Since its independence in 1991, Ukraine has been progressing on its path towards a competitive market economy, supported by accountable and responsive public institutions. Despite the rapid growth of the 2000s, the post-crisis recovery was short-lived as the country became mired in political instability. This has led to conflict, economic decline, and high unemployment.

The dramatic and turbulent events of the past years have left Ukraine in a level of crisis unprecedented in its history as an independent state, and brought rapid change in its political, social, and economic landscape. However, these events have also presented opportunities for reforms. A number of donors reflected this situation and are investing into building the institutions on all levels.

Public Finance for Development in Ukraine

Ukraine is one of the major political partners of Slovakia as well as of UNDP. Since its beginning, Ukraine was a target country of the Public Finance for Development programme. As a Slovak neighbour and one of the priority countries of Slovak development cooperation, it was a natural selection for the initial assessment of government needs and mapping of interventions by other donors.

However, due to complex realities of this European giant, establishing a programme in Ukraine was somewhat challenging and took several years to take off. The cooperation with Ukraine’s Ministry of Finance finally materialized in May 2015, and the implementation started in October 2015.

The activities cantered on upcoming strategies for PFM reform. Slovak experts helped with the methodology, design and setting-up of the strategy in following ways:

Our activities in Ukraine

  • PFM needs-assessment was completed by a Slovak expert, and presented to Ukraine’s MF in February 2016. The assessment provided inputs for the 2013 PFM reform strategy update, and insights into strengths and weakness of the reform process.  
  • Policy advice on PFM reform design and implementation.  Project experts provided comments and recommendations to improve the PFM Reform Strategy and Action plan.  The PFM reform strategy was approved by the Government in March 2017. The action plan was prepared by Ukraine’s MF and approved in May 2017.
  • Methodological support for designing a Medium-Term Expenditure Framework (MTEF). The project expert prepared: i) methodology for medium-term budget planning; ii) recommendations on regulatory amendments to the Budget Code and the Rules of Procedure of Verkhovna Rada (the Parliament of Ukraine); iii) Practical guide for Key Spending Units on how to implement the MTEF in their internal procedures, and iv) Guidelines for preparation of budget request by key spending units.   
  • On the request of the Ukrainian MF, a mission of Ardal (Slovak Debt and Liquidity Management Agency) expert took place to Kiev in September 2016.  The expert provided the Ministry’s senior managers’ recommendations for improving debt and liquidity management which served as input for the preparation of the PFM Strategy and Action plan.

The period from January 2017 was marked by delays and lack of communication with Ukraine’s Ministry of Finance, so the project implementation begun to fall behind the agreed terms. This combined with a very complex political situation, and immense engagement and financial support from other international donors, eventually led the UNDP and Slovak Ministry of Finance to the conclusion that the absorption capacity for the technical assistance on the Ukrainian side was low.

Based on these developments, in October 2017, the funding and implementing partners decided to discontinue the project for the current period and review the opportunities for engagement post-2019. As Ukraine remains a prospective partner for the Pubic Finance for Development programme, the situation in the country is being monitored and evaluated by both the UNDP and the Slovak Ministry of Finance.