21 Mar 2024 16:55

Ukraine plans to adopt public debt management strategy in 2025

MOSCOW. March 21 (Interfax) - The Ukrainian government's implementation plan for the EU's Ukraine Facility calls for launching a road map for reforming the public investments management system in the third quarter of 2025, as well as approving a medium-term public debt management strategy for 2026-2028.

Ukrainian media reported that according to the published document, the medium-term strategy would, in particular, "call for an analysis of public debt management mechanisms that will allow Ukraine to take measures to ensure the country's debt sustainability and mitigate risks, while simultaneously meeting budget financing needs and enabling the bond market to play an active role in the recovery phase."

Future priorities are to increase the share of public debt in the national currency and ensure a steady balance of payments.

In addition, the document authorizes the State Audit Service to control more than 38 billion euros of EU financial resources entering the Ukrainian state budget (in the fourth quarter of 2025), and enhances monitoring procurement procedures. "This reform will guarantee the complementarity and synergy of various types of audit and control of public funds. An effective financial control system will make taxpayers and investors more certain that funds are being used rationally and for their designated purpose," the document says.

The third indicator, to be fulfilled before the third quarter of next year, is approval of a plan of action to implement the road map for reforming management of public investments.

To improve the management of public finances, the plan calls for fulfilling two indicators in the fourth quarter of 2026: reviewing state budget expenditures and amending the Budget Code where this concerns the procedure for managing the fiscal risks of local budgets.

"Reviews of state budget expenditures are carried out annually based on government decisions and a methodology in keeping with Organisation for Economic Co-operation and Development (OECD) best practices, in particular in priority areas like social welfare, education, health care, energy and business support," the document says.

The EU Council and the European Parliament said in early February that they had agreed on a new mechanism to support Ukraine worth 50 billion euros for the period 2024-2027. This is "a new single special instrument to support Ukraine's recovery, reconstruction, and modernization, including key reforms necessary on its EU accession track," the EU Council said in a communique. The total budget will be 33 billion euros in the form of loans and 17 billion euros in the form of grants.

This will include 38.27 billion rubles euros to support the budget, 6.97 billion rubles for the investment fund and 4.76 billion euros of administrative support.

The European Parliament approved the Ukraine Facility regulation at the end of February.

To launch the Ukraine Facility, the Ukrainian government had to come up with a plan that sets out the reform and investment agenda for Ukraine. The plan will include its vision for recovery, reconstruction and modernization and the reforms it intends to undertake on the country's path towards EU accession. Special emphasis is placed on reforming the civil service, on the rule of law, on the fight against corruption and in effective management of finances. The government approved this plan on March 18.

Ukraine and the European Union on March 12 signed a loan agreement and a memorandum on transition financing for Ukraine within the Ukraine Facility for 2024-2027, which would enable Ukraine to receive 4.5 billion euros of bridge financing in March and, provided two conditions are met, another 1.5 billion euros in April.