Successful cooperation with international partners is critically important for Ukraine. It is crucial for the financing of priority state budget expenditures (domestic revenues are used for security and defense).
That is why the RRR4U consortium continues to regularly monitor Ukraine’s compliance with the IMF financing program and the implementation of the Ukraine Plan.
Fulfillment of obligations under financial support programs is not needed by donors – Ukraine needs them to achieve economic sustainability and transition to growth and increase the welfare of Ukrainians. It is also a way to gain the trust of all international partners and foreign businesses.
IMF
On March 28, The IMF Board of Directors approved the seventh review of the program with Ukraine. On March 31 Ukraine received another tranche of about $400 million.
Despite the successful completion of the review, we cannot call Ukraine’s results positive. Ukraine did not fulfill one benchmark (preparation of the NSSMC strategy), one benchmark was delayed (creation of a new administrative court), and the deadlines for four more had to be postponed.
Five new structural benchmarks were also added to the program. One of them concerns the inspection of the National Securities and Stock Market Commission (instead of the unfulfilled benchmark), two are anti-corruption, and one each are financial sector and corporate governance of state-owned enterprises.
A prerequisite for the seventh revision was the signing of a bill to increase excise taxes on tobacco products. The delay in signing the bill resulted in a budget shortfall of more than UAH 2 billion.
These benchmarks will be evaluated during the next, eighth review, which will take place in June:
- Amendments to the Budget Code on the integration of PIM into the budget process, mandatory prioritization and provision of IT solutions (deadline: end of January 2025);
- Adoption of the methodological framework underlying the PIM process (deadline: end of February 2025).
The eighth review will assess our progress against quantitative performance criteria and structural benchmarks as of the end of March 2025.
Ukraine has already fulfilled all the requirements for the next review of the benchmarks, as during the previous, seventh, review, the deadlines for three benchmarks were postponed to July – now they will be evaluated not in the eighth, but in the tenth review, in December 2025. Unfortunately, our progress so far cannot be called satisfactory.
EU
The implementation of the Ukraine Plan is ongoing under the Ukraine Facility.
In April 2025, Ukraine received the fifth tranche of budget support from the EU under the Ukraine Facility. This was preceded by the timely fulfillment of the indicators of the Ukraine Plan in the fourth quarter of 2024. The European Commission also approved the methodology for partial payments under the Ukraine Plan. Therefore, due to the failure to meet some of the indicators in the Q1 2025, Ukraine risks not receiving part of the funds.
Ukraine’s Plan: the main points as of the end of April 2025:
- On April 01, 2025, Ukraine received €3.5 billion for meeting 13 Q4 2024 indicators;
- The European Commission has approved the methodology for partial payments under the Ukraine Plan;
- Ukraine has stopped meeting the timely implementation of indicators under the Ukraine Plan;
- Ukraine should submit a request to the EU to assess progress in meeting the indicators for Q1 2025 and receive the next tranche;
- In the Q2 2025, Ukraine has to fulfil 11 indicators. Of these, 2 have already been met.
By the end of March, Ukraine had to fulfil 16 Q1 2025 indicators;
Despite the warnings about risks, 4 indicators for Q1 remained unfulfilled at the end of April.
SPECIAL TOPIC : “Ukraine Investment Framework Pillar II of Ukraine Facility”
What is behind Ukraine Investment Framework (UIF)?
Goal: to attract EUR 40 bn of public and private investment for the restoration and reconstruction of Ukraine (according to RDNA4, more than EUR 500 bn is needed to finance losses)
The total amount of the Ukraine Investment Framework = EUR 9.3 bn (or UER 6.97 bn after subtracting reserves)
- EUR 7.8 bn in loan guarantees (for which provisions must be made)
- EUR 1.5 bn in grants
Types of financing:
- loans, including local currency loans;
- guarantees;
- counter-guarantees;
- stock market instruments and any other forms of financing or credit enhancement;
- insurance;
- participation in the capital or quasi-capital
Support approaches (first phase):
- Direct: IFIs finance directly large corporations and municipalities from EUR 10-20 m
- Indirect: IFIs finance up to EUR 5 m through local partners – Ukrainian banks
- Mixed: IFIs finance directly and through Ukrainian banks
Challenges
- The problem of lack of bankable projects
- Sometimes projects are not fully prepared and lack complete indicators for investment projects
- Often, it is said that companies are unable to pass due diligence and compliance checks. The main reason for this is weak financial balance sheets and indicators, as well as non-transparent reporting, sometimes (but not only) related to an attempt to minimize the tax burden
- This reduces the number of projects that can access grants, guarantees, or investments
As a result, there is a need for:
- Programs for preparing projects for financing (project preparation facilities)
- Technical assistance to improve financial reporting and management structure in the applicant companies
- More information on Pillar II financing programs and procedures from IFIs (because there is never too much information)
You can view the previous monitors on the website RRR4U
The monitoring was prepared with the support of the International Renaissance Foundation.
RRR4U (Resilience, Reconstruction and Relief for Ukraine) is a consortium of four Ukrainian civil society organisations: Centre for Economic Strategy, Institute for Economic Research and Policy Consulting, Institute of Analytics and Advocacy and DiXi Group.