EUR 8 billion allocated for local business development under the Ukraine Facility programme: who will be able to get it
3 July 2024 11:15
Ukrainian hromadas will be able to count on an investment fund of EUR 8 billion under the Ukraine Facility. This was announced during an online meeting “Restoration at the local level” with representatives of ten Ukrainian territorial communities, said Olena Shulyak, chairman of the Verkhovna Rada Committee on the Organisation of State Power, Local Self-Government, Regional Development and Urban Planning, head of the Servant of the People party, "Komersant Ukrainian" reports
According to her, each community will find advantages in each component of the Ukraine Facility programme, under which Ukraine will receive €50 billion from the EU for recovery needs by 2027.
In particular, under the first component, Ukrainian territorial communities will receive €1 billion for their direct recovery. This money is earmarked, so it cannot be redirected to other needs, such as social payments. Under the second component, communities receive €8 billion.
Who can get it
In order for businesses in a particular community to be able to join this investment fund, each community must first create conditions for entrepreneurs and business development on its territory.
The prosperity of the community will depend not only on the quality of recovery planning, but also on the investment and development of local businesses that will operate on its territory. Therefore, communities need to look more closely at the opportunities they can offer. In particular, this can be done by creating a Comprehensive Recovery Programme (CRP) – about 200 territorial communities have already joined this process, and the number of communities that have started developing CRPs has increased by more than a third since this spring.
“It is impossible to create a high-quality CIP, which may eventually become the basis for urban planning documentation, without a thorough, detailed analysis of what the community has and what it can offer to business, i.e., to essentially scan its economic potential. For example, industrial parks are currently in an active stage of development, but they should not be limited to them. The community should clearly understand where it can lend a hand to business,”
– emphasised Shulyak.
She added that as of today, the involvement of communities in cooperation with international partners in financing recovery projects is quite high. In particular, about 550 communities already have experience working with international technical assistance projects.
It is worth noting that on 6 June, the Verkhovna Rada of Ukraine ratified the Ukraine Facility Plan agreement with the EU, which outlines a reform plan until 2027. To monitor the use of funds, the European Commission has set up a special body, the Ukraine Facility Audit Board.
Ukraine received the first tranche of EUR 4.5 billion under the Ukraine Facility programme on 20 March this year.
on 27 June, Ukraine received a new tranche of financial assistance from the European Union under the Ukraine Facility programme. The amount of support totalled EUR 1.9 billion.
Ukraine Facility
In February, the EU approved the Ukraine Facility, a €50 billion financing mechanism for Ukraine for the period 2024-2027. The programme consists of €17 billion in grants and €33 billion in loans. The mechanism provides not only for financing budgetary areas in Ukraine during the war, but also for programmes aimed at implementing the reforms on which Ukraine’s accession to the EU depends.
The resolution emphasises that EU support should be directed in three areas:
- Financial support for Ukraine to implement reforms and investments, and to maintain the country’s macro-financial stability, as envisaged in the Ukraine Plan to be developed by the Ukrainian government.
- Ukraine’s investment framework to mobilise investment and increase access to finance.
- Assistance on the path to European integration to mobilise technical expertise and build capacity.
What the plan for the Ukraine Facility envisages
The Ukraine Facility Plan envisages the implementation of structural reforms in the public sector, a number of economic reforms aimed at improving the business climate and entrepreneurship, and steps to develop priority sectors that can deliver rapid economic growth. The implementation of the Plan will contribute to Ukraine’s European integration and further sustainable economic development.
The Ukraine Facility Plan includes more than 150 indicators in 69 reform areas to be implemented by 2027. The plan was developed in full synchronisation with Ukraine’s key international partners.
The Ukraine Facility Plan also includes 16 investment indicators that are part of the overall list of changes. To meet them, it is necessary to continue and strengthen programmes for infrastructure development, demining, renewable energy, support for small and medium-sized enterprises, etc.
Funding under the Ukraine Facility programme is directly dependent on the fulfilment of the indicators set out in the Ukraine Facility Plan. In 2024, more than 36 indicators are planned to be implemented in the areas of improving public financial management, fighting corruption, managing state property, developing human capital, improving the business environment and developing priority sectors.
The last instalment under the programme is expected to be disbursed in 2028 based on the performance of the indicators for the fourth quarter of 2027.
A €6 billion transitional financing mechanism is envisaged for the period until the final launch of the Ukraine Facility programme.
As part of the transitional financing arrangements, Ukraine is implementing 5 indicators in the areas of public financial management, anti-corruption, business environment development and land market functioning. Three of them have already been implemented, and two more steps required to receive transitional funding are under development.
