COMMISSION STAFF WORKING DOCUMENT Accompanying the document Proposal for a Council Implementing Decision on the approval of the assessment of the Ukraine Plan
Date: 2024-04-15
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: EU aid, EU loan, European integration, Ukraine, accession to the European Union, economic reconstruction, economic reform, investment, investment aid, macro-financial assistance

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 15.4.2024  SWD(2024) 93 final  COMMISSION STAFF WORKING DOCUMENT Accompanying the document Proposal for a Council Implementing Decision on the approval of the assessment of the Ukraine Plan        {COM(2024) 172 final}  
 
 
EXECUTIVE SUMMARY ........................................................................................................ 2 

1. Introduction ....................................................................................................................................... 7 

2. Context ............................................................................................................................................... 8 

2.1 Impact of the war of aggression of Russia ....................................................................... 8 

2.2 Macroeconomic outlook for Ukraine’s economy ........................................................... 11 

2.3 Challenges linked to Ukraine’s recovery, reconstruction, and modernisation ............... 16 

3. Overall objective of the Ukraine Plan ......................................................................................... 20 

4. Assessment of the Ukraine Plan ................................................................................................... 26 

4.1 Reforms and investments and the linked qualitative and quantitative steps .................. 27 

4.2 Contribution to the general and specific objectives of the Ukraine Facility .................. 39 

4.3 Contribution to the green and inclusive recovery, reconstruction and modernisation 
needs ..................................................................................................................................... 46 

4.4 Contribution to the EU enlargement process and the Association Agreement .............. 50 

4.5 Consultation process for the preparation of the Ukraine Plan ........................................ 54 

4.6 Arrangements for an effective monitoring, reporting and evaluation in the Plan, 
including the system to effectively prevent, detect and correct irregularities, fraud, 
corruption, and conflicts of interest ...................................................................................... 56 

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EXECUTIVE SUMMARY  
Ukraine’s reconstruction, recovery, and modernisation: scene setter 

Russia’s  full-scale  invasion  of  Ukraine  in  2022  has  brought  significant  humanitarian, 
social and economic consequences. The humanitarian and demographic crisis on the back of 
significant  human  casualties  and  approximately  one  third  of  people  externally  or  internally 
displaced  is  exacerbated  by  the  large-scale  destruction  of  infrastructure  and  production 
capacities, a gaping hole in the public finances and a heavy reliance on external support. The 
economy contracted by 29.1 % in 2022 and rebounded only mildly in 2023. Estimates from the 
third  Rapid  Damage  Needs  Assessment  (RDNA3)  suggest  that  direct  damage  has  reached 
almost  EUR  140  billion,  requiring  an  estimated  EUR  448  billion  for  recovery  and 
reconstruction.  Economic  outlook  continues  to  depend  on  the  course  of  war,  evolution  of 
exports and international donor support.  

While the economy has proven to be resilient, it still has a difficult path ahead. Ukraine’s 
reconstruction will require a large-scale capital mobilisation from both the public and private 
sectors, domestic and foreign, calling for a careful prioritisation of funding. The size and quality 
of human capital  is  a critical  factor in  Ukraine’s  economic prospects,  putting  the social and 
labour market aspects of the recovery in the spotlight. The government’s capacity will need 
reinforcements  to  ensure  optimal  absorption  of  capital  and  implementation  of  much-needed 
reforms, starting from addressing rule of law issues that have plagued the business and investors 
community long before the war. The overall management of the recovery, reconstruction and 
modernisation efforts will need to ensure that transparency and accountability will be upheld at 
all stages.  

Ukraine’s future is firmly linked to its EU path. In December 2023, EU leaders opened EU 
accession  negotiations  with  Ukraine  following  the  recommendation  of  the  European 
Commission. The decision to open accession negotiations with Ukraine is a confirmation of the 
EU’s firm support to Ukraine and its people, and an important step on the road towards a secure 
and prosperous future. 

Overall impact of the Ukraine Plan  

On  20  March  2024,  Ukraine  officially  submitted  the  Ukraine  Plan,  following  several 
months of preparation and consultations. In accordance with the Regulation (EU) 2024/792 
of the European Parliament and of the Council of 29 February 2024 establishing the Ukraine 
Facility  (hereinafter  ‘the  Regulation’),  the  European  Commission  needs  to  prepare  an 
assessment of the Ukraine Plan. The Commission’s assessment covers the parts of the Ukraine 
Plan  that  are  linked  to  EU  support  under  the  Pillar  I  of  the  Ukraine  Facility.  However,  the 
measures discussed in this staff working document are part of a broader effort of the Ukrainian 
authorities to identify reform priorities and investment needs beyond the Pillar I of the Facility. 
These reforms and investments will guide the Pillar II (Ukraine Investment Framework) and 
Pillar  III,  which  will  help  mobilise  private  investments  and  accession  assistance  and  other 
supporting measures helping Ukraine on its path to future EU membership.  

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The Ukraine Plan is the country’s main tool for ensuring the recovery, reconstruction, 
and modernisation of the country, while mobilising stable and predictable funding from 
the EU. The overall objective is to ensure a major reform and investment agenda, while aiding 
the  government  to  continue  the  provision  of  essential  public  services.  These  reforms  and 
investments  were  selected  and  designed  based  on  the  needs,  priorities,  and  capacity  of  the 
Ukrainian state. They aim to support economic growth and Ukraine’s convergence towards EU 
income  levels  and  economic,  social  and  environmental  standards,  ultimately  supporting  the 
country on its path towards the Union membership. The Ukraine Plan’s goal is to bring together 
international partners, mobilise donors and private investors, support synergies and facilitate 
coordination.  

The  steps  identified  in  the  Plan  constitute  a  balanced  and  well-targeted  response  to 
Ukraine’s needs, amplifying the country’s growth potential in the medium-to-long term. 
According to the European Commission’s simulations, if all proposed reform and investment 
steps are fully implemented, they have the potential to lift GDP level of the Ukrainian economy 
by 6.2 % by the end of the Facility and by 14.2 % by 2040. On top of this, a significant part of 
the  funds  will  be  directed  for  budget  support,  which  is  expected  to  contribute  to  sustaining 
macroeconomic stability. These projections are contingent upon Ukraine exclusively benefiting 
from the implementation of reforms and investments under the Ukraine Facility, isolated from 
the support from other international donors. The implementation of reforms and investments as 
part  of  Ukraine’s  cooperation  with  other  donors  should  further  accelerate  economic  growth 
beyond the scope of current simulations. The Ukraine Plan, serving as “one plan” endorsed by 
the  government,  sets  out  the  reform  and  investment  priorities  for  all  donors  engaged  with 
Ukraine, providing insight into the supplementary measures Ukraine intends to undertake to lift 
its economy.  

The Facility is expected to contribute to ensuring Ukraine’s fiscal sustainability. Internal 
simulations by the European Commission project that public debt to GDP would be lower by 
about  10  percentage  points  compared  to  an  alternative  scenario  without  the  Facility.  The 
reforms outlined in the Ukraine Plan aim to increase investments, improve total productivity 
and  economic  resilience  and,  ultimately,  boost  growth,  which  will  put  the  economy  on  a 
sounder footing. Together with the highly concessional terms of funding which would lower 
interest payments and debt servicing, this will help support fiscal and public debt sustainability.  

Summary of the assessment of the Ukraine Plan 

The  Plan  identifies  critical  reform  and  investments  steps  to  boost  economic  growth, 
attract investments, and will, if implemented, contribute towards the general and specific 
objectives of the Ukraine Facility as described in Article 3 of the Regulation. In total, 146 
steps (or 151 including those allocated to the exceptional bridge financing) are defined by the 
European Commission and the Ukrainian Government across 15 growth-enhancing areas that 
Ukraine will need to fulfil in view of accessing the financing from the Facility’s Pillar I. These 
areas  include:  i)  the  highest  growth  enabling  sectors  such  as  energy,  agriculture,  transport, 
critical raw materials, and the management of state-owned enterprise; ii) key cross-cutting areas 
including business environment, financial sector, green transition and environmental reforms 
and  the  digital  transformation,  iii)  human  capital  as  a  foundational  sector  with  essential 

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elements supporting the broader economic and societal development; and iv) areas needed to 
ensure core values and good governance including the justice sector, anti-corruption and anti-
money laundering, public administration, public financial management and decentralisation and 
regional development. Each area is described as a standalone chapter in the Plan, containing 
detailed  descriptions  of  each  proposed  step,  together  with  a  summary  table  with  key 
information. For each of these sectors, the Plan also proposes an economic narrative explaining 
the  selection  of  the  respective  reform  area  as  a  major  driver  for  economic  growth,  a 
comprehensive reform agenda for the next 4 years, and an overview of the investment needs in 
the relevant chapters. This narrative will also guide the Facility’s Pillars II and III and can guide 
other international partners in their donor support and in the mobilisation of the private sector. 
In addition, Pillar I is expected to contribute to increased investment activity through a limited 
number of targeted public investments in the amount of at least EUR 5.2 billion in the fields of 
human  capital,  energy,  transport,  agri-food,  business  environment  and  decentralisation  and 
regional policy.  

The Plan is consistent with the general principles described in Article 4 of the Regulation 
and the principles for financing described under Article 16 of the Regulation. It reflects a 
whole-of-government  approach 
investment  priorities,  reflecting 
to  key  reforms  and 
reconstruction and modernisation needs in a balanced and holistic way, while staying mindful 
of being complementary to support provided by other international partners. The Plan proposes 
several steps to strengthen climate and environmental standards in the country in the dedicated 
chapter and suggests some form of mainstreaming such actions across several other areas, with 
a  clear  goal  to  ensure  compatibility  with  green  transition  standards  in  the  Union  as  well  as 
Ukraine’s  commitments  under  international  conventions  and  the  ‘do  no  significant  harm’ 
principle, to the extent possible in a war-torn country. To achieve these goals, Pillar III under 
the Ukraine Facility can support Ukraine with technical assistance. There is also a strong focus 
on social measures, inclusivity and supporting vulnerable groups, guided by the ‘leaving no one 
behind’ principle. The Plan also allocates 20 % of the non-repayable financial support referred 
to  in  Article  6  of  the  Regulation  amount  to  the  recovery,  reconstruction  and  modernisation 
needs of Ukraine’s sub-national authorities, in particular local self-government. Mirroring the 
comprehensive approach to the Plan, this allocation to sub-national authorities will be achieved 
through a combination of the dedicated sub-national steps and the sectoral public investments 
(energy,  transport,  human  capital),  from  which  parts  will  be  delivered  through  sub-national 
authorities, using same principles as set out in the investment and recovery architecture of the 
Plan. 

The reforms and investments envisaged in the Ukraine Plan adequately respond to the 
general and specific objectives of the Facility Regulation. They aim to address the dire social, 
economic, and environmental consequences of Russia’s war of aggression, while fostering a 
sustainable  reconstruction,  stronger  resilience,  integration  of  Ukraine  in  the  European  and 
global  markets  and  economic,  social,  and  environmental  convergence  towards  the  EU 
standards. Through its focus on adopting and implementing the political, institutional, legal, 
administrative, social, and economic reforms it aims to help modernise Ukrainian economy, 

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with a view to future Union membership. The reforms envisioned under the Ukraine Plan also 
contribute to eight mutually re-enforcing, specific objectives.  

The  proposed  steps  are  aligned  with  and  reinforce  Ukraine’s  EU  accession  path  and 
consistent with the objectives of the EU-Ukraine Association Agreement and the Deep and 
Comprehensive Free Trade Area. The reforms and investments proposed under the Plan aim 
to foster economic growth. As such, they complement and reinforce the recommendations of 
the 2023 EU Enlargement report. Most of the chapters have a broad or a partial complementarity 
with  the  recommendations  set  out  in  the  enlargement  report.  In  certain  areas,  the  proposed 
reforms and investments go beyond the enlargement report, highlighting the growth-enhancing 
focus of the Plan. The Plan is aligned with the objectives outlined in the Association Agreement 
with  the  Deep  and  Comprehensive  Free  Trade  Agreement,  as  it  helps  create  the  necessary 
conditions for Ukraine's integration into the EU single market.  

The Plan provides a guidance framework for the country to reconstruct, modernise, and 
recover. First, strengthening the pre-war efforts, the Plan drives the modernisation of Ukraine’s 
legal, economic, and political institutions, by strengthening the institutional set up, fostering a 
green  and  digital  transition,  and  advancing  much-needed  structural  transformation  of  the 
economy. Second, it includes a variety of reform measures to ease the business environment 
and  support  the  private  sector  and  facilitate  the  integration  of  Ukrainian  businesses  into 
international value chains, critical in sustaining and scaling up the recovery. Third, the Plan 
recognises  the  critical  focus  on  Ukraine’s  labour  force  and  human  capital,  contributing  to  a 
sustainable revitalisation of the country’s social fabric, aiming to strengthen respect for human 
rights,  including  the  rights  of  persons  belonging  to  minorities  and  gender  equality  and  to 
produce  a  more  integrated  and  inclusive  society.  Fourth,  the  Plan  supports  the  strategic 
reconstruction of a limited number of destroyed or partially damaged infrastructure assets in 
key  sectors,  guided  by  carefully  developed  strategic  documents  and  rooted  in  robust  public 
financial and audit management. Fifth, the Plan fosters Ukraine’s reconstruction and recovery 
by  integrating  environmental,  governance,  and  social  elements  and  ensures,  to  the  extent 
possible  in  a  context  of  war  or  post-war  recovery  and  reconstruction,  that  all  efforts  are 
considering the Do No Significant Harm principle. 

For  the  implementation  of  the  Plan,  Ukraine  proposes  adequate  mechanisms  and 
arrangements to protect the financial interests of the EU. The Ministry of Economy, through 
a dedicated internal structure, will ensure an effective implementation and monitoring of and 
reporting on the Ukraine Plan. The Ministry of Finance and its structures will provide additional 
assurance that funds have been used in a way that ensures an adequate level of protection of the 
financial interests of the EU. The proposed mechanisms should allow the authorities to prevent, 
detect and correct irregularities, fraud, all forms of corruption, including high-level corruption, 
conflicts of interest, or any other illegal activities and to effectively investigate and prosecute 
offences affecting the funds provided under the Facility. The Ukrainian authorities will also 
ensure due involvement of the Verkhovna Rada and all other relevant stakeholders throughout 
the implementation of the Plan.  

5 

 
 
 
 
Extensive consultations were held with various stakeholders through the preparation of 
the Plan. To ensure that whole-of-government priorities are reflected in the Plan, the Ukrainian 
authorities  set  up  an  inter-agency  working  group  coordinated  by  the  First  Deputy  Prime 
Minister  and  Minister  of  Economy  which  led  the  design  and  development  of  the  Plan.  The 
Ukrainian authorities consulted with key stakeholders and in various formats throughout the 
various  stages  of  the  Plan  development,  including  the  Verkhovna  Rada,  central  executive 
government  bodies,  regional  stakeholders,  business  sector  groups,  and  civil  society 
organisations.  The  consultations  were  extensive  and  attracted  strong  participation  from  the 
stakeholders. The Ukrainian authorities also consulted with international partners through the 
Multi-Agency Donor Coordination Platform, dialogues with representatives of the EU Member 
States during Senior Officials’ Meeting and associated expert groups. Consultations have been 
instrumental in the pursuit of synergies and effective coordination.  

6 

 
 
 
1. Introduction  

This document provides further details on the Commission’s assessment of the relevance, 
comprehensiveness and appropriateness of the Ukraine Plan submitted to the European 
Commission  on  20  March  2024.  The  criteria  described  in  Article  18  of  Regulation  (EU) 
2024/7921 have guided the Commission’s assessment of the Ukraine Plan in its entirety as well 
as  in  the  assessment  of  the  underlying  reforms  and  subsumed  reform  steps.  The  context  on 
which the Ukraine Plan was designed is presented in Section 2. The summary of the overall 
impact of the Plan, including the expected impact on growth, is explained in Section 3. The 
details on the assessment of the Ukraine Plan are in Section 4.  

1 OJ L, 2024/792, 29.2.2024, ELI: http://data.europa.eu/eli/reg/2024/792/oj. 

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2. Context 

This section lays out the context in which the Ukraine Plan has been prepared. It discusses 
the  devastating  consequences  of  Russia’s  war  of  aggression  as  well  as  its  impact  on 
international  and  Ukrainian  strategic  priorities,  including  the  Ukraine’s  EU  future  and  the 
critical role of international support. It then details the macroeconomic developments since the 
start of the war, followed by a brief outline of the short-term economic outlook. The last part 
of section one provides an overview of far-reaching challenges linked to the Ukraine’s recovery, 
reconstruction, and modernisation, part of which the Ukraine Plan aims to address.  

2.1 Impact of the war of aggression of Russia  

On 22 February 2022 Russia launched an unprovoked and unjustified military aggression 
against the territorial integrity of Ukraine. Russia’s full-scale invasion of Ukraine marked 
the escalation  in  an eight-year aggression that began with  Russia’s annexation of Crimea in 
2014,  leading  to  devastating  humanitarian,  social  and  economic  consequences.  To  this  day, 
intense  fighting,  heavy  artillery  shelling  and  airstrikes  keep  causing  significant  civilian 
casualties and damage to critical infrastructure and productive assets.  

Ukraine’s population has been severely  affected by the full-scale invasion. Over 20 000 
civilian casualties have been reported, including over 10 000 killed according to the UN High 
Commissioner for Human Rights2. As of January 2024, UNHCR data account for 3.7 million 
internally displaced people and more than 7.3 million Ukrainians who fled the country. More 
than 6.3 million people have crossed into neighbouring countries including Poland, Romania, 
Hungary, Slovakia, and the Republic of Moldova. UNHCR estimates that about 14.6 million 
people in the country will need humanitarian assistance in 2024 to access health and protection 
services3.  The  large-scale  destruction  of  infrastructure,  including  targeting  of  utility 
infrastructure, has affected the ability of people to access basic needs, such as electricity, water, 
heat, food, healthcare, and education.  

The war has had a devastating impact on Ukraine’s productive capacity and economic 
activity.  Real  GDP  contracted  by  29  %  in  2022,  the  largest  contraction  in  Ukraine’s 
contemporary history, due to the incapacitation of productive capacity in the occupied and areas 
where  combat  occurred,  and  a  large-scale  displacement  of  people.  Macroeconomic  stability 
came under severe pressure with rapidly deteriorating public finances, surging inflation, and 
steep drop in foreign currency inflows, mitigated only by the authorities’ resolute response and 
the  strong  support  of  the  international  community.  Ukraine’s  economy  recovered  to  some 
degree in 2023 with a modest single-digit growth rate, improved foreign  exchange reserves, 
and a sharp decline in inflation. Further details on the economic situation are presented in the 
next sub-section. 

2 Office of the United Nations High Commissioner for Human Rights, Ukraine: Protection of Civilianss in Armed Conflict, 
December 2023 Update, 15 January 2024. 
3 United Nations High Commissioner for Refugee,, Ukraine Refugee Crisis : Aid, Statistics and News, January 2024. 

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Despite these challenges, Ukraine’s economy has showcased a remarkable resilience. This 
is attributable to authorities’ rapid response, willingness to pursue politically difficult reforms, 
significant  perseverance  of  Ukrainian  people  and  strong  international  support.  The  financial 
sector has been particularly strong, helped by the National Bank of Ukraine’s (NBU) actions to 
curb external pressures and maintain stability of the exchange rate, and supported by hard-won 
structural reforms before the war. As a result, the financial sector remained stable and a run on 
the banks was contained. As most banks continued their business activities with little functional 
limitations to their operations, businesses were able to access crucial financing. Public services, 
albeit more limited in coverage due to more limited capacity in the public administration, were 
able  to  continue  their  operations,  as  tax-  and  social  security  payments  continued. 
Notwithstanding these positive developments, much remains to be done to ensure a prosperous 
recovery.  

The economic legacy of the war will be felt in the short to medium-term. In February 2024, 
the  World  Bank  together  with  the  Ukrainian  authorities,  the  European  Commission  and  the 
United Nations presented the updated assessment of damages covering a full year of the Russian 
aggression. The assessment found that the estimated overall reconstruction needs of Ukraine in 
2024-2033 amount to EUR 448 billion.  

Restoring the many levels of the country’s social fabric and living standards will be the 
key  tasks  for  years  to  come.  On  one  side,  the  Russian  aggression  has  contributed  to  the 
solidification of a sense of national identity and community. On the other side, it led to severe 
social disruption caused by military conscription, large-scale displacements inside and outside 
the country, impact of collective trauma and its unequal distribution, and severely deteriorated 
living conditions for major segments of the society. According to recent estimates, poverty has 
increased from 5.5 % to 24.1 % in 2022, pushing an additional 7.1 million people into poverty, 
with greatest effects felt by women, children, people with disabilities and the elderly4.  

Russia’s war of aggression has had a global impact. The invasion led to a deterioration of 
the  world  macroeconomic  outlook  and  sent  shockwaves  across  financial  and  commodity 
markets. The European energy markets were affected by rapidly increasing prices, leading to a 
reorientation of global natural gas flows and a renewed push towards energy diversification. 
Supply  chains  disruption  and  severe  price  shocks  in  food,  energy,  and  fertilizer  markets 
triggered a food security crisis in developing, countries dependent on Ukrainian agricultural 
exports. In this context, the EU and Ukraine established the vital Solidarity  Lanes5 aimed at 
facilitating Ukraine’s agricultural export and entered into an agreement to temporarily allow 
bilateral  transport  rights  to  Ukrainian  and  EU  road  hauliers  to  each  other’s  territories6.  By 
facilitating  two-way  trade,  Solidarity  Lanes  have  helped  not  only  to  safeguard  global  food 
security but to lay the foundations for enhanced connectivity, developing new transport routes 
to access global markets. Since May 2022, these alternative logistics routes via rail, road, and 

4 The World Bank, The Government of Ukraine, The European Union, The United Nations, Ukraine Rapid Damage and 
Needs Assessment, February 2024  
5 Commission Communication An action plan for EU-Ukraine Solidarity Lanes to facilitate Ukraine's agricultural export and 
bilateral trade with the EU COM/2022/217 final 
6 Agreement between the European Union and Ukraine on the carriage of freight by road, ST/10151/2022/INIT, OJ L 179, 
6.7.2022 

9 

 
 
 
 
inland waterways have been a lifeline for Ukraine’s economy. The cumulative trade value via 
the Solidarity Lanes during the period to February 2024 is estimated at approximately EUR 143 
billion. Ukraine’s exports via the Solidarity Lanes amounted to approximately EUR 47 billion, 
highlighting the resilience of the country’s export sector. 

The  EU’s  priorities  were  also  reviewed  following  the  return  of  war  to  the  European 
continent. Russia’s invasion of Ukraine led to a considerable increase in defence spending and 
production  throughout  the  Member  States,  as  well  as  a  renewed  interest  for  a  strengthened 
European security architecture. As a first emergency response, the EU adopted two programmes 
to increase Member States cooperation on common procurement of the most urgent and critical 
defence products  and to  urgently support the ramp-up of EU’s manufacturing capacities  for 
artillery ammunition and missiles. Building on these achievements, the Commission proposed 
to  continue  providing  financial  support  for  the  reinforcement  of  the  European  Defence 
Technological  and  Industrial  Base  until  2027  through  the  European  Defence  Industry 
Programme (EDIP). In this context, and as a part of the EDIP Regulation, the EU also proposed 
to  establish  a  defence  industrial  cooperation  programme  with  Ukraine  with  the  view  to 
recovery,  reconstruction  and  modernisation  of  the  Ukraine  Defence  Technological  and 
Industrial Base (the Ukraine Support Instrument). 

The  European  Council  has  granted  Ukraine  EU  candidate  status  and  decided  to  open 
accession negotiations. Several days after the start of the invasion, Ukraine applied for EU 
membership. The European Council granted Ukraine candidate status in June 2022, upon the 
fulfilment  of  the  conditions  specified  in  the  Commission's  opinion  on  the  membership 
application.  In  December  2023,  EU  leaders  decided  to  open  accession  negotiations  with 
Ukraine  following  the  recommendation  of  the  European  Commission.  The  decision  to  open 
accession negotiations with Ukraine is a confirmation of the EU’s firm support to Ukraine and 
its people, and an important step on the road towards EU membership.  

The international community, led by the G7, strengthened efforts to improve coordination 
of international assistance to Ukraine. The Multi-agency Donor Coordination Platform for 
Ukraine  (MDCP)  was  established  in  January  2023,  co-chaired  by  Ukraine,  the  US,  and  the 
European  Commission.  The  Platform’s  mandate  is  to  coordinate  support  for  Ukraine’s 
immediate financing needs and future economic recovery and reconstruction across different 
sources  and  established  instruments  for  financing  in  a  coherent,  transparent,  and  inclusive 
manner, complementing existing tracks. The MDCP brings together Ukraine, the G7 countries 
and the EU as well as partners from international financial institutions and organisations. As of 
February  2024,  it  includes  four  additional  temporary  members  (Republic  of  Korea,  the 
Netherlands,  Norway,  and  Sweden)  as  well  as  six  observers  (Denmark,  Estonia,  Latvia, 
Lithuania, Poland, and Spain). 

International  support  was  critical  in  ensuring  the  stability  of  the  country.  Since  the 
beginning of the war until early April, international partners have committed around EUR 75 
billion in concessionary budget financing, out of which the EU contributed with around EUR 
31  billion  from  the  EU  budget.  The  EU  support  was  done  through  various  instruments, 

10 

 
 
 
including  macro-financing  assistance  of  various  forms,  financing  under  the  Neighbourhood, 
Development and International Cooperation Instrument – Global Europe and a first tranche of 
exceptional  bridge  financing  under  the  Ukraine  Facility.  At  the  onset  of  the  Russian’s 
aggression, Ukraine, and the International Monetary Fund (IMF) agreed a 48-month Extended 
Fund Facility (EFF) with access to USD 15.6 billion. In addition, international partners have 
committed significant amounts in project financing and technical assistance. 

11 

 
 
2.2 Macroeconomic outlook for Ukraine’s economy 

The pre-war economic growth was mild because of the pandemic. Following a recession of 
-3.8 % in 2020, GDP grew by only 3.4 % in 2021. Unemployment rate in 2021 slowly grew to 
9.9 %, while nominal wages moderated their annual growth to 19 % by the end of the year. The 
inflation rate hiked and reached 9.4 % up from 2.7 % a year earlier. The general government 
deficit dropped from 5.2 % of GDP in 2020 to 3.4 % in 2021. Gross public debt reached 47.7 
% of GDP, down from 60.6 in 2020, largely reflecting a denominator effect according to the 
European Commission 2023 Autum Forecast7. The large current account surplus in 2020 of 3.3 
% turned into a 1.9 % deficit in 2021. Official reserves started declining in mid-November 2021 
due  to  cumulative  foreign  exchange  interventions  in  support  of  the  domestic  currency. 
Nonetheless, the outlook of credit ratings remained unchanged throughout 2021.  

Russia’s war of aggression has had a devastating impact on the economy. The economy 
contracted by 29.1 % in  2022 (see graph 1), albeit lower than forecasted at the onset of the 
invasion. The drop in output was particularly severe in the first half of 2022, before a relative 
stabilisation towards the end of the year. The reduction in GDP in 2022 was primarily linked to 
the incapacitation of productive resources within territories either occupied or adjacent to the 
frontlines as well as to the large-scale displacement of people, industry, trade, agriculture, and 
transportation suffered the largest decline in economic output sector-wise.  

Graph 1: Real GDP growth and projections 

10

5

0

-5

-10
%
n
-15
I

-20

-25

-30

-35

2,4

2,4

3,5

3,2

-3,8

3,4

5,7

6,1

3,7

-29,1

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Real GDP growth

Real GDP growth projections

Sources: National Bank of Ukraine (2024), European Economic Forecast (Autumn 2023) 

Most components of the GDP have seen a major drop in 2022.  Against  the backdrop of 
population displacement, high inflation, and reduction of the labour force, private consumption 

7 European Commission, European Economic Forecast Autumn 2023, Institutional paper 258, November 2023, ISSN 2443-
8014 

12 

 
 
 
 
 
and  investment  dropped  by  some  30  %  and  35  %  in  2022,  respectively8.  Net  exports  also 
worsened  due  to  logistical  bottlenecks  on  exports  and  by  refugees’  spending  abroad,  which 
cushioned the fall in imports. Only public consumption, stimulated by war-related expenditure, 
had a small positive contribution. Although the construction sector suffered the most with a 68 
% decline in output, the hardest blows came from the major contractions in industry (38 %), 
trade  (31  %),  agriculture  (28  %),  and  transport  (44  %).  Military  actions,  magnified  by  the 
obstructions at seaports and electricity shortages, led to a 35.2 % decrease in exports of goods, 
reducing foreign exchange earnings. Imports also experienced a significant decline of around 
18.4 %.  

Both  inflation  and unemployment  increased  significantly  after  the  invasion.  The  labour 
market remained weak and inefficient in matching demand and supply. A lot of workers left 
Ukraine and the deficit of skilled labour have become one of the most acute problems for local 
firms. The unemployment rate almost doubled year-on-year to 18.6 % in 2022. Inflation reached 
22.6 % in December 2022, driven by supply chain disruptions and rising food and energy costs. 
Due to the anti-crisis measures of the national central bank it was possible to ensure relatively 
moderate  inflationary  dynamics  and  to  maintain  price  and  financial  stability.  The  NBU 
introduced a fixed exchange rate regime, sharply raised the key policy rate to 25 % from 10 %, 
and  imposed  restrictions  on  the  FX  market,  banning  most  cross-border  foreign  currency 
payments to balance the economy and to protect financial system. 

Public  finances  deteriorated  markedly  in  2022  following  Russia’s  unjustified  invasion, 
both due to the cost of the conflict and its impact on economic activity. The 2022 budget 
deficit reached 25 % of GDP (excluding foreign grants). Thanks to the latter, which represented 
around 9.4 % of GDP, the general government borrowing was contained to 15.7 % of GDP in 
2022. Driven by skyrocketing spending on defence and public order, overall public expenditure 
increased  by  55  %  in  2022.  While  tax  revenues  contracted  slightly,  total  public  revenues 
increased  by  31  %,  primarily  thanks  the  large  inflow  of  foreign  grants.  Driven  by  sizeable 
borrowing and reflecting the steep drop in nominal GDP, total public debt reached 78.5 % of 
GDP in 2022.  

The banking sector was resilient in the face of war. Thanks to swift emergency measures the 
sector remained stable, liquid, and profitable, though risks remain significant. While the loan 
portfolios shrank, deposit growth has been positive, contributing to the liquidity of the sector. 
Deposits  recovered  quickly  and  ended  up  the  year  growing  by  46  %  compared  to  February 
2022. Loans decreased by 10 % and only started recovering in June 2023. Losses of banks due 
to invasion were moderate. The share of non-performing loans (NPLs) increased markedly but 
60 % of the financial difficulties of borrowers were not directly caused by the occupation or 
destruction. About 75 % of the NPLs are concentrated in the state-owned banks according to 
the data of the National Bank of Ukraine.  

Since 2023, the Ukrainian economy has been recovering mildly. The rapid revival of the 
energy system that had been particularly targeted in Russian drone and missile attacks, as well 
as some resilience in the labour market, boosted real GDP. Thanks to government stimulus, 

8 European Commission, European Economic Forecast Spring 2023, Institutional paper 200, May 2023, ISSN 2443-8014 

13 

 
 
 
falling inflation, an exceptionally good harvest and measures taken to improve export routes, 
real GDP grew by around 5.7 % in 2023. In early 2024, however, the Ukrainian economy is 
showing some moderate signs of a slowdown. In December 2023, the NBU’s index of business 
expectations9 (BAEI) dropped significantly to 41.0, from 49.1 in November 2023, significantly 
below  the  50-mark  threshold,  on  the  back  of  the  re-escalation  of  the  Russian  attacks  and 
growing business pessimism, however in February 2024 the BAEI was 47.5, up from 41.0 in 
January.  

Mismatches in the labour market keep the unemployment rate high. The labour market has 
seen signs of stabilisation since the beginning of 2023, amid lower net migration outflows and 
a partial return of internally displaced persons. Nevertheless, the still high level of displaced 
people abroad and within Ukraine continue to put pressure on the labour market and lead to 
mismatches across regions and sectors. According to the European Commission 2023 Autumn 
forecast  the  unemployment  rate  is  expected  to  remain  high  due  to  further  destruction  of 
production facilities, especially in those regions where hostilities are taking place. However, it 
should decline to around 14.5 % by 2025. Labour shortages and a decline of inflation should 
lead to some recovery in real wages, particularly in 2025. 

Inflation has eased visibly, partly thanks to decisive policy action by the National Bank of 
Ukraine. Consumer price inflation eased considerably throughout 2023, reaching a two-year 
low of 5.1 % in  December 2023, down from  26.6 % in  December 2022. This  decrease was 
mainly driven by slower growth in food and transport prices. Core inflation also moderated to 
4.9  %  in  December  2023,  from  22.6  %  in  December  2022,  driven  by  strong  base  effects,  a 
restrictive  monetary  policy  by  the  NBU,  and  more  contained  inflation  expectations  amid  a 
stronger hryvnia exchange rate. These positive developments allowed the NBU to start easing 
monetary policy from 25 % in July 2023, to 14.5 % from 15 March 2024 (see also graph 2), 
and to gradually remove some of the foreign exchange restrictions introduced in the aftermath 
of  the  invasion.  As  of  2  October  2023,  the  NBU  shifted  to  a  managed  float  system  for  the 
hryvnia10. 

9  Press  release  by  the  National  Bank  of  Ukraine,  1  February  2024  Businesses  Downgrade  Their  Expectations  for  Their 
Economic Performance – Business Outlook Survey in January Businesses (bank.gov.ua) 
10 Press release by the National Bank of Ukraine, 2 October 2023 NBU Introduces Managed Flexibility of Exchange Rate to 
Strengthen Resilience of the economy and the FX Market (bank.gov.ua) 

14 

 
 
 
Graph 2: Evolution of inflation and of the NBU Key Monetary Policy Rate  

30

25

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15

10

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Inflation (Consumer Price Index)

Key monetary policy rate

Source: National Bank of Ukraine 

The current account turned into a sizeable deficit in 2023 after posting a record surplus 
in 2022. Despite a sizeable trade deficit of EUR 12.9 billion, the current account recorded a 
surplus  of  almost  EUR  7.4  billion  (5.4  %  of  GDP)  in  2022,  thanks  to  sizeable  positive  net 
income from abroad. In 2023, the current account turned into a deficit that reached almost EUR 
8.3 billion reflecting a sizeable deterioration in the goods trade balance, which recorded a deficit 
of EUR 23.6 billion due both to a sustained increase in imports and a fall in exports, which 
remains 60 % below pre-war levels. Exports were affected by disruptions to the export routes 
in the Black Sea, particularly after Russia terminated the Black Sea Grain Initiative.  

The  country’s  international  trade  deficit  is  increasing,  thereby  challenging  short-term 
recovery and long-term sustainability. In 2022, external trade in goods and services deficit 
increased  to  around  EUR  24  billion,  up  from  EUR  2.5  billion  in  2021.  With  domestic 
consumption mostly catered to by foreign goods and services, there is limited room for domestic 
companies to build up their businesses. These higher costs of entry, paired with uncertainty and 
labour  shortages,  challenge  the  ability  of  domestic  firms,  particularly  SMEs,  to  scale  up 
domestic production. In the long-run, unsustainable net exports could imply losses in domestic 
productivity and, ultimately, competitiveness.  

The  deficit  continued  to  increase  in  2023  on  the  back  of  higher  defence  expenditure. 
Budget deficit reached close to 19 % of GDP in 2023. Higher revenues from both tax and non-
tax revenues in 2023 were more than offset by soaring expenditures, particularly on defence. 
Revenue growth was driven by non-tax revenues, including income from property and business 
activities, and a return to pre-war excise duty and VAT rates for motor fuels starting from July. 
Public debt reached around 87 % at the end of the year. 

15 

 
 
 
Having  lost  access  to  international  debt  markets,  Ukraine  continues  to  rely  on  foreign 
assistance.  Net  budget  financing  in  2023  comprised  EUR  28.4  billion  in  external  (loan) 
financing  (17.5  %  of  GDP),  and  EUR  14  billion  through  the  domestic  bond  market,  which 
increased  markedly  towards  the  end  of  the  year.  Total  grants  from  third  countries  and 
international institutions amounted to roughly EUR 11 billion (6.8 % of GDP). Public gross 
financing needs were estimated at around 25 % of GDP in 2023 and 2024, before decreasing to 
less than 20 % of GDP by 2025. Since 2022, Ukraine has not resorted to monetary financing, 
which has a been an important factor driving the fall in inflation. In 2023 international reserves 
increased  by  42  %  compared  to  2022  thanks  to  unprecedented  financial  assistance  from 
international partners11. 

The short-term economic outlook largely depends on the course of the war, evolution of 
exports,  and  donor  support.  Under  the  assumption  that  conditions  are  in  place  for 
reconstruction  efforts  to  start  from  the  beginning  of  2025,  including  the  reforms  and 
investments  underpinning  the  Ukraine  Facility,  the  European  Commission  2023  Autumn 
Forecast projects real GDP growth to remain moderate in 2024, at 3.7 %, before significantly 
picking up to 6.1 % in 2025. Private consumption will likely become the main growth driver, 
especially in the short term, as consumers continue to adapt to the war environment and falling 
inflation  provides  some  support  to  real  incomes.  Private  investment  is  expected  to  remain 
subdued, but funding made available through the Ukraine Facility and Ukraine’s EU candidate 
status could improve this outlook. A surge in public investment to kickstart the reconstruction 
will likely lead to strong total investment growth, particularly in 2025. As supply disruptions 
ease and Ukraine expands the use of alternative export routes, exports are projected to gradually 
increase but net exports are set to contribute negatively to growth due to the surge in domestic 
import-driven demand. The general government deficit is expected to decrease to 15.7 % of 
GDP in 2024 (20.4 % of GDP excluding grants), and to further decline to 8.1 % of GDP in 2025 
(10.2 % excluding grants), on the back of reduced war-related expenditures and higher nominal 
GDP growth. Public debt is expected to reach around 98.5 % by 2025.  

11Press release by the National Bank of Ukraine, 5 January 2024 Ukraine’s International Reserves Increased by 42 % to over 
USD 40.5 Billion in 2023 (bank.gov.ua) 

16 

 
 
 
2.3  Challenges 
modernisation 

linked 

to  Ukraine’s  recovery,  reconstruction,  and 

The  reconstruction  and  recovery  path  of  Ukraine  should  lead  the  country  towards  a 
modernised  and  sustainable  nation.  While  the  country’s  economy  has  proven  to  be  very 
resilient and starts recovering, it still has a difficult path ahead. In parallel to fighting the war, 
the country will have to engage in comprehensive reform efforts and extensive reconstruction. 
Many  challenges  must  be  overcome,  with  the  support  of  the  European  Union  and  the  other 
international partners.  

External funding is needed to sustain the basic functions of the Ukrainian State. With war-
related expenditure comprising of a large fraction of Ukraine’s state budget, not enough is left 
for maintaining the functioning of governmental institutions and public services. Non-defence 
related budgetary needs for external financing for 2024 alone are estimated to be close to EUR 
38  billion  in  2024,  including  expenditures  on  education,  social  protection,  and  public 
administration. This includes, amongst others, salaries for state employees, debt repayment and 
other  administrative  costs.  Consistent  inflow  of  foreign  funds  and  crucial  for  maintain  the 
functioning the Ukrainian State. 

Ukraine’s reconstruction will require a large-scale capital mobilisation. Recent estimates 
suggest that recovery needs up to 2027 amount to roughly EUR 448 billion12. With the fiscal 
deficit  deep  in  double-digit,  public  debt  close  to  90  %  of  GDP  and  financing  dependent  on 
foreign grants and concessional loans, the fiscal envelope is too tight to cover the reconstruction 
bill. The domestic private sector is weakened by the war and foreign capital inflows are limited 
as private investors are not equipped to cope with the continuous destruction and uncertainties 
of war. Against this backdrop, Ukraine’s ability to finance its own recovery needs is limited. 
While the EU, alongside international partners, is providing a comprehensive financial support 
package,  reconstruction  at  a  scale  and  long-term  recovery  will  require  significantly  higher 
funding, both from the public and the private sectors.  

Recovery efforts require an increased labour force. Due to the war, many Ukrainians have 
been displaced, losing their homes to destruction. Many others, particularly young men, fight 
against the Russian aggressor. A large number has also fled the country, many of whom are 
women and children, benefitting from  the temporary protection within the European Union. 
These  factors  significantly  reduce 
limited 
the  available 
implementation capacities and a potential triaging of reconstruction efforts. On top of this, some 
of those remaining in Ukraine may first require support for physical injuries or mental health 
issues, thus reducing the overall productivity of the labour force. Nevertheless, those remaining 
will have to shoulder the majority of ongoing reconstruction efforts, while long-term recovery 
of the country critically depends on returns of the population and increasing the labour market 
participation  of  women  and  other  traditionally  less  active  parts  of  the  active  population. 
Introduction of modern technologies and more efficient production processes would also help 
enhance productivity in lieu of the missing labour.  

labour  force,  resulting 

in 

12 The World Bank, The Government of Ukraine, The European Union, The United Nations, Ukraine Rapid Damage and 
Needs Assessment, February 2024.  

17 

 
 
 
Ukraine’s  labour  force  faces  a  scarcity  of  skills  required  for  Ukraine’s  recovery, 
reconstruction, and modernisation process. Even before the war, Ukraine’s labour market 
has  faced  significant  challenges,  including  skills  mismatches,  low  women  labour  force 
participation, and outdated education and training systems. The war has further exacerbated and 
complexified the issue, having drastically changed the structure of the population and the labour 
market. While the level of unemployment is higher than pre-war, there are unfilled vacancies 
in key sectors and private businesses point to the shortage of skilled workers as their primary 
challenge. In addition to a pre-war structural qualifications mismatch, this is also attributable 
to  emigration  of  skilled  workers,  military  drafting,  and  internal  displacement  as  internally 
displaced  persons  (IDPs)  don’t  always  find  jobs  in  their  area  of  expertise.  Furthermore,  the 
education system has not yet adjusted to the change in the market demands – a smooth economic 
recovery  will  require  the  training  or  re-training  of  many  specialists  in  sectors  such  as 
construction,  manufacturing,  ITC,  agro-industry,  energy,  transport,  or  the  military-industrial 
sector.  At  the  same  time,  education  and  training  institutions  at  all  levels  need  to  provide 
adequate and labour-market relevant vocational education and training, including by ensuring 
adequate conditions including shelters, improving their outdated equipment, teaching methods, 
and recruitment of qualified teachers. Thus, there is a large need for upskilling programmes and 
large-scale education reforms, in particular by tapping into the potential of women in the labour 
market.  

The  government’s  capacity  to  implement  reforms  will  be  key  and  will  need 
reinforcements.  Despite  showing  resilience  during  the  war,  public  sector  reforms  haves 
slowed,  particularly  in  merit-based  recruitment  and  selection,  job  classification  and  salary 
reform. This slowdown was an impact of war, as around 18 % of public sector vacancies have 
remained unfilled, creating large human resource constraints. This, in turn, significantly reduces 
the  government’s  absorption  capacity  for  reforms.  It  also  increases  dependence  on  foreign 
donor-funded structures embedded in the public administration, which is not sustainable in the 
long-term. These challenges also extend to sub-national governments, state-owned enterprises, 
and other public bodies outside the central government. Therefore, there is a need for expertise 
and technical assistance to increase capacity at all levels of administration and help all public 
authorities advance and implement reform.  

Despite  significant  improvements  in  the  recent  years,  the  rule  of  law  situation  in  the 
country is described as one of the key weaknesses impeding a swift economic growth. Since 
the Revolution of Dignity in 2014, Ukraine undertook a series of reforms in the justice sector 
aimed  at  the  consolidation  of  the  rule  of  law  and  making  the  judiciary  more  independent, 
transparent,  and  efficient.  However,  multiple  challenges  remain,  and  they  are  further 
exacerbated  by  the  ongoing  Russian  military  aggression.  The  judicial  system  suffers  from 
shortage of judges, low levels of public trust, poor management of resources and insufficient 
uniformity  of  court  practice.  E-justice  solutions,  enforcement  of  court  decisions  and  use  of 
modern  insolvency  tools  need  significant  improvement.  Ukraine  has  taken  various  anti-
corruption measures which have already started delivering results. However, further progress 
in  anti-corruption  and  anti-money  laundering  is  needed  for  Ukraine’s  successful  recovery, 
reconstruction,  and  modernisation.  A  strong  institutional  and  an  enforceable  legislative 
framework to effectively prevent and combat corruption and an effective anti-money laundering 

18 

 
 
system are paramount for tackling economic crimes, preventing fraud and mismanagement of 
funds  in  the  context  of  reconstruction  and  maintaining  financial  and  political  stability.  The 
independence  and  capacities  of  the  key  anti-corruption  institutions  in  Ukraine  need  further 
strengthening  capacities  to  ensure  full  institutional  anchoring  and  their  long-term  and 
sustainable performance.  

Ukraine will need to ensure an inclusive and sustainable reconstruction. The reconstruction 
will require an efficient co-ordination and cooperation between different levels of government 
in  a  whole-of-government  approach  with  a  clear  distribution  of  roles  and  responsibilities 
between  all  institutions  involved  in  the  reconstruction  process  at  national,  regional,  and 
municipal level. In the wake of the decentralisation reform, territorial communities have taken 
on  several  key  responsibilities  for  essential  functions  and  services.  Hence,  the  territorial 
communities will be key drivers of Ukraine’s reconstruction and modernisation, and they will 
need to have a leading role in the recovery process.  

Planning and decision-making of the recovery, reconstruction, and modernisation need 
predictability.  Currently  predictability  in  planning  is  constrained  by  a  high  number  of 
uncoordinated  strategic  planning  documents  at  all  government  levels,  and  particularly  at  the 
local one. The roles and responsibilities of the stakeholders in the reconstruction process are 
also not clearly defined. The Ukrainian authorities are currently undertaking important steps to 
resolve these challenges: an updated State Regional Development Strategy as the main vehicle 
for  a  coordinated  approach  to  regional  and  local  growth  and  reconstruction  and  a  Public 
Investment  Management  Roadmap  outlining  the  institutional  set-up  of  the  recovery  and 
reconstruction  process.  Further  efforts  are  needed  to  define  the  roles  and  responsibilities  of 
territorial communities and increase their capacity.  

Prioritisation of funding will be critical. For large-scale reconstruction projects of national 
and  regional  importance,  Ukraine  will  need  to  prioritise  the  limited  funding  according  to 
objective  needs,  policy  preferences  and  project  maturity.  This  will  require  putting  in  place 
structures  with  an  appropriate  prioritisation  methodology  (e.g.,  a  sectoral  single  project 
pipeline). Such a methodology should integrate relevant EU standards and regulations on key 
areas such as environmental and social impact, sustainability, inclusivity, and accessibility to 
mitigate  the  risk  of  creating  stranded  assets  as  Ukraine  advances  in  its  EU  path.  The 
requirements set down by this methodological approach will also have to be reconciled with the 
urgency of immediate reconstruction needs in the context of the ongoing war.  

Transparency and accountability will need to be upheld at all stages of the reconstruction 
effort.  This  requires  robust  monitoring  and  control  arrangements,  but  also  sustained 
participation of civil society at national and sub-national level. One of the main challenges in 
this  regard  is  to  create  interconnected  systems  that  ensure  open  access  and  the  ability  of 
institutions  and  citizens  to  monitor.  Building  on  the  country’s  proven  strength  in  digital 
innovation, Ukraine is currently developing a digital ecosystem which aims at meeting all these 
requirements using a single platform. 

While martial law is necessary in the context of the war, it should not be a reason not to 
uphold  high  standards.  A  prolonged  application  of  the  martial  law  beyond  the  timeframe 

19 

 
 
deemed  necessary  by  the  evolution  of  war  would  reduce  business  certainty,  thereby  posing 
challenges for Ukraine’s recovery. While the martial law is still in force, sustainable reforms 
should be conducted in alignment with EU standards, that is, via democratic procedures, and 
ensuring the full alignment with EU values and standards. 

20 

 
 
3. Overall objective of the Ukraine Plan  

The Ukraine Plan is the government’s main tool for ensuring the recovery, reconstruction, 
and modernisation of the country, while mobilising stable and predictable funding from 
the EU. The Plan is designed as a driver of the government’s growth-enhancing reform agenda 
over the next four years. As reconstruction and recovery cannot wait for the war to finish, there 
is a need to move from short-term emergency support to a medium-term funding and recovery 
strategy. Predictability and stability of EU funding, a key anchor for Ukraine’s geopolitical and 
economic future, will not only demonstrate the EU’s steadfast support, but also serve as a point 
of stability in a highly uncertain environment. In 2021, before the war, Ukraine’s living standard 
was at 29 % of the EU average.13 The Plan has the potential to drive economic growth in the 
next years and help Ukraine catch up peer countries in the short-term and converge towards the 
EU average in the medium-term. To this end, the reforms and investments proposed in the Plan 
are not only to? be feasible, but also ambitious enough to facilitate structural transformation of 
the economy to support Ukraine’s EU future. 

Pillar I of the Ukraine Facility makes available to Ukraine a total amount of EUR 38.27 
billion over four years, including via exceptional bridge financing. The exceptional bridge 
financing  is  provided  to  Ukraine  through  a  different  financing  instrument.  To  receive  that 
funding amounting to up to EUR 6 billion, Ukraine committed to 5 policy conditions and certain 
reporting requirements; the first instalment disbursed in March amounted to EUR 4.5 billion, 
while a next tranche of EUR 1.5 billion is expected to be disbursed to Ukraine in April, subject 
to the fulfilment of the conditions established in the Memorandum of Understanding concluded 
between the European Commission and the Government of Ukraine. To receive the rest of the 
funding  under  Pillar  I,  as  described  in  the  Plan,  Ukraine  proposes  146  quantitative  and 
qualitative steps calibrated over four years. The  EUR 32.27 billion, out of which EUR 5.27 
billion in non-repayable support and EUR 27 billion in loans, will be disbursed through pre-
financing and 15 payment instalments until 2027, the latter being contingent on fulfilment of 
the relevant steps. 

The  overall  objective  is  to  ensure  a  major  reform  agenda  while  aiding  the  Ukrainian 
authorities  to  continue  the  provision  of  essential  public  services.  As  of  December  2023, 
based on conservative estimates of GDP growth, Ukraine’s uncovered external funding needs 
(i.e., not covered by donors or institutional investors) in 2024-2027 stand at EUR 72 billion, 
while the government’s external funding needs amount to EUR 57 billion14. The Ukraine Plan 
and the funding attached to it are critical to ensure the basic public services are provided in the 
short term. At the same time, the Plan will ensure the implementation of key, forward-looking 
reform and investment activities that will support a sustainable economic growth while helping 
Ukraine advance on its EU path. It will help Ukraine transition towards a functioning market 
economy  with  the  capacity  to  cope  with  competition  and  market  forces,  while  ensuring  the 

13 European Commission, DG Neighbourhood and Enlargement Negotiations, EU Enlargement Package – Ukraine, 2023 
14 International Monetary Fund, Ukraine Country report n.23/399, Second review, December 2023 

21 

 
 
 
 
stability of institutions guaranteeing democracy, the rule of law, human rights, and respect for 
and protection of minorities.  

Ukraine  has  proposed  carefully  calibrated  and  sequenced  reforms  and  investments  to 
achieve  the  Plan’s  objective.  These  reforms  and  investments  were  selected,  designed,  and 
distributed throughout the four-year timeframe of the Plan, based on the needs, priorities and 
capacity of the Ukrainian state, and its vision of a future Ukraine as member of the Union. The 
Plan is expected to contribute positively to GDP growth, stimulate economic activity and set 
Ukraine on a path to longer term sustainable prosperity.  

The Ukraine Plan aims to reinforce the country’s needed efforts in the enlargement track. 
The key focus of the reforms and investments proposed in the Ukraine Plan is to spur economic 
growth.  As  such,  they  are  meant  to  complement  the  recommendations  under  the  EU 
Enlargement report and, at times, reinforce the critical steps. The same approach is taken with 
respect to the reforms proposed by the other international partners in their financing agreements 
with  Ukraine.  The  Ukraine  Plan  is  also  consistent  and  reinforces  the  objectives  of  the  EU-
Ukraine Association Agreement. 

The proposed reforms and investment have a significant growth-enhancing potential. If 
implemented timely and in line with the provisions of the Plan, these reforms and investments 
will lead to: i) an increase in business activity, including exports, as a result of a more dynamic 
private sector, direct support to firms and increase in the level of investments; ii) an increase in 
the  labour  force,  as  a  result  of  initiatives  such  as  early  childhood  education  and  care, 
investments in safe and quality education, and skills upgrading programmes, including for the 
displaced  persons  outside  Ukraine,  and  supported  by  a  more  buoyant  private  sector;  iii)  an 
improved infrastructure as a result of the implementation of investments under the Plan, and 
better planning and prioritisation of priorities in the transport sector; iv) an improved energy 
sector integrated with the EU Single Market; v) an increased fight against corruption and money 
laundering, and a more efficient judicial sector; vi) improved capacity and governance in the 
public  administration  and  state-owned  enterprises.  The  proposed  investments  are  directed 
towards key sectors driving the economic growth, such as business environment, human capital, 
energy,  and  transport.  The  Plan’s  reforms  and  investments  will  have  an  immediate  socio-
economic effect but will also influence Ukraine’s growth beyond the timeframe of the Facility.  

The Ukraine Plan seeks to bring together international partners and help channel support 
to the whole-of-government priorities in a coordinated fashion. By avoiding duplication in 
the Plan preparation process and presenting a single integrated Plan, Ukraine hopes to facilitate 
a clear communication of its priorities as well as effective coordination and implementation. 
The fulfilment of the reforms and investments in Plan unlock financial support under Ukraine 
Facility but the Plan includes broader reform priorities and highlights the need for additional 
capital mobilisation beyond the Ukraine Facility. These reform commitments and investment 
priorities are the result of a whole-of-government approach, also reflecting the reform priorities 
of the key international donors. Therefore, the Plan can be used to ensure synergies across the 
international partners in providing support to Ukraine.  

22 

 
 
Growth potential of the Ukraine Plan  

The reforms and investments in the plan constitute a balanced and well-targeted response 
to  Ukraine’s  recovery  and  reconstruction  needs,  amplifying  the  country’s  growth 
potential  in  the  medium-to-long  term.  The  reforms  included  in  the  plan  aim  to  enhance 
administrative  efficiency,  improve  government  effectiveness,  and  foster  a  more  conducive 
business environment – all of which have the potential to contribute to Ukraine’s recovery and 
reconstruction,  while  addressing  Ukraine’s  pre-existing  bottlenecks  to  economic  growth.  In 
addition,  the  Plan  includes  investments  in  human  capital,  including  on  safe  and  quality 
education,  as  well  as  targeted  measures  to  revitalise  the  agricultural,  energy  and  transport 
sectors.  According  to  internal  simulations15  by  the  European  Commission,  the  reforms  and 
investments have the potential to boost the Ukrainian economy by 6.2 % already by the end of 
the duration of the Facility, under the assumption that all the reforms and investments are fully 
implemented by then. In the medium term, GDP could increase by 14.2 % in total by 2040, 
when compared to a scenario without the Ukraine Plan (the ‘no-Plan’ scenario), as the impact 
of the reform measures takes hold. Additionally, a significant part of the funds will be directed 
for budget support, which is expected to contribute to sustaining macroeconomic stability but 
has not been directly accounted for in the simulations.  

Measures to enhance the judicial system and strengthen the anti-corruption framework 
together with, range of business-friendly measures are expected to have a positive effect 
on  economic  growth  and  the  business  environment.  Long-standing  weaknesses  in  the 
business environment, including high levels of corruption, inefficient contract enforcement and 
the  prevalence  of  market  dominance,  have  contributed  to  weak  private  investments  and 
entrepreneurship already before the war, hampering economic growth. The plan aims to tackle 
some of these challenges, in particular by strengthening the role, capacity and efficiency of key 
anti-corruption institutions. The judicial system is also set to benefit from streamlined judicial 
selection processes and efficiency improvements, which should contribute to transparency and 
legal certainty – key aspects of a well-functioning business environment. Additionally, the plan 
is expected to take steps to reduce state ownership in key sectors such as banking, which is 
characterised by a strong state footprint, as well as to continue improving the governance of 
SOEs.  The  regulatory  framework  is  set  to  be  improved  by  continued  deregulation  efforts, 
improvements  in  the  state-aid  legislation,  as  well  as  through  measures  to  align  the  legal 
framework  with  the  EU,  particularly  in  relation  to  public  procurement  rules.  These  reforms 

15 The simulations are based on a growth-accounting framework, adding a Real Business Cycle (RBC) style general 
equilibrium feedback mechanism. The framework decomposes GDP into inputs, namely private and public capital, labour, 
and productive efficiency, also known as total factor productivity (TFP). By adding these factors together, and particularly 
the impact of the plan on these factors of production in the future, we estimate the impact of the plan on Ukraine’s economy 
until 2040. Due to methodological complexities, not all policy areas from the Ukraine Plan are not part of the modelling, 
despite their potential to increase GDP. 

The main impact of the Plan on GDP growth comes from the reforms, which raise TFP and labour supply. These are expected 
to increase GDP by 5.3 % by 2027, and 13.7 % by 2040, under the assumption of their full and timely implementation, including 
those reforms related to strategies or action plans. This effect is primarily driven by reforms that impact indicators related to 
Government Efficiency, Regulatory Quality and Control of Corruption, accounting for over 11 % of the overall GDP boost. 
Additionally, public investments in the Plan raise GDP by 0.9 % relative to the no-plan scenario by the end of the duration of 
the Facility. This effect (due to having expanded the supply capacities of the Ukrainian economy) persists long after public 
spending from the Facility ends, being still at 0.5 % in 2040. The implied cumulative public investment multiplier (i.e., without 
the TFP and labour supply shows), is 2.8 after 10 years, and 4.6 after 15 years.  

23 

 
 
 
 
collectively aim to create a more transparent, dynamic, and competitive business environment 
that is conducive to economic growth. 

Reforms to enhance government effectiveness are expected to increase the transparency, 
efficiency  and  responsiveness  of  public  administration,  fostering  an  environment  more 
conducive to public and private investment. Ukraine’s public administration has struggled to 
improve  its  inefficiency  and  transparency,  which  has  weighed  on  investor  confidence, 
regulatory  quality,  and  the  allocation  of  resources.  The  plan  aims  to  improve  government 
effectiveness by aligning the Ukrainian legislation with the OECD principles of good public 
administration,  as  well  as  by  enhancing  merit-based  recruitment  at  different  levels  of 
government.  In  addition,  several  reforms  in  the  plan  aim  to  improve  the  management  of 
government finances by introducing spending reviews, establishing a medium-term state debt 
strategy,  improving  public  investment  management,  and  introducing  audits  of  budgets  (for 
SOEs,  local  authorities,  and  off-budget  funds),  thereby  increasing  the  transparency  and 
reducing  opportunities  for  mismanagement 
that  have  historically  eroded  economic 
performance. The reforms in the plan also aim to improve the governance and effectiveness of 
key institutions such as the Economic Security Bureau of Ukraine (ESBU), as well as introduce 
measures to improve digital / ICT uptake in the government sector, including by developing e-
government services, which can decrease costs of doing business and create a more attractive 
investment landscape. 

The  Plan  includes  measures  that  aim  to  tackle  both  long-standing  weaknesses  and 
immediate consequences of the war on human capital and the labour market. Investments 
across  education  sectors,  are  expected  to  contribute  to  the  rebuilding  some  of  the  destroyed 
educational infrastructure following Russia’s invasion, ensuring safe conditions in educational 
institutions.  This  will  lay  the  groundwork  for  a  restoration  and  modernisation  of  Ukraine’s 
educational  system.  In  particular,  investments  in  pre-school  education  infrastructure  can 
contribute  to  enhance  early  childhood  development  and  provide  the  basis  for  stronger 
educational outcomes and reduce educational disparities, thereby enhancing future productivity 
growth.  Additionally,  investments  in  Vocational  Educational  Training  infrastructure  can 
directly  help  increase  labour  market  participation  and  boost  labour  supply,  in  particular  by 
reducing  skill  mismatches  and  encourage  labour  market  participation  of  underrepresented 
groups – long-standing challenges to growth that have particularly been exacerbated following 
Russia’s war of aggression. Several  reforms in  the plan also  aim to  encourage the return of 
displaced persons, which may help counteract the impact of Russia’s invasion on labour supply. 
Moreover, reforms on improved cultural development will strengthen the Ukrainian identity 
and contribute to Ukraine’s economic and societal development. 

The  measures  related  to  the  energy  sector  aim  to  help  restoring  Ukraine’s  damaged 
energy  infrastructure,  enhance  renewable  energy  and  lower  energy  intensity  and 
dependency, fostering a more resilient and competitive economy. The full-scale war has had 
a  strong  impact  on  Ukraine’s  energy  sector,  resulting  in  much  of  its  electricity  generating 
capacity  and  grid  being  damaged  or  destroyed.  Investments  aimed  at  enhancing  renewable 
energy capacity are expected to increase the energy supply and its stability, diversify Ukraine’s 
energy mix, bolster its energy independence and provide the foundation for further investments 

24 

 
 
in sustainable energy projects. Flanked by supporting reforms, such as shortening permitting 
procedures, investing in renewables has the potential to drive new employment and increase 
innovation  and  technological  development.  Investments  in  energy  efficiency,  backed  by 
relevant reforms, is expected to help economic growth by creating new jobs and providing cost 
savings to businesses and consumers. Already before the full-scale invasion, Ukraine had one 
of the most energy and resource intensive economies in Europe and therefore a large potential 
increase 
for  energy  savings.  Moreover,  energy  efficiency 
competitiveness of businesses through reduction of demand and associated costs, freeing up 
capital for productive investments. It will also tackle energy poverty of vulnerable households. 
Improving  the  functioning  of  the  energy  and  electricity  market  in  Ukraine  can  increase 
competition, facilitate integration of renewable energy and attract investment.  

improvements  can  help 

The reforms and investments aimed at Ukraine’s transport sector are poised to play a role 
in  the  country’s  economic  recovery  and  growth  in  the  post-war  period.  Transport 
infrastructure plays a pivotal role as an enabler for reconstruction, ensuring seamless access and 
efficient delivery of materials and equipment. The plan outlines measures to help restructure 
the significantly damaged transport infrastructure and strengthen transport connectivity, with a 
focus on the Trans European Transport Network (TEN-T). Enhancing cross-border connections 
with  the  EU  will  be  of  particular  importance  to  facilitate  trade  flows,  reduce  transportation 
costs, thereby boosting economic growth and job opportunities. Additional productivity effects 
are expected from reforms of the railway market, although such effects will likely occur only 
in the longer term.  

The agri-food measures in the Plan prioritise demining of agricultural land to render it 
productive again. Estimates by the Ukraine’s Ministry of Defence and Ministry of Agriculture 
estimate that between 470,000 and 2.5 million hectares have been made unsuitable for use due 
to landmines and other explosive artifacts16, representing up to 7.6 % of total agricultural land. 
Because  of  the  presence  of  landmines,  these  areas  have  been  excluded  from  agricultural 
production,  resulting  in  operational  losses.  The  measures  aim  to  rebuild  the  strategic  and 
operational capacity for demining operations (in particular the governance and implementation 
of survey, clearance and land-release operations), with a view to restoring agricultural land for 
productive use. Given the large share of the agri-food sector in Ukraine’s economy, estimated 
at around 10 % of gross value added, this could significantly contribute to restore Ukraine’s 
production capacity and boost economic growth.  

The Facility is expected to contribute to ensuring Ukraine’s fiscal sustainability. Internal 
simulations  by  the  European  Commission  project  that  debt  would  be  lower  by  about  10 
percentage points of GDP, compared to an alternative scenario without the Facility, with public 
debt-to-GDP decreasing from 2026 onwards and going below 80 % of GDP by 2033. This will 
be  reflected  through  three  main  channels:  first,  by  supporting  the  reconstruction  and  the 
modernisation  of  the  country,  the  Facility  (including  its  grant  and  loan  components)  would 
boost  investments,  improve  total  productivity  and  ultimately  raise  real  GDP  growth,  as 
documented in the previous section. Second, the favourable financing conditions offered by the 

16 From the Ground Up: Demining Farmland and Improving Access to Fertilizer to Restore Ukraine’s Agricultural 
Production (csis.org) 

25 

 
 
 
Facility  would  lower  interest  payments  and  debt  servicing,  compared  with  an  alternative 
scenario  without  the  Facility.  Last,  these  two  channels  -  favourable  from  a  debt  dynamic 
perspective  -  would  be  slightly  mitigated  by  the  additional  spending  linked  to  the  loan 
component of the Facility. Overall, these channels combined would lead to a significant debt-
reducing effect over the medium term. 

The  economic  modelling  included  in  the  Ukraine  Plan  includes  the  indirect  leveraged 
impact of the Plan17. It presents two scenarios under which the Plan would mobilise additional 
financing of USD 100 billion, respectively USD 300 billion mostly through capital investments. 
These scenarios take as basis the Plan’s reforms, additional concessional financing from other 
donors, and an assumption that the majority of IDPs  would return to  Ukraine by 2026. Full 
economic recovery to 2022 GDP levels is expected in 2028 in the more positive scenario and 
in 2030 in less positive one. By 2033, GDP is expected to be at 138 %, respectively 125 % of 
2021 GDP levels. 

17 Due to the differences in the assumptions and methodology, the results of this assessment cannot be directly compared to 
the modelling used within the Ukraine Plan. 

26 

 
 
 
4. Assessment of the Ukraine Plan 

The Commission’s assessment of the Ukraine Plan is positive. The Commission has assessed 
the content of the Plan in line with Article 18 of Regulation 2024/792 and found that it addresses 
relevant  challenges  stemming  from  the  war  and  those  identified  in  the  context  of  Ukraine’s 
accession  path.  The  Plan  is  relevant  to  Ukraine’s  reform  priorities,  and  it  contributes  to 
addressing the objectives and challenges that are foundational to Ukraine’s reform efforts. The 
reforms proposed under the 15 chapters are comprehensive, covering a wide range of thematic 
areas.  The  Commission  has  also  assessed  the  Ukraine  Plan  against  the  general  and  specific 
objectives laid out in Article 3 of Regulation 2024/792, as well as against its contribution to a 
green and inclusive recovery, reconstruction, and modernisation of Ukraine. The Commission 
found that the  reforms of the Plan  appropriately  address  these objectives. Finally,  while the 
reforms presented in the Ukraine Plan broadly address the challenges presented in Section 2.3, 
additional  efforts  will  be  needed  to  ensure  a  complete  recovery,  reconstruction  and 
modernisation.  

27 

 
 
 
4.1  Reforms  and  investments  and  the  linked  qualitative  and  quantitative 
steps  

The Ukraine Plan proposes 69 reforms and 10 investments accounting for 146 qualitative 
and quantitative steps. Reforms are proposed in all 15 sectoral chapters, while investments 
are  proposed  in  six  chapters.  There  are  130  steps  linked  to  reforms  and  16  steps  linked  to 
investments. An additional 5 steps included in the Ukraine Plan, all linked to reforms, were 
included as policy conditions for the exceptional bridge financing. 

Reforms 

No. of 
reforms 

No. of 
steps 

Investments 
No. of 
investments 

No. of 
steps 

Total no. steps for 
reforms and 
investments 

Public Administration 
Reform 
Public Financial 
Management 
Judiciary 
Fight Against 
Corruption and Money 
Laundering 
Financial Markets 
Management of Public 
Assets 
Human Capital 
Business Environment 
Decentralisation and 
Regional Policy 
Energy Sector 
Transport 
Agri-Food Sector 
Management of 
Critical Raw Materials 
Digital Transformation 
Green Transition and 
Environmental 
Protection 
TOTAL 

3 

5 

4 

3 

4 

4 

9 
6 

3 

7 
4 
6 

3 

2 

6 

5 

9 

14 

10 

6 

9 

11 
9 

6 

17 
6 
8 

6 

4 

10 

5 
1 

1 

1 
1 
1 

8 
2 

2 

1 
1 
2 

5 

9 

14 

10 

6 

9 

19 
11 

8 

18 
7 
10 

6 

4 

10 

69 

130 

10 

16 

146 

28 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reforms under the Ukraine Plan 

Graph 3. Reforms under the Ukraine Plan  

29 

 
 
 
 
 
 
The Public Administration chapter aims at strengthening the capacity and efficiency of 
the Ukrainian administration and the gradual alignment of the rules, standards, policies, 
and  practices  with  the  EU  acquis.  The  chapter  includes  three  reforms  and  five  associated 
steps.  For  improving  the  civil  service  renumeration  system,  Ukraine  will  adopt  legislation 
introducing remuneration based on the functional classification of positions, providing a clear 
separation of wages into fixed or guaranteed and variable parts and ensuring the reduction of 
seniority supplement from 50 % to 30 %. This reform will contribute to the transparency and 
fairness of the remuneration system and to increasing the competitiveness of salaries of civil 
servants. This will help to attract new talent, mitigate the trend of high turnover and outflow of 
civil servants, and increase the capacity of the public administration system. To advance the 
merit-based recruitment and selection procedures for the civil service, the Ukrainian authorities 
will amend existing legislation to improve the procedure for entering, passing, and terminating 
civil service and gradually reinstating merit-based recruitment in the civil service for all civil 
service  categories.  These  steps  are  essential  for  building  trust  and  transparency  in  the  civil 
service,  for  attracting  talent  and  preventing  nepotism  and  corruption  in  the  civil  service. 
Digitalisation of civil service and human resources management focuses on the restoration and 
modernisation of the Unified Civil Service Vacancies Portal (career.gov.ua) and ensures that 
the human resources management information system (HRMIS) is operational and used in all 
operational  active public institutions at  national  and subnational  levels.  This  will ensure the 
provision of accurate data for better decision-making and policy-making process. Overall, the 
reforms  in  this  field  contribute  to  a  well-run  and  effective  public  administration,  which  is 
essential for the ease of doing business in the country, for attacking investment, for boosting 
economic growth and alignment with EU standards. 

The Public Finance Management chapter aims to enhance Ukraine's macro-economic and 
financial  resilience,  ensure  efficient  use  of  public  funds,  align  with  EU  standards,  and 
promote  sustainable  growth.  The  chapter  includes  five  reforms  and  nine  implementation 
steps. In view of improving revenue management, authorities will adopt a National Revenue 
Strategy, improve personal income taxation, bring VAT and excise taxation rules in line with 
the  EU  standards,  ensure  the  sustainability  of  the  social  benefits  system,  and  address  tax 
expenditures  and  exemptions.  The  Ukrainian  authorities  will  introduce  annual  spending 
reviews, aligned with best OECD practices, and amend the legislation defining the procedure 
for fiscal  risk management  at  local  level.  To build the foundation of debt sustainability,  the 
government will adopt an updated medium-term state debt strategy providing targets for debt 
sustainability  and  measures  to  develop  the  domestic  bond  market.  To  improve  public 
investment management, an action plan for the implementation of the Roadmap for reforming 
public investment management will also be adopted. Moreover, authorities will develop and 
implement the necessary digital management tools for the reconstruction of Ukraine, enabling 
better  monitoring  and  coordination  of  reconstruction  efforts.  Finally,  the  audit  and  financial 
control systems will be improved by amending the resolutions of the Cabinet of Ministers on 
state financial control, enabling the State Audit Service to ensure it has the means to protect the 
financial interest of the EU in line with international audit standards. . .  

The Judiciary chapter aims at increasing the capacity, accountability, integrity, efficiency 
and transparency of the judicial system which is crucial for ensuring the rule of law and 

30 

 
 
the  protection  of  human  rights  in  Ukraine  as  well  as  for  the  swift  recovery,  economic 
growth  and  attraction  of  investment.  The  chapter  includes  four  reforms  and  fourteen 
implementation steps. For enhancing the accountability, integrity and professionalism of the 
judiciary, Ukraine committed to resume the transparent and meritocratic selection of judges, 
qualification evaluation of sitting judges and a strong disciplinary responsibility system, along 
with  the  establishment  of  a  new  administrative  court  to  handle  cases  involving  central 
government  agencies  and  reinforcing  existing  judicial  integrity  tools.  Authorities  will  also 
introduce legislation on the improvement of insolvency regime in line with EU acquis and the 
legislation for simplified insolvency procedures for Micro, Small, and Medium Enterprises in 
line with EU acquis. Enforcement of court decisions will be enhanced through improved legal, 
institutional  and  IT  framework.  Authorities  will  put  in  place  new  IT  solutions  based  on  the 
roadmap  for  the  modernisation  of  the  Unified  Judicial  Information  and  Telecommunication 
System. For reforming the Prosecution Service, Ukraine will introduce legislation for enabling 
transparent  and  merit-based  selection  of  management-level  prosecutors,  for  improving  the 
disciplinary  system  for  prosecutors  and  increasing  the  capacity  of  the  Qualification  and 
Disciplinary Commission of Prosecutors and will put in place an e-Case Management System 
in the criminal justice. These reforms contribute to boosting judicial integrity, increasing the 
trust towards the judiciary, enhancing the efficiency of insolvency and enforcement procedures 
and  thus,  improving  Ukraine’s  international  reputation  as  a  reliable  jurisdiction  for  doing 
business.  

The chapter on the Fight against corruption and money laundering aims at  reinforcing 
the key anti-corruption agencies and updating the legal framework to increase the overall 
effectiveness of the anti-corruption framework to prevent and combat corruption and the 
implementation of the state’s anti-corruption policy. The chapter also focuses on addressing 
the  shortcomings  related  to  asset  recovery  and  management  and  on  alignment  of  Ukrainian 
legislation with EU acquis and FATF standards in the field of anti-money laundering enabling 
to better tackle economic crime and to improve the overall business climate in Ukraine. The 
chapter  includes  three  reforms  and  ten  implementation  steps.  To  develop  the  institutional 
capacity  of  the  anti-corruption  framework,  Ukraine  committed  to  increasing  the  human 
resources of the Specialised Anti-Corruption Prosecutor’s Office (SAPO) and of the High Anti-
Corruption Court (HACC) and to appointing a new head of the National Agency on Corruption 
Prevention (NACP). The authorities will amend the Criminal Code and the Criminal Procedure 
Code to improve provisions on plea bargains, cancel the pre-trial investigation period from the 
time of the registration of the criminal proceedings until the notification of the suspicion, and 
to allow the adjudication of certain cases by a single judge of the High Anti-Corruption Court. 
The  reform  also  addresses  the  shortcomings  related  to  asset  recovery  and  management  at 
institutional and procedural levels and improves the legislative framework reforming the Asset 
Recovery  and  Management  Agency  (ARMA).  To  enhance  the  anti-money-laundering 
measures, Ukraine will conduct the next risk assessment, amend the legislation for a unified 
registry of bank accounts in accordance with EU standards and will put in place the necessary 
software and hardware for the unified registry of bank accounts. The reforms in this chapter 
shall  increase  the  overall  effectiveness  of  the  anti-corruption  and  anti-money  laundering 
framework and the implementation of the state’s anti-corruption policy, reducing  corruption 

31 

 
 
 
risks  and  practices,  which  is  crucial  for  improving  the  business  climate  and  boosting  the 
economic growth.  

The Financial Markets chapter aims at realising the potential of the financial markets to 
support  economic  growth,  starting  with  maintaining  financial  stability.  The  chapter 
includes  four  reforms  and  six  implementation  steps.  The  banking  sector  reforms  start  by 
assessing the health of banking system via a resilience assessment of the largest banks in in 
terms of assets, with stress testing under adverse scenario. Proposed reforms aim to reduce state 
ownership  in  the  banking  sector,  by  developing  a  reform  strategy  for  SOBs,  setting  up  the 
gradual  reduction  of  state  ownership,  ensuring  financial  stability,  enhancing  the  governance 
and operational  efficiency of these banks, among other.  This  will increase the level-playing 
field in the banking sector and improve competition in the market. There will also be a new 
strategy  for  NPLs  focusing  on  strengthening  prudential  requirements  and  improving  the 
framework  for  NPL  recognition  and  resolution,  followed  by  any  required  legislative 
amendments to address the recommendations of this strategy. Reforms in the non-bank sector 
focus on improving the capacity of the National Securities and Stock Market Commission as a 
financial  supervisory  authority  and  improving  the  state  regulation  for  capital  markets  and 
organised commodity markets.  

The Management of public assets chapter aims to improve governance, management and 
legal set up of the state enterprises, while ensuring the level playing field with the private 
sector.  It  includes  four  reforms  and  nine  implementation  steps.  The  reform  agenda  will  be 
guided by the state-ownership policy, reflecting long-term and whole-of-government priorities, 
public  policy  objectives  that  state-owned  enterprises  (SOEs)  which  will  remain  in  the  state 
ownership are required to achieve as well as implementation arrangements and responsibilities. 
The reform of the SOEs will advance through legislative changes to bring corporate governance 
standards  closer  to  international  standards  as  well  as  transformation  of  top  strategic  SOEs. 
Ukraine’s largest SOEs will have corporate governance structures set up to ensure they operate 
at  arm’s  length  from  the  state  and  their  legal  form  will  be  modernised.  Consolidating  the 
ownership  of  SOEs  will  diminish  the  space  for  conflict  of  interest,  help  insulate  their 
management  from  unconstructive  political  pressures.  Better  governance  of  SOEs  supports 
better performance of those enterprises, while consolidated ownership can help increase focus 
on commercial success. Finally, given the size of the sector, it is important to record financial 
support to SOEs and ensure public resources are not used to distort competition with the private 
companies.  Therefore,  the  Ukrainian  authorities  will  pursue  further  reforms  to  ensure:  i) 
separation  of  accounts  between  commercial  and  non-commercial  activities  in  SOEs  ii) 
harmonisation  of  the  law  on  the  state  aid  control  with  the  EU  acquis  and  approval  of  rules 
related to Services of General Economic Interest to ensure budget support to SOEs due to Public 
Service  Obligations  (PSOs)  is  recognised  as  state  aid  and  as  such  recorded,  iii)  restored 
application of the state aid law.  

The  reforms  in  the  human  capital  chapter  aim  to  halt  recent  years’  erosion  of  human 
capital and create conditions that will help bring both human capital and the  economy 
back on a growth path. The chapter includes nine reforms and eleven implementation steps. 
The reforms will be guided by and linked with already on-going and further reforms, including 

32 

 
 
modernisation  of  labour  and  occupational  health  and  safety  legislation  in  consultation  with 
social  partners,  ensuring  proper  implementation  and  enforcement  of  labour  rights  through  a 
well-functioning labour inspections system, the healthcare reform, as the implementation of the 
Strategy  for  the  Development  of  Higher  Education  in  Ukraine  for  2022-2032,  and  the  New 
Ukrainian School Reform, as well as ongoing initiatives aimed at improving social security and 
protection  services.  Reforms  in  the  field  of  education,  including  vocational  education  and 
training,  will  help  address  the  increasing  demand  for  skilled  labour  for  Ukraine’s  re-
construction process; the need for better access to quality early childhood education and care 
services, that also will provide caregivers with the opportunity to join the labour force, and the 
need  for  ensuring  the  safety  of  children  while  attending  school  through  shelters  and  safe 
transport. The need to modernise the education system with new, inclusive teaching methods 
and digitalisation is relevant for all educational levels. In higher education, modernisation and 
strengthening of the higher education system and capacity is also important to prevent brain 
drain. To facilitate a better transition from military service to civilian life, Ukraine will establish 
rehabilitation-, medical care-, training- and financial support services aimed at helping veterans 
re-integrate with society and participate in the economy. To address long-standing challenges 
with  institutionalised  care,  Ukraine  will  reform  psychoneurological-  and  other  residential 
institutions, and de-institutionalise the alternative care of children, persons with disabilities and 
the elderly. In addressing the growing need for social housing, Ukraine will develop a housing 
policy  aimed  at  improving  access  to  housing  for  the  most  vulnerable  and  establish  a  social 
housing fund to ensure a sufficient supply of social housing projects. With a view to improve 
the functioning of the labour market, Ukraine will develop a Population Employment Strategy 
that  will  create  favourable  conditions  for  employment,  and  a  broader  Demographic 
Development  Strategy aimed at  overcoming negative demographic trends  such as migration 
and creating the conditions  for  IDPs  to  return home as well as addressing the challenges of 
premature  mortality.  Finally,  the  reforms  in  the  human  capital  area  includes  initiatives  to 
promote Ukrainian culture through the development and implementation of a Strategy for the 
Development of Ukrainian Culture, as well as investments in the creative and cultural sectors. 

The  reforms  in  the  business  environment  chapter  aim  at  facilitating  a  recovery  and 
reinvigoration  of  Ukraine’s  business  environment  as  well  as  facilitating  a  smooth 
integration  with  the  EU  internal  market.  The  chapter  includes  six  reforms  and  nine 
implementation  steps.  With  a  view  to  ease  the  burden  on  businesses  to  comply  with  rules, 
regulations,  and  administrative  procedures,  Ukraine  will  review  and  remove  overlapping 
regulations,  take  measures  to  deregulate  economic  activities  and  digitise  administrative 
procedures.  In  parallel  authorities  will  implement  reforms  to  improve  access  to  finance  and 
markets with particular focus on SMEs and the development of capacities to compete in the EU 
and global markets. Ukraine will continue the adoption of European standards to further deepen 
cooperation and Ukraine’s participation in the EU’s Single Market. Initial focus will be on the 
standards relevant for the restoration and development of Ukraine and sectors covered by the 
ACAA,  such  as  machinery,  electromagnetic  compatibility  of  equipment,  and  low-voltage 
electrical  equipment.  Authorities  will  also  address  issues  related  to  late  payments  through 
alignment  of  legislation  with  the  EU  directive  on  late  payment  in  commercial  transactions. 
Ukraine  will  also  relaunch  the  Economic  Security  Bureau  and  safeguard  its  effectiveness 

33 

 
 
through  the  provision  of  a  clear  mandate,  scope  for  investigative  powers,  and  adequate  and 
competent staffing. To achieve better alignment with the EU acquis, Ukraine will also pursue 
reforms of national procurement procedures. The process will include addressing concessions 
on  public-private  partnerships  and  is  expected  to  result  in  increased  participation  in  public 
procurement processes.  

The reforms in the field of decentralisation and regional policy aim to establish the legal, 
regulatory, and financial basis required for regional and local government entities to take 
on a more active role in the recovery and reconstruction process. The chapter includes three 
reforms and six implementation steps. To advance the decentralisation process, Ukraine will 
reform the territorial organisation of the executive authorities in the country in accordance with 
international best principles. The authorities will also publish a study on the necessary measures 
to grant legal personality to municipalities and will put in place legislation to ensure a better 
distribution of powers between local governments and executive authorities. Ukraine will also 
improve  the  public  consultations  on  public  policy.  For  enhancing  the  development  and 
implementation of regional policy the authorities will amend the State Strategy for Regional 
Development for 2021-2027 and the legislation for development of urban planning at the local 
level.  

The  Energy  chapter  is  focused  on  advancing  structural  reforms  to  advance  legal 
approximation  and  support  green  transition,  electricity  integration  with  the  EU, 
independence  of  the  regulator  and  energy  efficiency  in  the  critical  sectors,  including 
district  heating.  It  includes  seven  reforms  and  seventeen  implementation  steps.  To  ensure 
appropriate  strategic  planning  and  a  holistic  approach  to  the  formation  of  energy  and 
environmental policies as well as to establish national climate neutrality objectives, Ukraine 
will adopt an Integrated National Energy and Climate Plan. Increasing the share of renewable 
energy  will  be  facilitated  by  the  introduction  of  a  market-based  legislative  and  regulatory 
framework,  improvements  to  the  renewable  energy  surcharge  system  and  the  permitting 
procedures needed for investments. In terms of the energy market reform, Ukraine will speed 
up electricity integration via legal approximation, implementation of legislation on wholesale 
energy  market  integrity  and  transparency  (REMIT)  and  improve  the  independence  of  the 
national energy regulator. Addressing financial imbalances and ensuring sustainability of the 
system will require a gradual liberalisation of gas and electricity prices that will be undertaken 
once  the  conditions  allow,  all  while  ensuring  adequate  protection  of  vulnerable  households. 
This will be carefully planned through a dedicate Roadmap precising the steps to take and the 
associated timeline. Ukraine will also improve energy efficiency in key areas such as district 
heating,  buildings,  and  public  procurement,  with  the  goal  of  improving  affordability  and 
accessibility of energy and reducing financial pressures.  

The reforms in the transport chapter aim to improve connectivity and enhance efficiency 
in  the  transport  sector.  The  chapter  includes  four  reforms  and  six  implementation  steps. 
Ukraine will adopt a revised National Transport Strategy as well as a Strategy for Developing 
and Expanding the Border Infrastructure with EU Member States and the Republic of Moldova. 
The  former  will  provide  a  framework  for  an  efficient,  safe,  sustainable  transport  system  to 
enable a swift reconstruction and post-war economic recovery and development, with particular 

34 

 
 
 
emphasis on stronger integration into the Single Market The latter will ensure the efficiency of 
border  infrastructure  and  ensure  seamless  and  well-coordinated  traffic  of  passengers  and 
freight.  As  effective  capacity  of  border  infrastructure  relies  on  resources  and  operational 
procedures on both sides of the border, planning capacity increases must involve cooperation 
with  neighbouring  EU  Member  States  and  Moldova.  Ukraine  will  amend  the  legislation  to 
ensure  liberalisation  of  the  domestic  railway  market.  It  will  also  adopt  a  new  legislation 
compliant with the EU Port Services Regulation. Both reforms shall create a fair, open, and 
transparent non-discriminatory framework which shall enable enhanced competition. Also, in 
the field of merchant shipping and to increase the efficiency of service provision in seaports, 
Ukraine will adopt a new legislative framework to foster further development of the state safety 
navigation  system,  improve  the  qualification  level  of  Ukrainian  seafarers,  ensure  the  proper 
level of security for vessels and ports and safety of life at sea, thus aligning with multilateral 
international treaties in this field.  

The Agri-food chapter is focused on adjusting the legislative and governance set up of the 
sector  to  that  of  the  EU  pre-accession  countries  and  addressing  challenges  of  special 
Ukrainian  concern  such  as  land  reform,  irrigation,  and  war  recovery.  It  includes  six 
reforms and eight implementation steps. Ukraine will adopt a Strategy for agriculture and rural 
development until 2030 and outline the national priorities in the sector, focusing on harmonising 
the legislation and the governance. As a follow up, it will operationalise a Farm Sustainability 
Data Network, system which allows tracking in the agricultural sector and helps the authorities 
in making informed decisions regarding the allocation of state support to agricultural producers. 
Important step will be taken to ensure a functional land market, which is a pre-condition for a 
sustainable  development  of  farming,  investments,  and  access  to  credit.  New  regulations  to 
improve the set up for managing public support and investment programmes and the official 
public electronic farm register will increase governance standards, transparency, efficiency of 
channelling state support as well as support formalisation of producers. A long-term plan for 
the development of the irrigation system will provide a long-term vision and planning for the 
improved and sustainable use of water resources for irrigation purposes, bearing in mind the 
economic benefits and environmental protection. Finally, adoption of a mine action strategy 
and basic principles of prioritisation of territories to be demined will be the first steps to ensure 
demining of agricultural land and other areas.  

The  Critical  raw  materials  chapter  aims  to  modernize  Ukraine's  extraction  and 
processing  of  critical  raw  materials,  attract  investments,  ensure  sustainability,  and 
integrate with EU and global markets, while aligning with environmental and governance 
standards.  The  chapter  includes  three  reforms  and  six  implementation  steps.  Ukraine  will 
strengthen  strategic  planning  and  improve  administrative  procedures  to  ensure  an  optimum 
framework  for  strategic  investors  in  critical  raw  materials.  It  will  amend  the  National 
Programme for the Development of the Mineral Resources Base of Ukraine to 2030 to provide 
the appropriate legal and financial instruments for investment promotion. A verification and re-
assessment of critical raw materials reserves using international classification system will be 
conducted and results will be made available to investors. A pipeline of investments projects 
for extraction of critical raw materials will be complied and published. International tenders for 
production sharing agreements (PSAs) will be launched and published, using model agreements 

35 

 
 
developed by the Ukrainian authorities. Open access to the terms of the PSAs shall be given, 
which shall ensure transparency of tendering. The launch of an Electronic Cabinet of a Subsoil 
User will allow for the gradual digitalisation of administrative services for issuing subsoil user 
permits. Such Cabinet shall be connected to investors data room providing free and unhindered 
access to digitalised/scanned geological reports, and relevant data. Ukraine will also publish a 
study assessing the current legislation on ESG reporting for the mining and extractive sector, 
proposing recommendations on what legislative gaps need to be covered.  

transformation  chapter  aims 

The  Digital 
to  modernise  Ukraine’s  electronic 
communications infrastructure, further digitalise public services and the economy, and 
strengthen cybersecurity and data protection.  The chapter includes two reforms and four 
implementation  steps.  Reforms  include  measures  aimed  at  contributing  to  regulatory 
approximation  of  Ukrainian  legislation  to  EU  law,  with  the  objective  of  contributing  to 
obtaining internal market treatment. Those include contributions to harmonisation of Ukrainian 
legislation in the field of electronic communication and radio frequency, which will support 
future  development  of  5G  in  Ukraine,  as  well  as  alignment  to  EU  cybersecurity  standards, 
paving the way towards the implementation of the EU’s 5G Security Toolbox, and facilitate 
integration into the EU Digital Single Market. Cyber security is a prerequisite for all the digital 
transformation  efforts, particularly  in  the  context of the ongoing  Russian hybrid aggression. 
Ukraine  will  also  increase  the  number  of  available  electronic  public  services  and  prioritise 
mutual  recognition  of  electronic  identification,  authentication,  and  trust  services,  by 
modernising its integrated electronic identification system ID.gov.ua and aligning it with the 
new  Digital  Identity  and  Trust  Services  framework  (amended  eIDAS  Regulation).  Both 
measures shall further increase Ukraine’s digital transformation.  

The  Green  transition  chapter  aims  to  support  transition  to  climate  neutrality, 
environmental  recovery  and  circular  economy.  It  includes  six  reforms  and  ten 
implementation steps. To enable the transition to climate neutrality, Ukraine will adopt several 
key  measures  and  policy  documents,  including  a  Framework  Climate  Law,  the  second 
Nationally  Determined  Contribution  under  the Paris  Agreement,  and  an  Action  Plan  for  the 
Establishment of a Greenhouse Gas Emissions Trading System. In parallel, Ukraine will also 
resume the compulsory nature of the monitoring, reporting and verification (MRV) system, part 
of the progress towards an emissions trading system, which will enhance competitiveness and 
lower the carbon-intensity of the economy in a cost-efficient way. The National Energy and 
Climate  Plan  of  Ukraine  is  also  relevant  for  the  green  transition  chapter  and  from  a 
mainstreaming point of view. To prevent environmental pollution and stimulate environmental 
recovery,  Ukraine  will  enact  legislation  on  prevention,  reduction,  and  control  of  industrial 
pollution and adopt measures to reduce illegal logging and other issues that lead to deforestation 
and forest degradation. To help rebuilding and reconstruction, Ukraine will adopt a Strategy for 
implementing  the  principles  of  the  Circular  Economy  and  related  Action  Plan  as  well  as  a 
National  Waste  Management  Plan.  At  the  same  time  and  following  a  public  consultation, 
Ukraine will develop a note defining the scope of derogations from rules on the application of 
the Environmental Impact Assessments and Strategic Environmental Assessments.  

36 

 
 
The reform agenda of the Ukraine Plan is significantly wider than the steps linked to the 
financing under the Facility. While the reforms linked to the EU financing under the Facility 
are  comprehensive and  directly impacting Ukraine’s recovery and path  towards the EU, the 
Ukraine  Plan  refers  to  several  other  reforms  that  are  needed  in  the  country  to  ensure  a 
harmonisation with EU standards and transition towards the EU’s economic standards of living. 
While these reforms are not attached to the EU funding, the Ukrainian authorities commit to at 
least aim to roll them out, including in the context of financing instruments with other donors.  

Such  wider  reforms  are  proposed  under  most  chapters  of  the  Plan  and  reinforce 
Ukraine’s s ambitious reform agenda. For example, in Public Finance Management, Ukraine 
aims to further align VAT and excise tax legislation with the EU acquis, and the public sector 
accounting  with  international  standards,  and  introduce  an  integrated  IT  platform  for  public 
sector accounting. In financial markets, authorities will adopt further measures towards aligning 
with the EU banking regulation as they wish to prepare early for integration with EU financial 
markets. In the management of public assets, in will record state aid above certain thresholds 
in  a  state  aid  registry  until  the  state  aid  control  is  relaunched,  relaunch  the  large-scale 
privatisations once the conditions allow, continue liquidating non-operational SOEs as well as 
start  looking  into  resolving  long-standing  issues  such  as  debt  moratoria  for  SOEs  and 
municipally owned enterprises. In digital transformation, authorities aim for  steps towards  a 
full  alignment  with  EU  roaming  legislation  as  well  as  taking  measures  to  improve  the 
independence of the regulatory authorities. In green transition, Ukraine will adopt legislation to 
continuing  aligning  with  the  acquis  in  water  and  waste.  In  public  administration,  Ukraine 
commits  to  start  applying evidence-based policy  making, improve the standards and quality 
control  of legislation and ensure its regulatory impact  assessment.  To  enhance Rule of Law 
reforms,  Ukraine  should  fill  the  open  vacancies  in  the  Constitutional  Court  of  Ukraine  take 
measures  to  address  the  corruption  risks  in  the  Supreme  Court,  reform  the  legal  education 
system, and propose measure to reform the Bar of Ukraine. In the energy sector, Ukraine will 
implement further efforts to develop renewable energy sources, including introducing a system 
for issuing guarantees of origin for electricity produced from renewable energy sources, the net 
billing system and creating a regulatory framework for biogases. In human capital, Ukraine will 
complement on-going reforms in the labour market, health and education sectors, with actions 
empowering authorities to address new challenges, such as those related to IDPs, people with 
physical  and  mental  traumas,  adults  in  need  of  marketable  skills,  and  children  in  need  of 
remedial education. In addition, reforms such as the de-institutionalisation of care, increasing 
the  quality  of  education,  and  strengthening  of  professional  education  respond  to  direct 
recommendations in the 2023 Enlargement Report. The business environment reforms reinforce 
the  strategic  priorities  outlined  in  the  National  Recovery  Plan,  including  the  call  for  urgent 
measures and investments to support economic recovery, modernisation, and growth.  

37 

 
 
 
Investments under the Ukraine Plan 

Graph 4. Investments under the Ukraine Plan  

38 

 
 
 
 
Under  Pillar  1  of  the  Facility,  the  Ukraine  Plan  includes  ten  investments  and  16 
implementation steps amounting to at least EUR 5.2 billion or 16 % of the financing made 
available. The investments are designed with a view to address identified challenges that have 
emerged  as  a  direct  consequence  of  the  war,  while  contributing  to  reconstruction  and 
modernisation  needs,  including  those  of  sub-national  authorities,  in  particular  local  self-
government.  

Investments  cover  Ukraine’s  needs  in  human  capital,  business  environment,  energy, 
transport, agri-food, and decentralisation and regional policy. Investments in the human 
capital  target  improving  access  to  safe  and  quality  education,  including  preschool, 
compensation  to  people  whose  house  has  been  damaged,  compensation  to  veterans  with 
disabilities for house rent, strengthening healthcare services and infrastructure, construction/re-
construction  of  damaged  social  infrastructure.  The  investments  under  business  environment 
will provide support to micro-enterprises and SMEs, in particular processing entities, with a 
view to strengthen their resilience and facilitate an increase in business activity and creation of 
associated employment opportunities. Transport investments will target key priorities identified 
in  the  National  Transport  Strategy  of  Ukraine  until  2030  in  railways,  maritime  and  inland 
shipping, roads, aviation border crossing points and other strategic areas. Investments in the 
energy  sector  will  improve  energy  efficiency  in  district  heating  and  the  building  sector, 
including  via  topping  up  the  Energy  Efficiency  fund,  physical  protection  of  the  energy 
infrastructure and supporting the development of renewable energy sources, aligned with the 
new market-based framework for renewable energy. Investment in the agri-food sector support 
demining through established national schemes.  

Investments also  cater  for the needs of the  sub-national  authorities, in particular local 
self-government. The amount equivalent to 20 % of the non-repayable financing support under 
Pillar I of the Ukraine Facility (EUR 1.05 billion) is allocated to the recovery, reconstruction 
and  modernisation  needs  of  Ukraine’s  sub-national  authorities,  in  particular  local  self-
government,  by  the  end  of  2027.  Ukraine  will  establish  a  transparent  mechanism  to  ensure 
financing of the recovery, reconstruction and modernization needs of subnational authorities, 
in  accordance  with  their  local  development  strategies.  The  sectoral  pre-allocation  of  funds 
through  investment  indicators  reflects  an  estimate  of  the  investments  needs  at  local  level, 
without prejudice to the actual needs and priorities of sub-national authorities, as defined in 
their local development strategies. 

Furthermore, investments contribute to environmental and climate objectives. At least 12 
% of all investments financed under the Pillar I will contribute to the climate change mitigation 
and  adaptation,  environmental  protection,  including  biodiversity  conservation,  and  green 
transition,  or  to  addressing  the  challenges  resulting  therefrom.  This  will  contribute  to  the 
Regulation’s  requirement  to  allocate  at  least  20  %  of  the  overall  amount  corresponding  to 
support under the Ukraine Investment Framework and to investments under the Ukraine Plan 
to  measures  that  contribute  to  climate  change  mitigation  and  adaptation,  environmental 
protection, including biodiversity conservation, and to the green transition, or to addressing the 
challenges resulting therefrom. 

39 

 
 
 
These investments complement the reforms of the Plan and should be implemented based 
on well-established principles. Appropriate project preparation and implementation will be of 
paramount  importance.  It  will  be  critical  for  the  tendering  to  be  carried  out  based  on  open 
transparent competitive procurement procedures and that the selection and design of the assets 
is aligned with Ukraine’s decarbonisation targets and green transition, to the degree possible in 
a war context. To the extent possible, alignment with sectorial EU acquis and other relevant 
standards, such as TEN-T in the transport sector, will be ensured. Furthermore, in order for 
Ukrainian  SMEs  to  be  competitive  on  EU  Single  Market,  the  investments  proposed  in  the 
business environment sections will need to be accompanied by actions that will improve SMEs’ 
access  to  effective  business  development  services,  including  those  related  to  marketing  and 
networking in an EU single market context.  

Beyond the investments covered under Pillar 1 of the Facility, the Plan identifies other 
investments areas  for  Ukraine’s recovery, reconstruction, and modernisation.  The Plan 
highlights investment priorities over the 2024-2027 period in various sectors: financial markets, 
human capital, business environment, energy, transport, agri-food, critical raw materials, digital 
transformation, green transition, decentralisation. In most sectors the range of investments areas 
identified appears to be broad and comprehensive. Other sectors are more focused, proposing 
just a limited number of priorities. The potential role of the private sector in certain specific 
market  segments  is  highlighted,  wherever  possible.  These  investment  priorities  should 
contribute  to  guiding  investments  under  Pillar  II  of  the  Facility,  the  Ukraine  Investment 
Framework. The investment priorities as identified by the government in the Ukraine Plan are 
meant  to  be  used  by  all  other  donors  and  international  partners  as  guidance  in  their  own 
operations as only a limited number of these priorities will be funded by the Ukraine Facility.  

40 

 
 
 
 
4.2 Contribution to the general and specific objectives of the Ukraine Facility  

Table 4.2.a: Summary of contribution to the general objectives of the Ukraine Facility 

Plan chapter 

General Objective 1  General Objective 2  General Objective 3 
adopting and implementing 
foster social and territorial 
the political, institutional, 
cohesion, and democratic, 
legal, administrative, social 
economic, environmental 
and economic reforms 
resilience and progressive 
required to comply with 
integration into the Union 
Union values and to 
and global economy and 
progressively align to 
markets and upward 
Union rules, standards, 
economic, social and 
policies and practices 
environmental 
(‘acquis’) with a view to 
convergence towards EU 
future Union membership, 
standards. 
thereby contributing to 
mutual stability, security, 
peace, prosperity and 
sustainability. 

address the social, economic 
and environmental 
consequences of Russia’s war 
of aggression, thereby 
contributing to the peaceful 
recovery, reconstruction, 
restoration and modernisation 
of the country and to the post-
war recovery of Ukrainian 
society, including by creating 
the social and economic 
conditions for Ukrainian 
Internally Displaced Persons 
and persons under temporary 
protection to return. 

Public Administration 
Reform 

Public Financial 
Management 

Judiciary 

Fight against Corruption 
and Money Laundering 

Financial Markets 

Management of Public 
Assets 

Human Capital 

Business Environment 

Decentralisation and 
Regional Policy 

Energy Sector 

Transport 

Agri-Food Sector 

Management of Critical 
Raw Materials 

• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 

• 

• 

• 
• 

○ 

• 

○ 

41 

• 
• 
• 
• 
• 

○ 
○ 
• 
• 
• 
• 
• 

 
 
 
 
 
 
 
 
 
 
 
 
 
Digital Transformation 

• 

• 

Green Transition and 
Environmental 
Protection 
● significantly addresses the general objective; ○ partially addresses the general objective 

• 

○ 

The reforms and investments in the Ukraine Plan fully contribute to the general objectives 
of the Ukraine  Facility. Each chapter of the Plan contributes to at  least  one of the general 
objectives  either  significantly  or  partially.  Five  chapters  contribute  significantly,  and  two 
chapters contribute partially to the first general objective aimed at addressing the consequences 
of the war. All chapters contribute significantly to the second general objective, fostering socio-
economic and environmental resilience and progressive integration into the Union and global 
economy.  Eleven  chapters  contribute  significantly  and  three  contribute  partially  to  the  third 
general objective to progressively align to Union rules, standards, policies, and practices. 

The  Plan  makes  a  significant  contribution  to  addressing  the  social,  economic,  and 
environmental  consequences  of  Russia’s  war  of  aggression.  The  Public  financial 
management chapter sets out measures to improve revenues and debt management and increase 
administrative capacity to manage public finances to help the public sector respond efficiently 
to the consequences of the war. The Financial markets chapter addresses the high levels of non-
performing loans and includes measures to assess, monitor and improve the overall health of 
the  banks,  sector  which  is  critical  in  ensuring  capital  flows  to  fund  reconstruction  and 
modernisation  efforts.  The  Business  environment  chapter  aims  to  improve  the  regulatory 
environment,  provide  financial  support  to  micro,  small  and  medium-sized  businesses,  and 
introduces  industrial  parks  as  a  tool  for  attracting  investments  in  the  de-occupied  areas. 
Investments  foreseen  under  the  transport  chapter  target  the  reconstruction  and  upgrade  of 
damaged  and  destroyed  transport  infrastructure  facilities,  while  the  reform  measures  will 
contribute to the creation of effective conditions to ease the return of IDPs. The Human capital 
chapter  significantly  contributes  to  addressing  the  consequences  of  war  by  prioritising 
vocational education and training to address the demand for skilled labour for reconstruction 
activities; aiming at improving the functioning of the labour market through the adoption of an 
employment strategy; improving access to housing for the most vulnerable, so as to provide 
them with a foundation for re-establishing their lives and participate actively in the economy; 
improving  access  to  early  childhood  education  and  care,  thereby  providing  caregivers  the 
opportunity to join the labour force. 

The  Plan  makes  a  significant  contribution  to  fostering  social  and  territorial  cohesion, 
democratic,  economic,  environmental  resilience,  and  progressive  integration  into  the 
Union and global economy. The proposed reforms and investments go beyond the immediate 
needs  caused  by  the  war  and  aim  at  fostering  resilience  and  sustainable  long-term  growth. 
Reforms under the Public administration reform chapter aim to modernise the civil service in 
key  aspects,  thereby  enhancing  resilience.  The  reforms  in  the  Justice  and  Anti-money 
laundering and anti-corruption chapters aim to foster both democratic and economic resilience 
by improving transparency, judicial independence, and strengthening enforcement capabilities, 

42 

 
 
 
 
  
as well as further developing the anti-corruption institutions and legal framework for both the 
prevention and combatting of corruption. The Public asset management chapter aims to update 
the  government’s  strategy  for  state  assets,  manage  better  the  assets  that  remain  in  the  state 
ownership and transform top SOEs, supporting a stronger economic resilience. Strengthening 
strategic planning in critical raw materials and the creation of an appropriate framework for 
strategic investors, alongside other reforms foreseen under the Critical raw materials chapter, 
will support the competitiveness of Ukraine in global markets along the supply chains based on 
its rich resources. Given the economy’s heavy reliance on this sector, the Agri-food chapter aim 
at  increasing  the  resilience  of  the  sector  and  convergence  towards  EU  standards  to  enable 
further  integration  into  the  Single  Market.  The  Energy  chapter  improves  the  framework  for 
increasing renewable energy, strengthening energy efficiency in the key sectors supported by a 
strategic  and  holistic  planning,  and  conducting  key  energy  market  reforms  such  as 
strengthening  the  regulator  and  taking  steps  to  address  the  need  to  liberalise  energy  prices. 
Finally,  long-term  resilience  requires  forward-looking  policy,  which  is  why  the  reforms  to 
foster digitalisation (e.g. strengthening cybersecurity capabilities) and the green transition (e.g. 
establishing an advanced circular economy action plan) have a significant contribution.  

The Plan makes a significant contribution to guiding the country towards EU membership 
through the adoption of EU values and fostering alignment with the acquis. A majority of 
reforms in the public sector reform chapters significantly contribute to this aim, including the 
Public  administration  reform  chapter  (e.g.  ensuring  merit-based  recruitment  and  selection 
procedure for the civil service), the Public finance management chapter (e.g. digitalisation of 
tax  and  customs  administrations),  the  Justice  chapter  (e.g.  reinforcing  judicial  integrity  in 
alignment with EU principles), the Fighting against corruption and money laundering chapter 
(e.g. alignment of anti-money laundering and other related anti-fraud legislation with the EU 
acquis),  and  the  Decentralisation  and  regional  policy  chapter  (e.g.  fostering  involvement  of 
citizens at local decision-making). On sectoral policy, the reforms and investments proposed in 
the financial sector (e.g. aligning legislation on capital markets), in agri-food (e.g. introducing 
an  improved  EU-like  institutional  and  administrative  set  up  for  managing  investment 
programmes,  legislation  on  the  state  agrarian  register  and  the  adoption  of  the  strategy  for 
agriculture and rural development until 2030), energy (e.g. electricity integration package and 
making energy efficiency criteria mandatory in public procurement) and transport (e.g. adoption 
of new legislation on railway transport as well as port services), in business environment (e.g. 
adoption of harmonised standards of non-food products), and digitalisation (e.g. convergence 
in the area of electronic identification schemes) aim to bring Ukrainian regulatory framework 
closer to the EU acquis in each specific sector.  

43 

 
 
  
 
Table 4.2.b: Contribution to the specific objectives of the Ukraine Facility by chapter 

Ukraine Plan 
chapter 

Specific 
Objective 
1 

Specific 
Objective 
2 

Specific 
Objective 
3 

Specific 
Objective 
4 

Specific 
Objective 
5 

Specific 
Objective 
6 

Specific 
Objective 
7 

Specific 
Objective  
8 

Public 
Administration 
Reform 

Public Financial 
Management 

Judiciary 

Fight Against 
Corruption and 
Anti-Money 
Laundering 

Financial 
Markets 

Management of 
Public Assets 

Human Capital 

Business 
Environment 

Decentralisation 
and Regional 
Policy 

Energy Sector 

Transport 

Agri-Food 
Sector 

Management of 
Critical Raw 
Materials 

Digital 
Transformation 

• 

• 
○ 
○ 
○ 

○ 

○ 

○ 

○ 
○ 

• 

• 

• 
• 

• 

• 
• 
• 
• 
○ 

• 
• 
• 

• 

• 

• 

• 
• 

• 

• 
○ 
○ 

• 
○ 

○ 

• 

• 

○ 
○ 

• 

○ 

○ 

• 

• 
○ 

○ 

○ 
• 
○ 

○ 

○ 
○ 

○ 
○ 

• 

○ 

• 

○ 

Green Transition 
and 
Environmental 
Protection 
● significantly addresses the specific objective; ○ partially addresses the specific objective

• 

• 

○ 

44 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The  Ukraine  Plan  contributes  significantly  to  all  the  specific  objectives  of  the  Ukraine 
Facility. The first specific objective (SO1) is aimed at easing Ukraine’s internal and external 
financing constraints and maintaining macro-financial stability. The second specific objective 
(SO2)  aims  at  rebuilding  and  modernising  physical  and  social  infrastructure.  SO3  aims  at 
strengthening  Ukraine’s  security  against  hybrid  threats  and  disinformation  and  foreign 
manipulation. SO4 targets boosting Ukraine’s economic and social development and foster the 
transition  to  a  sustainable,  climate  neutral,  and  inclusive  economy  and  alignment  with  EU 
standards,  thereby  supporting  further  integration  of  Ukraine  into  the  Union’s  single  market. 
SO5  aims  at  strengthening  the  rule  of  law,  democracy,  the  respect  of  human  rights  and 
fundamental freedoms and equality, as well as supporting transparency, structural reforms, and 
good governance at all levels. SO6 aims to foster Ukraine’s green transition and environmental 
protection, including demining efforts. SO7 focuses on supporting political and administrative 
decentralisation  and  local  development.  SO8  supports  cross-border  cooperation  with  the 
Member States bordering with Ukraine, provided that Ukraine remains the sole beneficiary of 
the funding.  

Two  chapters  contribute  significantly  to  SO1,  while  five  other  chapters  contribute 
partially. The reforms proposed in the Public financial management chapter aim to strengthen 
the sustainability of public finances and state debt, increase efficiency of public expenditures, 
and  therefore  help  authorities  maintain  Ukraine’s  macro-financial  stability  and  ease  its 
financing constraints. Reforms also include enhancing public revenue management, ensuring 
continuity in conducting the spending reviews and the improved medium-term debt strategy. 
The  financial  markets  chapter  aims  at  strengthening  the  health  of  the  banking  sector  and 
enhancing financial stability, thereby contributing to macro-financial stability.  

Two  chapters  contribute  significantly  to  SO2,  while  four  other  chapters  contribute 
partially.  The  Human  capital  chapter  targets  the  rebuilding  of  social  infrastructure,  such  a 
housing, healthcare facilities, schools, and higher education institutions. The Transport chapter 
focusses on rebuilding transport infrastructure aiming to modernise the transport network and 
to  further  integrate  into the  single  market.  The  energy  chapter  aims  to  build  or  rebuild  new 
energy infrastructure and pursue further electricity integration with the EU, while the agri-food 
chapter includes significant de-mining efforts. The business environment chapter aims to attract 
private investment to support rebuilding efforts, while the decentralisation and regional policy 
chapter  focuses  on  giving  local  authorities  a  bigger  role  in  fostering  regional  and  social 
cohesion. 

One chapter contributes significantly to SO3, while three others contribute partially. The 
digital  transformation  chapter  includes  new  legislation  on  strengthening  the  cybersecurity 
capabilities  of  the  state  information  resources  and  critical  information  infrastructure.  Other 
chapters include the development and upgrade of certain IT platforms or tools to help Ukraine 
fight against hybrid threats. 

Thirteen chapters contribute significantly to SO4, and two chapters contribute partially. 
This  is  not  surprising  given  the  link  between  economic  growth,  strengthening  of  strategic 
economic sectors and further integration into the EU. A strengthened judiciary and improved 
enforcement capacities against money laundering and corruption are crucial contributors to a 

45 

 
 
stable investment environment and sustainable and inclusive economy more generally. This is 
also the case for the financial market reforms that aim to strengthen this key sector and improve 
access to finance in a bid to foster economic growth. A strong business environment is also a 
key  determinant  of  a  sustainable  economy  and  a  stable  investment  environment.  Sectoral 
reforms  building  up  transport,  energy,  and  critical  raw  materials  infrastructures,  and 
strengthening the agricultural sector, are also crucial contributors to this specific objective. All 
reforms  in  the  green  transition  chapter  contribute  by  nature  to  fostering  the  transition  to  a 
sustainable,  climate  neutral  economy.  The  digital  transformation  chapter  with  measures  to 
modernise the country, and the human capital chapter aiming to, among others, help build back 
the country’s social fabric, are also key for long-term sustainability and alignment with key EU 
priorities.  

Eight  chapters  contribute  significantly  to  SO5,  and  four  chapters  contribute  partially. 
Most  public  sector  reform  chapters  significantly  contribute  to  this  specific  objective.  The 
reforms  proposed  in  the  public  administration  reform  chapter  reinforce  the  effectiveness  of 
public  administration  and  support  transparency  and  good  governance  at  all  levels.  The 
digitalisation measures for tax and customs administrations and public investment management 
under the Public financial management chapter strengthen the quality of the public sector and 
help to curb corruption and tax evasion. Similarly, strengthening enforcement capacities under 
the Judicial and anti-corruption chapters and anti-money laundering and are very important for 
enforcing  democracy  and  international  justice.  Reforms  envisioned  under  the  digital 
transformation chapter further strengthen the effectiveness of public administration, while an 
increased role of regional authorities under the decentralisation and regionalisation chapter, will 
further  strengthen  democratic  and  inclusive  decision-making.  The  reforms  under  the 
management  of  public  assets  chapter  will  lead  to  improved  governance,  a  more  efficient 
management of SOEs, and develop the state aid framework. The critical raw materials chapter 
aims to significantly increase transparency in the sector and improve governance standards.  

Three chapters  contribute significantly to SO6,  and four chapters contribute partially. 
Two chapters of the Plan focus precisely on green transition,  environmental protection,  and 
digital transformation. The energy chapter aims to facilitate decarbonisation in line with the 
overarching climate neutrality objectives, to develop the framework for the renewable energy 
investments  and to  improve energy efficiency in various sectors. The agri-food sector has a 
significant contribution to demining, while the critical raw materials chapter aims to develop 
the  legislation  on  Environmental,  Social,  and  Governance  (ESG)  reporting  in  the  mining 
industry.  

One chapter contributes significantly to SO7, and four chapters contribute partially. The 
decentralisation  and  regional  policy  chapter  aims  to  advance  the  decentralisation  reform  by 
increasing the involvement of citizens to decision-making processes at the local level and by 
enhancing the development and implementation of regional policy. Other public sector reforms 
such as those under public administration and public financial management partly contribute as 
well.  

46 

 
 
 
One chapter contributes significantly to SO8, and two chapters contribute partially. The 
reform of the Economic Security Bureau under the business environment chapter will support 
the  fight  against  international  crime,  while  a  number  of  other  reforms  will  strengthen  the 
capacity  of  businesses  for  cross-border  trade.  The  transport  chapter  includes  a  reform  on 
expanding the border infrastructure with Ukraine’s neighbouring EU Member States.

47 

 
 
4.3  Contribution  to  the  green  and  inclusive  recovery,  reconstruction  and 
modernisation needs 

The  Ukraine  Plan  provides  a  guidance  framework  for  the  country  to  reconstruct, 
modernise, and recover. In doing so, it also revitalises reforms commenced by Ukraine before 
the war, accelerates further alignment with the EU acquis, and determines crucial steps towards 
the country’s sustainable growth path, bringing it close to EU accession.  

The  Plan  highlights  the  reconstruction  of  destroyed  or  partially  damaged  assets  as  an 
essential first step. It includes investments on the reconstruction and upgrading of damaged 
and destroyed transport and social infrastructure. It also proposes reforms and investments on 
the demining of land and water across the country, a crucial step in the restoration of usable 
land  and  water  areas.  Another  major  priority  is  the  reconstruction  of  human  capital 
infrastructure, in particular housing, healthcare facilities, schools, higher education institutions, 
culture, and research infrastructure.  

The  Plan  acknowledges  that  reconstruction  needs  to  be  done  strategically  to  ensure 
Ukraine’s long-term resilience. To this end, the proposed transport investments are guided by 
two  strategic  documents:  revision  of  the  National  Transport  Strategy  of  Ukraine  and  the 
Strategy for developing and expanding the border infrastructure with EU member states and the 
Republic of Moldova until 2030. This kind of comprehensive planning of the transport sector 
is  a  necessary  first  step  to  ensure  rebuilding  of  the  transport  network  in  a  strategic  way, 
reflecting the reorientation of trade and other flows. Similarly, the energy investments reflect 
the need to address the destruction of energy infrastructure and ensure security of energy supply 
through multiple angles - protection of energy infrastructure, development of private-sector led 
renewable  energy,  as  well  as  increasing  energy  efficiency  in  various  sectors.  In  parallel, 
reconstructing an economy from the ravages of war requires a robust fiscal foundation, putting 
measures to improve public financial management and audit systems at the centre of the Plan.  

The  Plan  highlights  the  need  for  a  focus  on  sustainability  aspects,  integrating  strong 
environmental, governance and social elements. Examples include the long-term plan for the 
development of irrigation systems, as well as the strategy and an Action Plan for implementing 
the  principles  of  a  circular  economy  to  help  deal  with,  among  others,  the  challenge  of 
demolition and hazardous waste in the wake of the destruction. Authorities indicated the intent 
to follow demining with wider decontamination  efforts and ecological rehabilitation. On the 
social  side,  the  Plan  includes  reforms  aimed  at  improving  access  to  rapid  skills  up-grading 
programmes to address the short- and medium-term labour needs and facilitate reconstruction 
activities,  steps  to  support  transition  from  military  service  to  civilian  life,  as  well  as  social 
inclusion measures such as improving social infrastructure system and de-institutionalisation 
of  care.  As  SOEs  dominate  sectors  critical  to  Ukraine’s  recovery  like  energy,  transport  and 
banking,  the  transformation  of  these  enterprises,  as  envisaged  in  the  Plan  is  critical  for 
reconstruction efforts. Finally, continuing decentralisation and regional policy reforms aims to 
empower local governments to perform their functions effectively and take on the expected role 
in the reconstruction.  

48 

 
 
The  Ukraine  Plan  outlines  the  alignment  of  investment  and  reforms  with  the  “do  no 
significant harm” principle, to the extent possible in a context of war or post-war recovery 
and  reconstruction  The  Plan  includes  selected  environmental  measures  and  climate  policy 
reforms,  supporting  Ukraine’s  alignment  with  the  EU  acquis,  fulfilment  of  Ukraine’s 
obligations under multilateral environmental agreements such as the Paris Agreement and the 
Kunming-Montreal  Global  Biodiversity  Framework  as  well  as  increasing  ambitions  for 
Ukraine’s NDC prior COP30. In addition to reforms aiming at climate change mitigation and 
adaptation,  measures  related  to  conservation  of  biodiversity,  pollution  prevention,  circular 
economy  and  water  protection,  the  Plan  includes  measures  mainstreaming  sustainability 
practices  to  key  sectors  such  as  production  of  energy  and  critical  raw  materials.  Energy 
efficiency measures are planned across selected sectors, which should contribute to Ukraine’s 
climate targets and economic competitiveness. For the measures of the Ukraine Plan to have a 
lasting impact, Ukraine should strengthen the implementation of environmental legislation, in 
particular horizontal environmental acquis, notably address environmental assessments, access 
to justice on environmental matters and environmental enforcement (inspection) requirements. 
In the Plan, Ukraine commits to  develop  a note, following public  consultation,  defining the 
scope  of  current  derogations  from  rules  on  the  application  of  Environmental  Impact 
Assessments and Strategic Environmental Assessments. The note is reflected as a qualitative 
step under the green transition and environmental protection and will need to be published by 
Q3-2024. In the respective payment request, the Commission will assess the note to ensure that 
it  is  compatible  with  EU  standards  and  is  enforceable  and,  if  needed,  will  provide  further 
recommendations  to  the  Ukrainian  authorities  to  improve  it.  At  least  12  %  of  the  Pillar  I 
investments  are  expected  to  contribute  to  climate  change  mitigation  and  adaptation, 
environmental  protection,  including  biodiversity  conservation,  and  to  the  green  transition. 
These include at least 80 % of all investments in transport infrastructure and at least 60 % of all 
those in energy infrastructure. This will contribute to the Regulation’s requirement to allocate 
at  least  20 %  of the overall amount corresponding to  support under the  Ukraine  Investment 
Framework and to investments under the Ukraine Plan to measures that contribute to climate 
including  biodiversity 
change  mitigation  and  adaptation,  environmental  protection, 
conservation, and to the green transition, or to addressing the challenges resulting therefrom. 
The Plan also indicates intentions to align reforms and investment priorities with the “do no 
significant harm” principle and provides an economic, social and environmental rationale for 
the  necessity  of  environmental  and  climate  friendly 
the 
implementation of the Plan and in the assessment of the payment requests the Commission will 
monitor  how  these  reforms  and  investments  are  compatible  with  the  principle  of  ‘do  no 
significant  harm’,  to  the  extent  possible,  in  a  context  of  war  or  post-war  recovery  and 
reconstruction.  Further,  for  investments  in  selected  areas,  the  Plan  envisages  mitigation  and 
offsetting measures to reduce possible negative impacts on the environment and climate which 
the Commission will monitor throughout the implementation. 

investments.  Throughout 

The Plan supports the recovery of private sector and its integration into European and 
global value chains. To this end, the Plan supports the recovery of the country’s private sector 
via  strengthening  the  rule  of  law,  traditionally  the  main  obstacle  impeding  investments  in 
Ukraine, improving the business environment, and building market institutions. Reforms aimed 

49 

 
 
at improving the functioning of the justice system and the fight against corruption and money 
laundering are essential to address rule of law issues, including improving the legal framework 
and developing institutional capacity for a more effective fight against corruption. The reforms 
of the insolvency regime combined with the enforcement of court decisions should contribute 
to  increasing  the  debt  recovery  and  enforcement  rates,  while  supporting  the  health  of  the 
financial  sector.  The  reform  of  the  Prosecution  Service  will  be  key  for  ensuring  a  strong 
criminal justice system that effectively tackles crime, while preventing pressure on businesses 
and abuse of power on the side of prosecutors and law enforcement agencies. The business 
environment  chapter  presents  reforms  and  investments  focused  on  facilitating  recovery  of 
business  activity  with  particular  attention  to  SMEs,  de-regulation  and  the  harmonisation  of 
legislation  and  standards  with  the  EU  in  key  areas  that  will  further  open  access  to  the  EU 
market.  Reforms  in  the  critical  raw  materials  chapter  focus  on  strengthening  the  strategic 
planning  as  well  as  improving  administrative  procedures  hopefully  leading  to  an  enhanced 
framework  for  investments  in  the  sector.  Reforms  proposed  under  the  chapter  on  financial 
markets aim to create optimal conditions for the financial system, more competitive banking, 
and a stronger non-banking sector, thereby improving access to finance. Restructuring of the 
management  of  public  assets  combined  with  efforts  to  optimise  the  portfolio  and  increase 
transparency could facilitate inflow of private capital. Ensuring public resources are not used 
to subsidise commercial activities and monitoring the state funds channelled to SOEs increases 
level  playing  field  between  public  and  private  companies.  Strengthening  independence  and 
capacity of market regulators in the financial markets and energy sector, or creating it in the 
railway sector, is a key ingredient in improving the functioning, transparency, and stability of 
those markets, with the ultimate goal of attracting private investments and upholding market 
competition.  

The  Plan  takes  a  forward-looking  perspective  to  support  modernisation  of  Ukraine’s 
judicial, economic, and political institutions. Strengthening the institutional set up, fostering 
a green and digital transition, and advancing structural transformation of the economy are key 
ingredients  in  modernising  outdated  structures.  For  instance,  the  chapters  of  public 
administration,  public  finance  management  and  rule  of  law  foresee  the  streamlining  and 
digitalising processes in public administration services, the tax and customs administration, and 
the  judiciary.  The  green  transition  chapter  includes  several  measures  introducing  more 
sustainability  in  business  practices,  curbing  greenhouse  gas  emissions  and  developing  a 
national Climate Policy framework. Improving educational systems at preschool and vocational 
education  levels  will  help  with  long-term  skills  development.  The  steps  proposed  under  the 
management of public assets aim to modernise the approach to state ownership, management 
and governance, which, given the sheer size of the sector and its legacy issues, could lead to 
large productivity gains and economic modernisation.  

The Plan also proposes measures to modernise the country’s social institutions, support 
the  most  vulnerable  and  leave  no  one  behind.  The  Plan  includes  measures  to  help 
rehabilitation for persons with disabilities and steps to facilitate the transition for veterans from 
military to civilian life, via, for-instance, psychological counselling and re-skilling programs. 
Steps to improve early childhood education are in the best interest of children and will also help 
build the necessary environment to bring back to Ukraine families with children of school age. 

50 

 
 
Supporting labour market integration of women through dedicated measures within the reform 
on improving the functioning  of the labour market,  coupled with  improving  the quality  and 
accessibility  of  care  services  will  help  empower  women  and  promote  higher  labour 
participation  rates.  Measures  on  deinstitutionalisation  of  care  aim  to  support  the  most 
vulnerable  including  children,  elderly  and  disabled.  Coupled  with  the  focus  to  restore  and 
enable access to schools, housing, and other social infrastructure, and strengthen social security 
and cultural development this will help fundamentally restore the country’s social and cultural 
life, thereby strengthening the country’s social fabric advancing inclusivity.  

The Plan acknowledges the need to establish a comprehensive state coordination system 
to  ensure  effective  reconstruction  and  modernisation  processes  across  all  levels  of 
government.  To  this  end,  the  "Recovery  and  Investment  Architecture"  chapter  of  the  Plan 
outlines the roles and responsibilities of state institutions and agencies, core strategic planning 
documents and fundamental principles of Ukraine's reconstruction and modernisation processes 
at the national and sub-national levels. The fundamental principles of the reconstruction process 
contribute  to  Ukraine’s  economic,  social,  and  environmental  resilience  at  all  levels  of 
government  and  facilitate  progressive  alignment  with  the  EU  acquis,  including  through  the 
“build back better” approach, if applied and monitored comprehensively. The capacity of the 
(sectoral) single project pipeline to ensure a transparent and efficient approach to selecting and 
implementing  reconstruction  projects  is  contingent  on  the  creation  and  application  of  a 
comprehensive prioritisation methodology fully aligned with the fundamental principles of the 
reconstruction process outlined above. Furthermore, the development of a financial mechanism 
for the allocation of an  adequately substantial  share of  funding for the sub-national  level,  in 
particular  territorial  communities,  will  be  critical  to  sustain  the  positive  effects  of  the 
decentralisation  reform  for  local  self-governance  and  foster  regional  development.  The  Plan 
also proposes a public investment management (PIM) roadmap, which aims at increasing the 
effectiveness  of  Ukraine’s  finance  management  system.  The  establishment  of  an  integrated 
digital  platform  will  help  to  ensure  civic  participation  and  effective  monitoring  of  the 
reconstruction process and is therefore expected to prevent, detect, and correct mismanagement 
and malfeasance. Finally, the public administration reform aims to build trust in the civil service, 
attract talent and prevent corruption and conflicts of interest through encouraging merit-based 
recruitment  and selection, digitalisation of management operations across public institutions, 
and a clear and transparent procedural framework. 

51 

 
 
 
4.4  Contribution  to  the  EU  enlargement  process  and  the  Association 
Agreement 

Table 4.4.a Consistency of the Ukraine Plan with the 2023 Enlargement Report 

chapter in the Plan 

chapter in the 2023 Enlargement report 

Degree of 
alignment 

1. Public Administration Reform 

cluster 1: Functioning of the democratic 
institutions and public administration reform  

2. Public Financial Management 

3. Judiciary 

4. Fight against Corruption and 
Money Laundering 

cluster 1: Functioning of the democratic 
institutions and public administration reform 
chapter 16 Taxation  
chapter 17 Economic and monetary policy 
chapter 29 Customs union 
chapter 32 Financial control  
chapter 33 Financial and budgetary provisions 
chapter 23 Judiciary and fundamental rights 
chapter 4 Free movement of capital  
chapter 23 Judiciary and fundamental rights 
chapter 24 Justice, Freedom and Security 
chapter 9 Financial services 

5. Financial Markets 
6. Management of Public Assets  chapter 8: Competition policy 

7. Human Capital 

8. Business Environment 

9. Decentralisation and Regional 
Policy 
10. Energy Sector 

11. Transport 

chapter 19: Social policy and employment 
chapter 26: Education and culture 
chapter 5: Public procurement 
chapter 20: Enterprise and industrial policy 
chapter 22: Regional policy and coordination of 
structural instruments 
chapter 15: Energy  
chapter 14: Transport 
chapter 21: Trans-European Networks 

12. Agri-Food Sector 

chapter 11: Agriculture and rural development 

13. Management of Critical Raw 
Materials 
14. Digital Transformation 
15. Green Transition and 
Environmental Protection 
chapters 2, 4, 5, 7, 8, 10, 11 
cluster 1: Economic criteria  
● broad alignment with recommendations in the 2023 Enlargement Report;  
○ partial alignment with recommendations in the 2023 Enlargement Report. 

chapter 10: Digital transformation and Media 

chapter 27: Environment and climate change 

52 

● 

● 

○ 
○ 
○ 
○ 
● 
● 
○ 
● 
● 
● 
○ 
○ 
● 
○ 
● 

○ 

● 
● 
○ 

● 

○ 
● 

● 

 
 
 
 
 
 
The  reforms  set  out  in  the  Ukraine  Plan  complement  and  are  consistent  with  the 
recommendations of the 2023 Enlargement Report. Both documents provide a framework 
for reforms that will ultimately bring Ukraine closer to the European Union membership. The 
Plan is different from, but complementary to the EU accession process, due to the potential to 
accelerate economic convergence upon successful completion while simultaneously increasing 
alignment with the EU acquis in key areas. As presented in the table above, most chapters either 
have a broad (steps laid out in the Plan match more than half of the recommendations in the 
2023  Enlargement  report),  or  a  partial  (at  least  one  reform  matches  the  recommendations) 
correspondence with the recommendations set out in the enlargement report.  

There is a strong alignment in some of the areas that are fundamental to the EU accession 
process, the so-called Cluster 1 in the Enlargement report. This is of crucial importance in 
light  of  the  close  link  between  economic  growth  and  the  areas  of  the  rule  of  law,  such  as 
judiciary, the prevention and fight against corruption and anti-money laundering, and public 
financial  management.  For  instance,  the  Plan’s  key  reforms  proposed  in  the  anti-corruption 
chapter is broadly aligned with the Enlargement report’s recommendations. Both documents 
recognise the need to, among others: i) allocate resources to the key anti-corruption institutions 
and  ensure  transparent  appointment  procedures  for  anti-corruption  enforcement  institutions; 
and ii) implement the Asset Recovery Strategy for 2023-2025 and initiate reform of the Asset 
Recovery and Management Agency. One area fundamental to the EU accession process has 
partial alignment. This refers to the need for alignment of Ukrainian legislation and institutional 
practices  with  the  FATF  Standards.  The  actions  regarding  anti-money  laundering  address 
partially the recommendations described in the Enlargement report 2023, which refers to the 
need to align with FATF standards in the broad sense. Ukraine proposes to approve the Action 
Plan dealing with the risks identified in the third round of the National Risk Assessment and 
establish  a  legal  framework  for  the  unified  registry  of  bank  accounts  as  a  step  towards 
establishing the Register for holders and beneficial owners of bank accounts. Steps (i) and (ii) 
go  in  the  direction  of  improving  Ukraine’s  framework  to  fight  against  corruption  which, 
consistently with the 2023 Enlargement Report, shall be subsequently strengthened further by 
revising the Criminal Procedure Code and the Criminal Code to enhance the effectiveness of 
the judiciary in addressing high-level corruption cases, in particular by introducing reasonable 
time limits for pre-trial investigations. These are important steps among other actions needed 
to  tackle  money  laundering  and  terrorism  financing  including  areas  such  as  virtual  assets 
legislation or adjustments of beneficial ownership register regime.  

Furthermore, given the growth focus of the measures in the Plan, nearly all recommendations 
from  the  Economic  criteria  chapter  of  the  Enlargement  report  are  reflected  in  the  various 
chapters of the Plan.  

Strong alignment is also seen in the green transition areas and key sectors such as energy, 
financial  services,  and  agri-food.  A  prime  example  of  close  alignment  is  the  chapter  on 
energy: both the Plan and the enlargement report recognise the need to: i) continue aligning 
Ukraine’s energy policy with the EU Acquis, advance the green energy transition by adopting 
the Integrated National Energy and Climate Plan, encouraging investments in the production of 
renewable energy, and implementing energy efficiency measures in key sectors; ii) achieve cost 

53 

 
 
reflective  energy  pricing;  and  iii)  improve  the  independence  and  functioning  of  the  energy 
regulator. In relation to the green transition, the reform on entry into force of the legislation on 
prevention, reduction and control of industrial pollution follows up on the enlargement report 
recommendation to adopt a law on environmental control as well as legislation harmonizing 
with  the industrial  emissions  acquis. Similarly, the entry into force of the legislation on the 
State Climate Policy aligns with the recommendation to adopt a climate law and initiate the 
update  of  its  long-term  low  emission  strategy  consistent  with  the  EU  2030  framework. 
Measures in the financial services and the agri-food sector are also broadly aligned with more 
than half of the recommendations in the dedicated chapters of the enlargement report.  

Six  chapters  have  a  partial  alignment  with  the  recommendations  of  the  enlargement 
report.  The  planned  reform  of  legislation  on  the  railway  system  included  in  the  transport 
chapter  corresponds  to  the  recommendation  to  align  and  effectively  implement  the  EU  rail 
acquis and set up appropriate administrative structures for rail transport. It also partially aligns 
with  the  recommendations  on  Trans-European  Networks.  Another  chapter  that  partially 
corresponds to the enlargement report is digital transformation. The reform on entry into force 
of the legislation on strengthening the cybersecurity capabilities of state information resources 
and critical information infrastructure follows up on the report recommendation to further align 
with the EU directive on security of network and information Systems (NIS) and the EU 5G 
Cybersecurity Toolbox. The chapter on decentralisation and regional policy includes a step to 
amend the State Strategy for Regional Development for 2021-2027 and, therefore, aligns with 
the  enlargement  report’s  recommendation  to  align  it  with  the  recovery  and  reconstruction 
process, principles of multi-level governance and a territorially based regional policy. Other 
partially aligned chapters include those on human capital, management of public assets, public 
financial  management  and  business  environment  in  relation  to  the  public  procurement.  In 
addition, the free movement of capital chapter has partial alignment due to the scope of the anti-
money laundering steps.  

The  Plan  proposes  additional  measures  not  captured  in  the  enlargement  report.  As  an 
example,  the  Plan  takes  the  reforms  of  state-owned  enterprises  significantly  beyond  the 
recommendations in the Enlargement report, particularly in relation to material transformation 
of top key SOEs. While both the Plan and the enlargement report recommendations refer to 
improving  the  management  of  SOEs,  the  Plan  will  also  improve  the  corporate  governance 
principles which will not only be enshrined in the legislative changes, but also implemented in 
top  15  SOEs  through  appointments  of  supervisory  boards.  Furthermore,  top  SOEs  will  be 
corporatised, addressing a long-standing issue of having an archaic legal form which limits their 
access  to  funding.  Furthermore,  the  chapter  on  critical  raw  materials  does  not  have  a  direct 
correspondence to a particular chapter in the enlargement report. However, it has significant 
potential to stimulate the economic growth. This illustrates that the Ukraine Plan complements 
the Enlargement report, jointly providing a framework for reforms that will ultimately guide 
Ukraine into European Union membership.  

Several  recommendations  from  the  Enlargement  report  are  addressed  in  the  broader 
reform agenda of the Plan.  Examples include  continuing  alignment with the EU  acquis  in 
banking, insurance, and financial sector, the need to achieve full alignment with EU roaming 

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legislation  as  well  as  the  need  to  ensure  the  independence  of  the  regulatory  authorities  in 
telecom and media. The wider reform agenda in the green transition chapter also captures other 
reforms  included  in  the  2023  Enlargement  report,  namely  the  need  to  continue  aligning 
Ukrainian  legislation  on  water  and  waste  with  the  EU  acquis.  Consistently  with  the  2023 
Enlargement Report’s recommendations, the broader reform agenda under the Human Capital 
chapter refers to modernising labour and occupational health and safety legislation in line with 
the  EU  acquis,  while  ensuring  an  enabling  environment  for  bipartite  and  tripartite  social 
dialogue, as well as strengthening the capacities of social partners.  

The  Plan  also  supports  the  objectives  of  the  Association  Agreement  and  the  Deep  and 
Comprehensive  Free  Trade  Agreement.  It  promotes  additional  rapprochement  between 
Ukraine and the EU by means of deeper alignment with the EU acquis, thereby creating the 
necessary conditions and opportunities for Ukraine’s integration in the EU single market.  A 
few examples include the measures foreseen under the public finance management, financial 
markets,  rule  of  law,  management  of  state-owned  assets,  agri-food,  transport,  or  energy 
chapters. More specifically, the financial markets chapter builds on the cooperation in financial 
services  between  the  EU  and  Ukraine,  established  through  the  Association  Agreement. 
Regulatory approximation in the financial markets is advancing on parallel tracks both via the 
association agenda and the enlargement track, whilst enlargement benefits immensely from the 
achievements of the association efforts. Reforms in the human capital chapter, and the green 
transition  chapter  contribute  to  the  trade  and  sustainable  development  of  objectives  of  the 
DCFTA, complementing EU technical assistance efforts. In the energy area, the Plan proposes 
measures promoting the increase in the share of renewable energy, and the European integration 
of Ukraine’s energy markets. These echo Ukraine’s commitment to the Energy Community, 
the Association Agreement and the principles of sustainable development and green economy.  

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4.5 Consultation process for the preparation of the Ukraine Plan 

To  ensure  a  high  quality  and  inclusivity,  the  authorities  undertook  stakeholder 
consultations throughout the planning and development of the Ukraine Plan. As an initial 
step and to ensure a whole-of-government priorities are reflected in the Plan, the government 
set up an inter-agency working group led by the First Deputy Prime Minister and Minister of 
Economy in June 2023. The working group consisted of the Ministers for European and Euro-
Atlantic  Integration,  Minister  for  Communities,  Territories  and  Infrastructure  Development, 
Minister of Finance, Minister of Foreign Affairs, Minister of Justice, Minister of the Cabinet of 
Ministers,  Office  of  the  President  of  Ukraine,  the  Government  Commissioner  for  Gender 
Policy, the Government Office for Coordination on European and Euro-Atlantic Integration and 
the Reform Delivery Office. The consultation process was held in two phases, involving central 
executive government bodies, regional stakeholders, business sector groups, civil society, and 
Members of the Parliament and parliamentary committees. The consultation process attracted 
significant involvement from key stakeholders. 

In the first phase (July – Sept. 2023), stakeholders were consulted on key areas that could 
help boost economic growth and attract investments. As a result, the Ukrainian authorities 
prepared a concept note outlining a growth vision and key reform and investment areas to boost 
economic growth. Consultations were held in the format of workshops for representatives of 
regional administrations, business representatives, social partners, and other key stakeholders, 
as  well  as  calls  for  proposals  from  all  participants.  The  extent  of  the  consultations  was 
significant.  For  example,  a  questionnaire  formulated  by  the  Ministry  for  Communities, 
Territories and Infrastructure Development engaged 206 leaders from urban, rural, and rural 
territorial communities across 24 regions in Ukraine, while 64 online and in-person meetings 
organised for more than 2,000 participants from business and business associations leading to 
the submission of 329 policy and 460 investment proposals. 

In the second phase (Sept. – Dec. 2023), stakeholders were consulted on specific reforms 
needed  to  boost  economic  performance,  which  ultimately  built  the  foundation  for  the 
Ukraine  Plan.  Consultations  in  this  phase  consisted  of  several  workshops  and  structured 
consultations as well as the application of a questionnaire to representatives of various levels 
of subnational and local governments to provide feedback on the considered reforms (attracting 
more than 800 participants), consultation  events and written feedback from  the civil  society 
(attracting over 40 non-governmental organisations which submitted over 250 comments), and 
dedicated consultation sessions with the Verkhovna Rada.  

The Verkhovna Rada of Ukraine was duly consulted in the preparation of the Plan.  In 
October 2023, consultations were held with the leadership of 18 committees of the Verkhovna 
Rada,  with  participation  of  representatives  from  over  20  ministries  and  central  executive 
authorities  responsible  for  preparing  proposals  and  implementing  reforms  within  the  Plan. 
Following  the  consultations,  the  government  received  and  processed  59  proposals  from  5 
committees  of  the  Verkhovna  Rada,  39  of  which  were  fully  or  partially  considered.  The 
government  held  separate  sessions  with  the  parliamentary  committee  on  Economic 
Development and representatives of the committees on Energy, Housing and Utilities and the 

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Organisation  of  State  Power,  Local  Self-Government,  Regional  Development  and  Urban 
Planning in October-December 2023 

Consultations with the international community were focused on ensuring alignment and 
fostering  coordination.  Alignment with  other donors was secured via  regular consultations 
through the Multi-Agency Donor Coordination Platform, dialogues with the EU Member States 
during Senior Officials’ Meetings, and via associated expert groups hosting conversations with 
G7  countries  and  international  financial  institutions.  As  the  Plan  lays  out  the  medium-term 
reform and investment priorities of the Ukraine authorities, going beyond the requirements of 
the Facility, it can be used as tool for fostering synergies, alignment, and effective coordination 
between various international partners.  

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4.6 Arrangements for an effective monitoring, reporting and evaluation in 
the  Plan,  including  the  system  to  effectively  prevent,  detect  and  correct 
irregularities, fraud, corruption, and conflicts of interest 

The arrangements proposed by Ukraine in the Ukraine Plan are assessed to be adequate 
to ensure an effective monitoring, reporting and implementation of the Ukraine Plan. The 
governance  proposed  includes  the  Ministry  of  Economy  as  the  National  Coordinator,  the 
Ministry of Finance as the entity auditing the Plan, and various ministries, central executive 
bodies, and other public entities outside of the remit of the central government, as also in charge 
of monitoring and reporting on the implementation  of the qualitative  and quantitative steps. 
Considering  the  broader  context  of  resource  constraints  due  to  the  staffing  situation  in  the 
government  and  the  ongoing  full-scale  war  in  Ukraine,  the  administrative  capacity  of  these 
bodies is considered satisfactory and appropriate for the tasks at hand.  

The  Plan  describes  the  institutional  set  up  for  the  implementation  of  the  reforms  and 
investments tied to the financing under the Pillar I of the Facility. The Ministry of Economy 
of  Ukraine,  with  a  broad  mandate  covering  economic  and  social  policies,  will  serve  as  the 
central  coordinating  authority  for  the  Plan's  implementation.  A  dedicated  structural  division 
within  the  ministry  called  the  ‘Office  of  the  National  Coordinator’  will  be  put  in  place  and 
staffed accordingly. The necessary administrative resources for coordination functions will be 
provided mostly within the existing resources of the government.  

The Plan outlines the envisaged monitoring and reporting mechanisms. The Plan proposes 
a reporting system for the implementation of reforms and of investments. The public authorities 
responsible for the fulfilment of the quantitative and qualitative steps will submit to the National 
Coordinator the necessary information on the progress of the implementation of the indicators, 
using the system of electronic interaction of executive authorities. The arrangements governing 
public authorities’ reporting to the central coordination body will be regulated by a procedure 
to be approved by the Government.  

The  monitoring,  control,  and  audit  systems  put  in  place  for  the  implementation  of  the 
Ukraine  Plan  are  based  on  adequate  internal  control  principles.  While  general  in  their 
nature, the Plan contains descriptions of systems to protect the EU’s financial interests.  The 
Ministry of Finance together with the State Audit Service will provide assurance on the legality 
and regularity of the spending of EU funds and on the protection of the financial interests of the 
EU.  A  dedicated  structure  within  the  Ministry  of  Finance  will  be  established  to  audit  and 
confirm the satisfactory fulfilment of the qualitative and quantitative steps the achievement of 
indicators.  The  State  Audit  Service  will  be  in  charge  of  monitoring  the  steps  that  focus  on 
investments  or  those  that  require  undergoing  public  procurement  procedures.  Given  the 
extensive experience in coordinating macro-financial assistance programmes from the EU, a 
range  of  IMF  programmes,  including  the  ongoing  Extended  Fund  Facility  arrangement,  the 
Ministry of Finance is sufficiently equipped to audit the implementation of the Ukraine Plan. 
The track record in coordinating international donor assistance serves as additional reassurance 
to allow an effective use of funds and avoiding double funding, as required by the Article 18 of 
the Regulation. 

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The Ukraine Plan proposes a series of reforms in public financial management aimed at 
reinforcing  and  improving  audit  and  financial  control  systems  in  Ukraine.  The  reform 
priorities  in  the  Ukraine  Plan  are  consistent  with  the  recommendations  of  the  Enlargement 
report to help Ukraine on its accession track. In addition, the proposed reforms of the public 
investment  management  will  increase  the  transparency  and  accountability  of  recovery, 
reconstruction, and modernisation processes. These reforms aim to strengthen Ukraine’s audit 
and financial control systems so that they will be adequate and provide reasonable assurance 
regarding the effective use of funds provided under the Ukraine Facility, and also the efficient 
prevention, detection, and correction of irregularities, including fraud, corruption, and conflict 
of interest.  

Additional  arrangements  for  the  effective  monitoring,  reporting  and  evaluation  in  the 
Plan  are  covered  in  the  Framework  Agreement.  The  Framework  Agreement  will  set  out 
specific  arrangements  for  the  management,  control,  supervision,  monitoring,  evaluation, 
reporting and audit of funds under the Facility, including avoiding double funding, as well as 
preventing,  detecting,  investigating  and  correct  irregularities,  fraud,  corruption  or  any  other 
illegal activity affecting the financial interests of the Union and conflicts of interest, including 
the effective investigation and prosecution of offences affecting the funds provided under the 
Facility. The Framework Agreement shall be complemented by a financing agreement and a 
loan  agreement,  setting  out  specific  provisions  for  the  management  and  implementation  of 
funding under the Facility. 

59