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Hi, this is Daryna Krasnolutska in Kyiv. Welcome to our weekly newsletter on what’s shaping economics and investments from the Baltic Sea to
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Hi, this is Daryna Krasnolutska in Kyiv. Welcome to our weekly newsletter on what’s shaping economics and investments from the Baltic Sea to the Balkans. You can subscribe here.

Arms and Money

Ukrainian President Volodymyr Zelenskiy’s new cabinet, installed after the biggest government shake-up since Russia’s full-scale invasion, will redouble efforts to seek fresh financial resources and produce weapons as the war drags on. 

As Yulia Svyrydenko, 39, replaces Denys Shmyhal as prime minister, Zelenskiy will have another presidential loyalist in the role as Kyiv seeks to buoy its relationship with the US under Donald Trump. Svyrydenko helped broker a landmark natural resource deal with Washington earlier this year. 

Her remit will be to shore up financing and to build Ukraine’s domestic weapons production. 

While this year’s budget commitments are covered, Ukraine is in a rush to secure foreign aid to help finance projects next year. The war-battered nation faces a $40 billion shortfall, with the government holding out for funds from abroad to cover spending, including next year’s salary and pension payments. 

“One of the key challenges that has recently emerged is securing sufficient external financing for the coming years, should the war continue,” said Olena Bilan, chief economist at Kyiv-based investment bank Dragon Capital. Key support from the European Union and the International Monetary Fund are set to expire in 2027, she said. 

The reshuffle also shifts Ukraine’s arms industry under the Defense Ministry, which will now be led by Shmyhal, whose five-year tenure made him the eastern European nation’s longest-serving premier. 

The expanded remit reflects the growing importance of Ukraine’s domestic arms production, which currently covers 40% of what its forces use on the battlefield. Zelenskiy wants Ukraine to increase that to half in the first six month’s of the new government’s mandate.  

“We all see how difficult it is to maintain the world's sufficient support — and how many other wars and crises are breaking out in the world, scattering global efforts,” Zelenskiy told lawmakers. “So, Ukraine needs more of its own strength.” 

Around the Region

Hungary: The new chief executive officer of Hungary’s largest lender called for the adoption of the euro and for an end to ad-hoc policymaking under Prime Minister Viktor Orban that has sapped investor confidence and dented valuations. Peter Csanyi called for a “predictable economic and regulatory environment.” 

Slovakia: Prime Minister Robert Fico rejected a set of guarantees offered by the European Commission aimed at assuaging Bratislava’s concerns about a planned bloc-wide ban on Russian gas deliveries. He told Commission President Ursula von der Leyen the proposals were “too vague.” 

Robert Fico, Slovakia's prime minister, in Tirana, Albania, in May.  Photographer: Atdhe Mulla/Bloomberg

Ukraine: North Korea is now supplying as much as 40% of Russia’s ammunition for its war as the partnership between Pyongyang and Moscow deepens, Kyiv’s military intelligence chief, Kyrylo Budanov, told us. 

Hungary: Viktor Orban, Europe’s longest-serving premier, said his party could survive an eventual change of leadership, broaching the topic of succession after 15 years of uninterrupted rule as an opposition party has overtaken his Fidesz party in polls ahead of next year’s election.   

Chart of the Week

Bulgaria sold €3.2 billion in a two-part Eurobond deal following credit-rating upgrades spurred by its planned entry into the euro area next year. The Balkan country is set to become the 21st nation to adopt the euro in 2026 after EU finance ministers signed off on its bid last week. The approval helped trigger upgrades at Fitch Ratings and S&P Global Ratings to BBB+, three notches above junk and above existing euro member Greece.

By the Numbers

  • Romania’s government survived a no-confidence motion after the measure fell well short of the 233 needed to pass, clearing the way for a sweeping austerity plan. 
  • Romania has also emerged from the bond-market turmoil seen earlier this year, with falling borrowing costs showing a “180-degree turnaround” in market sentiment and improved feedback from rating firms, Treasury Chief Stefan Nanu said Thursday.
  • Hungary registered the slowest wage growth in more than two years in May, at 7.7% from a year earlier, showing consumers’ fading spending power to help reinvigorate the economy. 

Things to Watch

  • Polish government reshuffle 
  • Hungary central bank rate decision on Tuesday - expected to hold rates at 6.5% for a 10th month to anchor inflation expectations
  • Ukrainian central bank rate decision on Thursday - expected to hold rates at 15.5%

Final Thought

An American social media influencer’s tour through the Baltic states has brought out throngs of digital-savvy young fans and spurred invitations from regional politicians. “What do you do? You just be chillin’?” Darren Jason Watkins Jr., better known as IShowSpeed, asked Estonian Prime Minister Kristen Michal during a visit to his office in Tallinn. The single-day dash through Latvia, Lithuania and Estonia helped introduce his 80 million followers to local delicacies such as smoked fish, blood sausage and pink soup. But the venture amounted to something of a marketing campaign, with Baltic governments providing some €90,000 in funding. That figure raised eyebrows in the northeast European region, where belt-tightening is a virtue. Was it worth it? “Worth. Every. Cent,” one local marketing specialist said on LinkedIn.

IShowSpeed at Fanatics Fest NYC 2025 in New York, on June 21. Photographer: Bryan Bedder/Getty Images North America

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