UKRAINE’S REFORMS MATRIX

to systematize all recommendations and conditionalities

to analyze the necessary changes and plan their implementation

to carry out continuous monitoring - to check the status of implementation

to ensure accountability to the public and coordination with international partners, including MDCP

The reform matrix includes measures to implement the recommendations of international partners and the conditionalities of financial support programs (reform actions).

 

 

The analysis of the Reform Matrix as of June, 30 2024 is presented.

• 1
  Recommendations

  A list of measures recommended by international partners, the implementation of which will accelerate Ukraine’s European integration process and improve synchronization in key areas.

• 2
  Conditionalities

  A list of commitments for implementing reforms that Ukraine has undertaken to receive financial support from international partners.

THE REFORMS MATRIX CONSISTS OF 4 STRUCTURAL DOCUMENTS

• EU Commission's Recommendations for Ukraine's EU candidate status

  EU Enlargement Report

   

  The EU Enlargement Package is a strategic document on EU enlargement policy published annually. It includes a report by the European Commission assessing the progress made by candidate and potential candidate countries.

   

  On 8 November 2023, Ukraine’s first Progress Report on the EU Enlargement Package was published. The report confirmed the fulfilment of four out of seven steps for granting candidate status and contained recommendations for reforms to fulfil the next three steps.

   

  The recommendations were related to:

   

  • Strengthening the fight against corruption
  • Limiting the excessive influence of oligarchs
  • Reform of legislation on national minorities

   

  On 24 April, the first Report of Ukraine on the implementation of the reform recommendations identified for Ukraine in the Ukraine Progress Report under the EU’s 2023 Enlargement Package was submitted to the European Commission.

• IMF Loan Conditions

  In March 2023, the International Monetary Fund approved a four-year Extended Fund Facility (EFF) Programme for Ukraine of SDR 11.6 billion (equivalent to USD 15.6 billion).To receive these funds, Ukraine is committed to meeting structural benchmarks.

   

  The structural benchmarks are reforms aimed at supporting the Ukrainian economy in the face of high uncertainty due to the war, the need to strengthen state institutions, and European integration. The timely implementation of these reforms is a condition for receiving EFF funds.

   

  The structural benchmarks cover the following areas:

   

  • Maintaining fiscal, external, price and financial stability
  • Economic recovery in a period of high uncertainty
  • Improving corporate governance
  • Strengthening public institutions

   

  EFF tranches are disbursed based on quarterly reviews in 2024. Starting from 2025, tranches will be disbursed on the basis of biannual reviews. Ukraine is fully respecting all structural benchmarks and other commitments under the EFF programme with the IMF.

   

  The fifth review of the EFF is expected at the end of September 2024.

• The Ukraine Plan under the Ukraine Facility

  Ukraine Facility is the European Union’s financial support programme for Ukraine. During the period of 2024-2027, 50 billion euros from the EU will be allocated to finance the state budget, stimulate investment, and provide technical support in the implementation of the program.

   

  The basis for providing budgetary support under the programme is the Ukraine Plan. The Plan includes the following key areas for reform:

   

  • Implementation of structural reforms in the public sector
  • Implementation of a number of economic reforms aimed at developing the business climate and entrepreneurship
  • Steps to develop priority sectors that can ensure rapid economic growth.

   

  More than 151 quarterly implementation indicators correspond with 69 reformes anticipated in the Plan. The Plan includes also 16 investment indicators. To fulfill them, it is necessary to continue and strengthen programs on infrastructure development, demining, renewable energy, small and medium-sized enterprises support, etc.

   

  The Ukraine Facility will provide funding for the implementation of the Plan’s indicators.

• World Bank Conditions (Development Policy Loan (DPL)

  Together with the Government of Ukraine, the World Bank is implementing framework projects focusing on energy, healthcare, social protection, housing, transport and agriculture.

   

  World Bank Conditions (Development Policy Loan (DPL)

   

  Growth Foundations Development Policy Operation (DPO) is a systemic project of the World Bank to support reforms in Ukraine. DPO funds are provided under the guarantees of the governments of Japan and the United Kingdom through the Advancing Needed Credit Enhancement for Ukraine Trust Fund (ADVANCE Ukraine).

  The DPL project is also about increasing the potential for economic development by boosting productivity, capital accumulation and access to export markets, as well as creating a macro-financial policy favourable to economic development. It is focused on potential growth with an alleviation of policy-based growth constraints to advance Ukraine’s regulatory alignment with EU standards.

   

  All the results are covered by the Policy and results matrix with 8 Prior Actions,1 Policy Action and 11 Triggers.

   

  Key areas of reform under the DPO programme include:

   

  • Improving corporate governance
  • Law # 3587-IX dated 22.02.2024 “On amendments to some legislative acts of Ukraine regarding the improvement of corporate governance” 
  • Promotion of renewable energy production
  • Law #3220-IX dated June 30, 2023 “On Amendments to Some Laws of Ukraine Regarding the Restoration and “Green” Transformation of the Energy System of Ukraine”; Resolution #227 dated February 27, 2024 “On the introduction of guarantees of the origin of electric energy produced from renewable energy sources”.
  • Introducing agricultural notes as a new instrument for financing farmers – Law # 3586 dated 22.02.2024 on Agrarian Notes 
  • Strengthening the financial sector
  • Law # 3585 “On Amendments to the Law of Ukraine “On State Regulation of Capital Markets and Organized Commodity Markets” and some other legislative acts of Ukraine regarding the improvement of state regulation and supervision of capital markets and organized commodity markets
  • Improving access to finance for businesses (“Affordable Loans 5-7-9%”) – CMU Resolution 1403 dated 27.12.2023 

   

  The Programme also includes the implementation of EU customs and tax experience into Ukrainian legislation, improvement of fiscal policy and regulation of capital markets, and ensuring transparency and accountability of procuring entities in the e-procurement system.

  The results of the Programme will allow Ukraine to accelerate its European integration path and promote economic growth.

  In 2024, Ukraine might receive up to $1.5 billion from the World Bank under the Development Policy Loan Programme.

THE REFORMS MATRIX CONTAINS 6 CLUSTERS OF NECESSARY REСOMMENDATIONS AND CONDITIONALITIES

• Cluster 1: The Fundamentals of the Accession Process

  This cluster aims to strengthen Ukraine’s fiscal and financial capacity, liberalise markets and improve the business environment. In addition to reforming the public finance sector, this cluster also proposes synchronisation with the EU on banking standards, alignment on public procurement, and auditing of key law enforcement institutions.

• Cluster 2: Internal Market

  This cluster is focused on removing existing restrictions on the Ukrainian internal market and aligning it with EU standards in terms of cross-border information exchange and accountability of state regulators. This includes strengthening the regulatory powers of the government for higher quality operation and market assessment, while implementing the full set of EU synchronisation measures to improve competition, copyright and general market conditions.

• Cluster 3: Competitiveness and Inclusive Growth

  This cluster aims to foster economic development and enhance the business environment in Ukraine. These include deregulation, supporting entrepreneurship, increasing private investment, promoting innovation, transforming and digitising tax authorities, and reforming the education system. The reform actions also focus on developing medium-term priorities for SME growth and aligning legislation with EU standards

• Cluster 4: The Green Agenda and Sustainable Connectivity

  This cluster aims to improve Ukraine’s transport and energy infrastructure, promote green energy and ensure environmental sustainability. Key reform actions include establishing administrative structures for railways and inland waterways, improving road safety, aligning with EU standards and developing administrative capacity for project preparation. The focus is on implementing a national energy and climate plan, promoting investment in renewable energy and introducing market-based incentives.

• Cluster 5: Resources, Agriculture and Cohesion

  This cluster focuses on aligning Ukraine’s agricultural and rural development with EU standards to facilitate market integration. Key reform actions include adopting the agriculture and rural development strategy, strengthening institutional capacity, and accelerating legislative harmonisation with EU agricultural and SPS standards. It also aims to improve access to finance for farmers, update credit programs for SMEs, improve food safety, reform fisheries management, and strengthen regional development strategies to support post-war recovery and reconstruction.

• Cluster 6: External Relations

  This cluster contains reform actions for the synchronisation of Ukraine’s foreign policy with the foreign policy of the EU. Specifically, it involves ensuring that Ukraine’s trade policy aligns with WTO rules and the EU Association Agreement, synchronizing sanctions and defense policies, and ratifying a number of international legal documents.

• How is the Reforms Matrix structured?

  The Reforms Matrix contains a list of recommendations from international partners (including those contained in the European Commission’s report on Ukraine as part of the EU Enlargement Package) and conditionalities under financial support programs (IMF, World Bank loans, Ukraine Plan for the Ukraine Facility). 

   

  The implementation of recommendations and conditionalities may involve several different activities, which may be the responsibility of different government agencies and may have different deadlines. The completion of each task is an indicator of the progress of the Reforms Matrix.

   

• What types of indicators does the Reforms Matrix include?

  Since different documents contain different implementation indicators, the Matrix contains 11 types of indicators:

   

  • Those related to the work on draft laws (‘Draft law developed’, ‘Draft law submitted to the CMU’, ‘Support for the Verkhovna Rada’s consideration of the draft law’, ‘Support for the draft law during its adoption’, ‘Law adopted’, ‘Law entered into force’
  • Related to the work on the Government’s acts (‘The draft act of the Cabinet of Ministers was submitted to the Cabinet of Ministers’, ‘The act of the Cabinet of Ministers was adopted’, 
  • Related to the work on acts of central executive authorities (‘CEB act developed’, ‘CEB document adopted’)
  • ‘Institutional capacity building’ (holding competitions, conducting trainings, etc.)
  • Process indicator (related to various procedural measures such as the introduction of digital systems, negotiations, etc.)

• What are the deadlines in the Reforms Matrix?

  The Reforms Matrix includes two types of deadlines. 

   

  One is the deadline for completing individual tasks to meet the conditionalities and recommendations. Since these may be different tasks with different responsible institutions, each has its own deadline.

   

  The second is the fulfilment of the conditionalities or recommendation on the whole. If the conditionality or recommendation involves the implementation of only one indicator, the deadlines are the same. If it involves several tasks, the deadline corresponds to the last of the tasks.

• Why do some tasks have unclear deadlines?

  Meeting the conditions and recommendations often requires a large number of separate activities that are the responsibility of different authorities. Some indicators may reflect a process or serve as a necessary step for further work. For example, support for a draft law should be provided before the law is passed, or the timing of the measure may be tied to the date of termination or cancellation of martial law, etc. Because of this, sometimes the deadline is not measurable.

• Responsible authorities

  A number of tasks involve a number of different bodies in their implementation. The Reforms Matrix contains a lead agency responsible for the consolidation or implementation.

• Abbreviations and Acronyms

  • GDP Gross Domestic Product
  • CES Center of Economic Strategy
  • KSE Kyiv School of Economics
  • VAT Value-Added Tax
  • PIT Personal Income Tax
  • FDI Foreign Direct Investment
  • SME Small and Medium-sized Enterprises
  • ICT Information and Communications Technology
  • NPL Non-Performing Loan
  • SOE State-Owned Enterprise
  • WTO World Trade Organization
  • GNI Gross National Income
  • IMF International Monetary Fund
  • EU European Union
  • OECD Organisation for Economic Cooperation and Development
  • ECB European Central Bank
  • CPI Consumer Price Index
  • EBRD European Bank for Reconstruction and Development
  • SCMU Secretariat of the Cabinet of Ministers of Ukraine
  • CEB Central Executive Body
  • RM Reform Matrix