts concluded with the reporting period.

Justification: Indicator of development of the leasing market and improved capacity of leasing companies to finance private sector of Ukraine including SMEs. Disaggregated by: N/A Unit of Measure: Score from 1 to 5 NBFI Legal and Regulatory C18 Source: Verkhovna 0 0 0 2 1 4 5 Annual Environment Reform Rada reports, activity reporting Definition: This indicator is a direct measure of NBFI legal and regulatory reform, which enable environment for the NBFI market development including increased access to finance for SMEs. Total possible points are 5.

Justification: A measure of progress towards NBFI legal and regulatory reform. Disaggregated by: N/A Sub - Component D: Increased financial inclusion and expanded digital finance solutions Unit of Measure: 44% Share of digital payments using 31,2% 39% as of D19 Percent 33% 35% as of 38% 40% Annual payment cards as of 2015 2017 Source: NBU 09.30.2018 Definition: Percent of cashless transactions by volume. The indicator of a share of cashless payments out of the total amount of operations conducted with the help of payment cards. Justification: Indicator of expanded cashless economy Disaggregated by: N/A

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Frequen Unit of Measure and cy of

Baseline

FY17 FY18 FY18 FY19 FY19 FY20 FY20

Source FY17 Collectio

Actual Actual Actual Actual

Target Target Target Target n

Unit of Measure: 2,200 Number of digital transactions 1,287 as of 2,311 as of D20 Number in millions 1,600 2,000 as of 2,500 3,000 Annual using payment cards 2015 2017 Source: NBU 09.30.2018

Definition: This is a direct indicator of increased financial inclusion and expanded digital finance solutions in Ukraine Justification: Measures the number of digital transactions in the economy that should increase due to expansion of digital financial services and increased

financial inclusion. Disaggregated by: N/A Unit of Measure: Score Improvements in the Digital from 1 to 4 (best) D21 0 1 1 2 1 3 4 Annual Finance Legislation Source: Verkhovna Rada, activity reporting Definition: This indicator measures improvements in the digital finance legislation leading to better financial inclusion of population and expanded use of digital financial services. Justification: Improved legislative environment boosts increased financial inclusion of population and expanded use of digital financial services. Disaggregated by: N/A

Sub - Component E: Balanced and Sustainable Pension System Unit of Measure: Score (Score card from 1 to 5) Material improvements in the E22 Source: Technical 0 5 2 0 5 0 0 Annual Pension Fund efficiency Leads and implementing partners’ reports Definition: This is the indicator of the extent, to which the Pension Fund is able to maintain a balanced and sustainable pension system. Specifically, it demonstrates (1) to what extent the Pension Fund has modernized ICT facilities, which enable it to reduce administrative costs and provide improved services; (2) developed and started implementing action plan to improve financial sustainability of the pension system. The indicator assigns a score to improvements in the area of the Pension Fund IT system, infrastructure modernization, development of a roadmap and implementation of the information campaign on the pension system. Justification: A direct measure of progress towards effective pension system Disaggregated by: N/A Unit of Measure: 9,8% 10,8% Percent 11,2% as of March as of March Pension expenditures ratio to Source: Ministry of as of E23 11,2% 2019 (actual 11% 2019 (PFU 11% 10,5% Annual GDP (context indicator) Finance of Ukraine, December expenditure report) Pension Fund of 2016 Final s) Ukraine expenditures

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Frequen Unit of Measure and cy of

Baseline

FY17 FY18 FY18 FY19 FY19 FY20 FY20

Source FY17 Collectio

Actual Actual Actual Actual

Target Target Target Target n ratio to GDP data - TBD in December 2019 Definition: This is context indicator - percent of total pension fund expenditures to GDP Justification: A measure of success of reforms of the pension system; can be used to understand effectiveness of the pension system Disaggregated by: N/A Unit of Measure: Score Improvements in the pension from 1 to 4 (best) E24 0 1 1 4 1 0 0 Annual system legislation Source: Verkhovna Rada, activity reporting Definition: This indicator measures progress in pension related legislation towards more sustainable and balanced pension system Justification: A measure of the pension system improvements. Disaggregated by: N/A

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ATTACHMENT D. SUB-CONTRACTOR TABLE

Status

End Date End

Start Date Start

Subaward Title Subaward

each locationof eachoperation)

ReportingPeriod

IP(Prime) Name

SubawardeePOC

USAID Award No. Award USAID

SubawardeeName

ProgrammaticArea

Subaward Sign Date Subaward

SubawardeeAddress

Subaward Description Subaward

SubawardeeWebpage

Project / ActivityName

Subaward Amount, USD Subaward

Program Program Component/Objective

Duration covered subaward Duration this by

region for Location (Latitutde, longitude, town, district and longitude,district Location town, (Latitutde, Implementation Suite 7, the of the Financial Cubes Reporting DOI: Corruption Offices, System (FRS), Financial Sector Reduced in Target 4. Improve disclosure, Firm 19- https://www.viz Conor Beacon training, October 19- AID-121-BC- SUBK-KYV- Transformation 15- Kyiv, Sectors. A. financial and Fixed VIZOR LIMITED Oct- $524,759.00 orsoftware.com Ongoing Crowley, South documentation, 2018 - Oct- 17-00001 18-0177 (FST) Activity in Jul-19 Ukraine Creation of Fair, transactional Price 18 / CEO Quarter, system July 2019 18 Ukraine Transparent reporting systems (FFP) Sandyford, certification, and Markets Dublin 18, maintenance and Ireland support services. Development of Society for Avenue ISO 20022 SUBCONT Worldwide Financial Sector Ilona Adèle 1, standard Firm February RACT No. Interbank 14- 30- DO4: Inclusive, 6. Implementation of 22- AID-121-BC- Transformation Kyiv, https://www.swi Pouna 1310 La message Fixed – 1002990- Financial Feb- Sep- $247,170.00 Sustainable, Market- ISO 20022 for Ongoing Feb- 17-00001 (FST) Activity in Ukraine ft.com/ Senior Hulpe, specifications Price Septemb 19S-31752- Telecommunicat 19 19 driven Growth payment system 19 Ukraine Account Belgium relevant for the (FFP) er 2019 00 ion SCRL, Director, Tel: + 32 2 NBU’s SEP S.W.I.F.T. SCRL CEE 655 3111 payment system

FST Quartely Report Table 2 Subawards Upd Apr 2019.xlsx

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ATTACHMENT E: GIS AND FUTURE ACTIVITIES TABLE

FST – Projected Q3 Activities, April-June 2019

DO1: Corruption Reduced in Target Sectors

Activity/Description Partners Date Location Objective Framework Element 3: Financial Disclosure / Transparency 1. Completion of software development for the NSSMC Apr-June Kyiv Implementation of the Financial Reporting Financial Reporting System (next stages) 2019 System (using XBRL) to improve information disclosure, increase transparency of about 4000 financial entities 2. Implementation of the next stages oft NSSMC, Apr-Sep Kyiv Finalize the curriculum and assist NSSMC in “Transparent System of Certification of Stock CFA 2019 drafting required NSSMC resolutions to Market Specialists and Asset Managers.” Ukraine implement 3. Tender issued for developer/operator of Banks, Apr-May Kyiv Increased transparency, increased DCT (digital comparison tool) NBU, 2019 competition among banks; fair loan future comparisons based on best international vendor standards; empowerment of consumers to make rational choices in selecting credit products based on total cost 4. Expert support of the AML draft law during NBU, MOF, Apr-Sept Kyiv Align the Anti-money Laundering Law with its readings in the Parliament FIU, STTA 2019 international standards, including application of a risk-based approach to customer due diligence and strengthened sanctions for violations. 5. BEPS: NBU, Apr-Sept Kyiv Implement the OECD/G20 Action Plan on 1) expert support for the NBU on the STTA, EY 2019 Base Erosion and Profit Shifting (BEPS), the exchange of information between relevant main aim of which is to eliminate tax planning authorities within BEPS implementation strategies that exploit gaps and mismatches in framework; tax rules to shift profits to low or no-tax 2) expert support for the interdepartmental locations; improvement of information working group created by the NBU on exchange within Ukraine and cross-border. information exchange among the Ukrainian authorities

34 Activity/Description Partners Date Location Objective 6. AML training program, jointly with the NBU, NBU, May-Sept Kyiv Training of AML chief officers of banks on best for AML chief officers of banks STTA 2019 practices of KYC and CDD; RegTech Projects implemented in AML/CFT compliance; continuous professional training program for banks’ employees; establishment of whistleblowing procedures. 7. Improvement of AML data analytics within NBU, May-Aug Kyiv AML data analytics needs assessment report the NBU STTA 2019 to identify possible IT solutions. 8. Conduct mystery shopping survey in Banks, May-Jun Kyiv, Test verification methodology for the DCT, consumer lending (banks only) Marketing 2019 Kharkiv, check compliance with consumer lending law Agency Dnipro, Odesa, Lviv, Zaporizhia 9. Public education and communications on NBU, May-Jun Kyiv Educate the public on the damage SOBs due state-owned banks STTA 2019 to the financial sector and economy; support for privatization as the only option 10. Anti-Corruption assessment of DGF: DGF, Jun 2019 Kyiv Review and strengthen DGF procedures in Procedures and policy manuals subcontract selected areas to ensure integrity

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DO4: Inclusive, Sustainable, Market-driven Growth

Activity/Description Partners Date Location Objective Framework Element 1: Enabling Environment A. Legal / Regulatory 1. Assistance to the NBU on the Action Plan NBU, Apr-Sept Kyiv - Strengthen consumer protection in the on consumer protection STTA 2019 banking sector - Support NBU in consumer protection activities under current legal framework 2. Pilot program with Yaroslav Mudryi National Legal Apr 19-20, Kharkiv Consumer protection, develop capacity of civil Law University in Kharkiv Clinics 2019 society in consumer complaints resolution

3. Report on financial consumer complaints “Civil Jun 2019 Kyiv Input report for piloting disputes resolution at handling/dispute resolution procedures on the liberties” (insurance the “Civil liberties’” NGO level insurance market NGO companies) B. Public Confidence 1. Survey on Financial Literacy – NBU May-Jun Kyiv -The survey data permitted first ever direct - Press-conference on the survey results 2019 comparisons with OECD countries - Distribution of report at Financial Inclusion - Input to the national financial literacy Forum strategy by the National Bank of Ukraine and FST - Data for FST MEL 2. Develop National Financial Literacy NBU Apr-Jun Kyiv - Systematic, coordinated, and sustainable Strategy 2019 national financial literacy program - Highlight the importance of financial literacy to empower people, achieve personal financial wellbeing 3. Develop course outline and curriculum for DGF Apr-Jun Kyiv Improve household personal finance, increase on-line multimedia interactive course on 2019 financial literacy financial literacy 4.Conduct Financial Inclusion Forum NBU, Jun 2019 Kyiv Enable stakeholders to identify financial VISA, inclusion objectives, obstacles, and MasterCar opportunities. Develop a prioritized set of d actions to pursue in a coordinated manner.

36 Activity/Description Partners Date Location Objective 5. Assist with design and development of the NBU Apr-Jun Kyiv Provide expertise to develop a legal charter NBU Information and Education Center for 2019 for Information and Education Center for Financial Literacy Financial Literacy by NBU 6. Conduct training on Effective PFU Apr-Jun Kyiv - Raise public awareness about pension Communications for PFU 2019 issues - Increase the capacity of the PFU to communicate with the public 7. Financial literacy course development: DGF, Apr-Jun Kyiv and - Raise levels of financial literacy and - Receive approval of the Ministry of MinEdu, 2019 countrywid consumer protection awareness among the Education for the revised and updated Banking e young Financial Literacy Course materials for University, - Promote a more knowledgeable, empowered 10th grade students of comprehensive financial consumer secondary schools - Conduct ToT program for MinEdu methodologists -Develop materials for the e-textbook 8. Conduct Economic Information Days in the NBU, Kyiv Apr-Jun Lviv, Raise financial literacy and consumer regions School of 2019 Dnipro protection rights of Ukrainian citizens and Economics specifically “economic agents” 9. Develop and produce videos, education NBU, DGF, Apr-Jun Kyiv Educate and raise awareness of the general materials for NBU, DGF, PFU PFU 2019 public about financial issues

10. Assist PFU in conducting a series of PFU Apr-Jun Regions Raise public awareness about pension regional press-conferences for journalists on 2019 services Implementing New E-Services on the PFU - Increase the capacity of the PFU to Web-Portal communicate with the public

37 Activity/Description Partners Date Location Objective Framework Element 2: Access to Finance 1. Complete institutional analysis of Ukrainian UUL, Apr-May Kyiv Institutional development and capacity Union of Lessors, present strategic business leasing 2019 building of Ukrainian Union of Lessors, self- plan companies reliance 2 Presentation on “Opportunities for Medical UUL May 28, TBD Market expertise to enter new segments for Equipment Leasing in Ukraine” 2019 leasing companies, social impact 3. Training on “Risk Assessment” UUL, Apr 15-16, Kyiv Improve the understanding of risk and risk leasing 2019 assessment procedures in leasing companies companies 4 Complete Leasing Finance for Small and UUL, Apr 10, 17, Kharkiv, Promote leasing as an efficient tool of access Medium Business: training and market fairs leasing 2019 Vinnytsya to finance for SME companies 5. Analysis of the real estate construction NSSMC, Apr-Jul Kyiv Identify consumer abuse issues; provide financing schemes NBU, 2019 policy recommendations to promote fair Association market conduct s 6. Survey on knowledge, awareness, and Market Jun-Aug Kyiv Grain commodity market status report, behavior of grain market participants participants 2019 promote hedging and other risk management regarding commodity futures, risk practices practices 7. Support exchanges and other stakeholders Ukrainian May-Jun Kyiv Develop new regulations for products and in developing market standards for new Energy 2019 introduce new financial instrument in the financial instruments; trading, clearing and Exchange, energy market settlement systems; price discovery Oil and mechanisms Gas Association 8. Trainings for market participants and Ukrainian May-Jun Kyiv Trainings for oil and gas market participants private stakeholders on specifics of Energy 2019 on specifics of new regulations for oil products commodity trading Exchange, and daily trading on gas market Market participants 9. Feasibility study and analysis on diaspora Various Jun-Jul Kyiv, other Access to finance for SMEs through an on-line investment in Ukrainian SMEs 2019 diaspora platform

10. Analysis of remittance flows to Ukraine NBU Jun-Jul Kyiv, other Explore options to channel remittances into 2019 investments

38 Activity/Description Partners Date Location Objective Framework Element 4: Financial Infrastructure 1. ISO 20022 and reform of the instant NBU, May-Sept Kyiv Facilitate digital financial transactions messaging payments system workshops banks 2019 2.Digital finance status assessment and EY, UNIT May-Jun Kyiv Update on the development of digital finance publication City 2019 initiatives, future steps 3. Continue to monitor legislation on pillar 2 and Apr- Jun Kyiv Stability of the pension system, risks from 3 (laws #6677, the new NSSMC draft Law, and 2019 premature implementation of the accumulation draft law on occupational pensions) pension system (Pillar 2) 4. Analyze Ukraine’s private pension MSP, PFU, Apr-Jun Kyiv Complete the comprehensive analysis of institutions, their performance and viability NSSMC, 2019 Ukraine’s pension system in terms of FSR sustainability, fairness, balance with various recommendations 5. Support Ukrainian Association of UAIB, Jun 16-17, Odessa Dialogue between market and regulators. Investment Businesses annual meeting NSSMC 2019 Promote introduction of new FRS reporting system 6. Ukrainian participation in US SEC spring NSSMC Apr 1-11, Washingto Capacity building of regulators training for regulators from emerging markets 2019 n DC

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