The European Commission has adopted a proposal for a Council Implementing Decision with a positive assessment of the Ukraine Plan, Ukraine’s comprehensive reform and investment strategy for the next four years. This important step paves the way for regular and predictable support to Ukraine under the EU’s up to €50 billion Ukraine Facility. Financing under the Facility will help Ukraine to keep its administration running, pay salaries and pensions, provide basic public services, and support recovery and reconstruction while it continues to defend itself against Russia’s aggression.
The payments will be disbursed subject to the implementation of the agreed reform and investment steps set out in the annex of the Council Implementing Decision. In addition, financial support under the Ukraine Plan will be made available under the precondition that Ukraine continues to uphold and respect effective democratic mechanisms.
The Commission assessment of the Ukraine Plan is based on the criteria established by the Ukraine Facility Regulation. In particular, the Commission assessed whether the Ukraine Plan constitutes a targeted and well-balanced response to the objectives of the Ukraine Facility, whether it addresses the challenges of Ukraine’s accession track, and whether it responds to Ukraine’s recovery, reconstruction and modernisation needs.
According to the Commission’s assessment, the Ukraine Plan effectively addresses the objectives of the Ukraine Facility, by identifying those key reforms and investments that can boost sustainable economic growth and attract investments, to amplify the country’s growth potential in the medium-to-long term.
The Plan also provides a framework to guide the recovery, reconstruction and modernization of Ukraine. Finally, the assessment finds that the Plan proposes adequate mechanisms and arrangements to protect the financial interest of the EU, by ensuring an effective implementation, monitoring and reporting on the Plan.
Commission President Ursula von der Leyen said: “Ukraine’s strategy for reforms and investments offers a solid basis to rebuild a more modern and prosperous Ukraine, on its path towards the EU. The Commission’s positive assessment of the Ukraine Plan will pave the way for regular payments under the Ukraine Facility. With today’s proposal, we showcase once again that Europe stands with Ukraine for as long as it takes, and that we are ready to deliver much-needed financial support”.
The Ukraine Plan identifies 69 reforms and 10 investments, broken down into 146 qualitative and quantitative indicators. The reforms proposed under the Ukraine Plan cover 15 areas including energy, agriculture, transport, the green and digital transition, human capital, as well as state-owned enterprises, the business environment, public finances, and decentralisation.
They aim at enhancing Ukraine’s macro-economic and financial resilience, improving governance, increasing the capacity and efficiency of the administration, the accountability and integrity of the judiciary, supporting the development of the private sector and creating an environment conducive to sustainable economic growth.
Several reforms are expected to help Ukraine’s efforts on the accession path by advancing alignment with the EU acquis, notably in public administration, public finance management, anti-money laundering, public procurement, as well as the transport and agri-food sectors. Investments cover the fields of human capital, energy, transport, agri-food, business environment and regional policies.
Next Steps
Following the Commission’s positive assessment of the Ukraine Plan, Member States have one month to adopt the Council Implementing Decision put forward by the Commission.
The adoption of the proposed Council Implementing Decision would enable the Commission to disburse up to €1.89 billion in pre-financing until regular disbursements tied to the implementation of reform and investment indicators under the Ukraine Plan would start.
Background
The new Ukraine Facility, which entered into force on 1st March, foresees up to €50 billion of stable financing, in grants and loans, to support Ukraine’s recovery, reconstruction, and modernisation for the period 2024 to 2027. Of this, up to €32 billion of the Ukraine Facility is indicatively earmarked to support reforms and investments set out in the Ukraine Plan, whereby disbursements will be conditioned to the delivery of identified indicators. Close to €7 billion will be mobilised for the Investment Framework to support investments, and provide access to finance, while around €5 billion is foreseen for technical assistance to support reforms and related support measures. Finally, €6 billion are earmarked for exceptional bridge financing, of which the EU already disbursed €4.5 billion in March.
Ukraine submitted its Ukraine Plan to the European Commission on 20 March. It presents a vision for sustainable growth, based on carefully selected priorities and a sequenced set of reforms and investments for the next four years. The Plan promotes investments that foster Ukraine’s recovery, reconstruction and modernisation, including at the local level.
The Commission assesses that reforms and investments put forward in the recommended Council Implementing Decision have a significant potential to enhance growth, sustain macroeconomic stability, improve the fiscal situation and to support Ukraine’s further integration with EU. If all proposed reforms and investments are fully implemented, Ukraine’s GDP could increase by 6.2% by 2027 and by 14.2% by 2040. The implementation of the Plan could also lead to a reduction of the debt by about 10 percentage points of GDP by 2033 compared to an alternative scenario without the Facility.
To ensure the protection of EU financial interests, the Ukraine Plan is equipped with an adequate framework for transparency, audit and control and requires the Ukrainian State to substantially enhance its audit and control systems as part of the foreseen reforms. In addition, an independent Audit Board, to be set up in May, will assist the Commission in preventing any mismanagement of Union funds and, in particular fraud, corruption, conflicts of interest and irregularities.