KSE: Ukraine’s government lays out post-war recovery priorities

KSE: Ukraine’s government lays out post-war recovery priorities
The Ukrainian government has released a working paper that highlights the priority areas for the country's eventual reconstruction. / bne IntelliNews
By Kyiv School of Economics October 10, 2023

The Ukrainian government, led by the Ministry of Economy, has finalised the concept note required for preparing the Ukraine Plan as part of the Ukraine Facility, a €50 bn financial support program from the EU for 2024-2027. The UF will be an important component in Ukraine's recovery process, focusing on economic growth, internal transformations, and European integration.

The Concept Note serves as a general narrative, outlining reforms and describing priority sectors for growth. Its further elaboration and the identification of clear KPIs will pave the way for finalising the Ukraine Plan. The document was prepared in close co-operation with specialised experts, think-tanks and the business community. In August, the government also held consultations with representatives of the European Commission to harmonise various elements of the plan, including its overall structure, topic distribution and individual sections.

The concept note provides a comprehensive framework for steering Ukraine's economic growth and development, addressing several key components.

Macroeconomic Projections: The note begins with a macro-financial overview and growth projections for 2024-2027/2033. A core objective is to achieve a GDP in 2027 that is 10% higher than that of 2021.

Priority Reforms: In coordination with the European Commission, the government has pinpointed five cornerstone areas for reform:

  • Public administration
  • Public finance system
  • Judiciary system
  • Anti-corruption and anti-money laundering measures

Sectoral Reforms: Emphasis is also placed on sector-specific reforms designed to invigorate capital and services markets. These include:

  • Financial markets
  • Management of state assets and privatisation
  • Human capital
  • Business environment

Priority Sectors: The note focuses exclusively on high-potential sectors for economic growth, investment attraction, and job creation. Each sector was chosen based on its existing contributions to the economy, global growth prospects, and utility to the EU market, among other criteria. Priority sectors of economic growth and main areas of development:

  • Energy:
    • development legal, organisational and technical conditions for the sustainable development of renewable energy (Net Billing model, guarantees of origin etc)
    • strengthening the flexibility of the energy system by increasing peak and semi-peak generating capacities, construction storages
    • development of National energy and climate plan and Ukraine's hydrogen strategy
    • liberalising energy markets, integrating markets and increased transmission capacity with ENTSO-e
    • ensuring efficient energy consumption
  • Agri-food
    • strengthening agricultural institutions and regulatory framework in line with EU policies
    • support strengthening agricultural value chains
    • demining agricultural land
    • stimulating and supporting innovation, inc. through agritech and foodtech technologies
    • developing grain storage facilities, irrigation and food processing infrastructure
  • Transport and logistics
    • restore and develop export logistics potential of Ukraine, with a focus on TEN-T
    • elimination of the consequences of armed aggression in the logistics sector and ensuring the population’s access to the basic services
    • implementing key reforms to foster alignment with the EU acquis
  • Critical Materials
    • streamlining and digitalising administrative procedures
    • approximating EU standards and using best practices in governance and competition in the sector
    • strengthening strategic planning and ensuring optimum framework for strategic investors
    • involvement of modern extraction technologies and integration of Ukraine into modern processing value chains
    • developing a National Geological programme
  • Processing industry and Green Steel:
    • strengthening regulatory framework for investments
    • introducing insurance mechanisms for military and political risks and improving financial instruments
    • stimulation of domestic demand
    • support principles of the EU Green Deal and develop stimulus government policies
    • developing specialised education and training
    • promoting cross-sectoral and international collaboration and protecting intellectual property

These priority sectors correspond to the strategic directions of the development of the Ukrainian economy, which were presented by the government of Ukraine in London in June at the Ukraine Recovery conference held in London in June .

Cross-cutting Priorities: Lastly, the note identifies overarching themes like EU alignment, digital transformation and green transition.

During July-September 2023, the GoU, led by the Ministry of Economy of Ukraine and with the support of the KSE, held a series of comprehensive consultations with the business environment, associations, experts and NGOs regarding priority sectors of economic development and sections of the Ukraine Facility. In total, more than 30 meetings were held with various groups of key stakeholders, in which more than 1,300 participants took part.

In sum, the concept note acts as a roadmap, laying the groundwork for the more detailed Ukraine Plan. It reflects a multi-faceted approach, considering both specific sectors and broader systemic reforms to achieve robust, sustainable growth.

The Kyiv School of Economics (KSE) is a bne IntelliNews media partner and a leading source of economic analysis and information on Ukraine. This content originally appeared on the KSE website.