How reform stagnation could affect Ukraine’s international financing

Delays in reforms and government apologies — RRR4U monitoring report

On July 31, the #RRR4U consortium presented a new edition of its monitoring report on the implementation of conditions under the IMF cooperation program and EU assistance through the Ukraine Facility. For the first time, analysts reported a systemic slowdown in reforms, with delays in meeting key indicators that have already cost Ukraine part of its funding.

“We’re not just losing money – we’re losing trust. This is a war of attrition, and delays in reforms undermine our position in it,” emphasised Maksym Samoiliuk, an economist at the Centre for Economic Strategy.

IMF loyalty and programme changes

Ukraine has only partially fulfilled the structural benchmarks of the IMF programme’s eighth review. The deadlines for four of them have been postponed — including the appointment of the head of customs, an integrity check of the NSSMC, an audit of NABU, and public investment reform. According to Oleksandra Betliy, Leading Research Fellow at the Institute for Economic Research and Policy Consulting, “Even the benchmarks that do not require passing legislation are being delayed – although these are formally considered easy tasks.”

A major challenge will be passing the next review of the Programme. Analysts identified the key risk as the situation surrounding the upcoming combined ninth and tenth review scheduled for December (unless a new programme is agreed earlier). By then, a number of complex decisions must be implemented by the end of September, including the appointment of the head of the Economic Security Bureau of Ukraine (ESBU), the repeal of the Lozovyi amendments, and reforms in the financial sector. Some of these steps have not yet been launched, and there is still no consensus on several of them.

“Our event this time is not a typical one, because we’re talking about a real slowdown in reforms. The period of romantic relations is long gone. Partners are not just reminding us of commitments, they’re starting to apply instruments that look less like a carrot and more like a stick. The International Monetary Fund remains relatively lenient for now, allowing delays on certain structural benchmarks. However, the EU has already begun applying its methodology of partial payments. For the first quarter, we missed out on €1.4 billion, and another €1.27 billion is at risk based on second-quarter indicators,” added Roman Nitsovych, Research Director at DiXi Group.

The possibility of revising the current IMF program was also discussed.

“A new IMF program wouldn’t be a failure – it would be a logical step. Every program has its purpose, and the current one is focused on recovery preparation. But the full-scale war continues, macroeconomic forecasts are shifting, and Ukraine now needs a program with different policy measures and financing terms. In 2026 and 2027, we’re expected to repay more to the IMF than we receive – that model isn’t sustainable. On top of that, the current budget deficit forecast looks unrealistic, given the continued need to fund the army, social support, and salaries. Therefore, a programme revision is a normal and necessary step,” explained Oleksandra Betliy.

Ukraine Facility: over €2 billion lost

According to estimates from the Institute for Analytics and Advocacy, Ukraine’s failure to meet the indicators under the Ukraine Plan in the first and second quarters of 2025 has already resulted in the loss of more than €2.1 billion in expected disbursements.

As Vitalii Nabok, an analyst at the Institute, noted, “Some laws that could have been adopted last year are still in limbo” – particularly those related to decentralisation and vocational education. 

“These commitments are not primarily for international partners. They are for Ukrainians – the ultimate beneficiaries of all the reforms embedded in both the IMF program and the Ukraine Facility. That’s why they must be treated with responsibility,” Nabok emphasised.

Members of Parliament from both the ruling and opposition factions also voiced their positions. Andrii Motovylovets, First Deputy Head of the Servant of the People faction, began his remarks with an apology for draft law No. 12414, which limited the independence of NABU and SAPO.

“I want to begin by asking for forgiveness – for leading the country into a political and public crisis. Today, we’ve taken the first step toward resolving it. We failed to meet some of our commitments – that’s a fact.

I’m only responsible for the work of the Verkhovna Rada. Most of these commitments are taken on by the government, which often communicates with us in strange ways about what exactly it has agreed to. Sometimes I find out about these obligations not from the government, but from analysts.

(…) Why is there a problem now? Why did things used to be implemented, and now they aren’t? Because politics has returned to the Verkhovna Rada.”

At the same time, Yaroslav Zhelezniak, an MP from the Holos party, criticised both the government and international partners, particularly the European Commission. He emphasised that the key reason for failures in meeting obligations has been the loss of internal discipline and the disappearance of external pressure.

“We used to deliver on everything. And that’s absolutely true. (…) We always made the deadlines – sometimes on the last day, but we made them. And then the deadlines started to be forgiven. That was a fatal mistake by the European Commission and the IMF.

(…) It all comes down to a presidential meeting where everyone – from the finance minister to the deputy prime minister – stays silent and is afraid to tell the President the truth. Because whoever does – gets fired.

(…) If our partners start acting like adults and clearly say: reforms in exchange for money, then things will quickly fall back into place. But if not, there will be another breakdown like on July 22. And next time, the response from both the public and our partners is unlikely to be so loyal,” Zhelezniak added.

Henrik Huitfeldt, Head of the Public Finance, Business Support and Social Policies Section at the EU Delegation to Ukraine, while assessing Ukraine’s progress under the Ukraine Facility, acknowledged delays and the need to revise parts of the plan, but also highlighted positive developments:

“Discussions on an overall revision of the plan are ongoing, and there is hope that this revision will be approved by the European Council before the payment request for the third quarter of this year is submitted. If some elements are delayed, other indicators will need to be accelerated.

(…) The plan for Ukraine is a commitment undertaken by the Ukrainian government. This is a new process, and I believe it is a learning experience for both sides. There are areas where we would like to see faster reform progress, but overall, considering the extremely difficult circumstances, the progress has been quite impressive.”

To sum up the discussion, all partners will now treat us much more critically. Explanations about who exactly — the Rada or the Cabinet — failed to do something no longer work. Ukraine is failing as a whole. So we must draw conclusions and restore the trust of our partners.

More details are available in the Monitoring Report on the Implementation of the IMF Program and EU Assistance (July 2025) (in Ukrainian). The English version will be available later.

Panelists:

• Henrik Huitfeldt, Head of the Public Finance, Business Support and Social Policies Section at the EU Delegation to Ukraine;
• Yaroslav Zhelezniak, Member of Parliament, the First Deputy Chair of Ukraine’s Parliamentary Committee on Finance, Tax, and Customs Policy;
• Ivanna Klympush-Tsintsadze, Member of Parliament, Chair of the Verkhovna Rada Committee on Integration of Ukraine to the EU;
• Andrii Motovylovets, Member of Parliament, First Deputy Chair of the Servant of the People political party faction;
• Yulia Shaipova, Senior Project Manager, Reform Support Team, Ministry of Economic Development;
• Dmytro Shulga, Director of the “Europe and the World” Programme, the International Renaissance Foundation.

Moderator: Hlib Vyshlinsky, Executive Director of the Centre for Economic Strategy.

The event is supported by the International Renaissance Foundation

*RRR4U (Resilience, Reconstruction and Relief for Ukraine) is a consortium of four Ukrainian civil society organizations: the Centre for Economic Strategy, the Institute for Economic Research and Policy Consulting, the Institute for Analytics and Advocacy, and DiXi Group.

RRR4U publishes monthly monitoring reports on Ukraine’s fulfillment of the conditions of key international financial programs with the IMF and the EU. You can find previous editions on the consortium’s website – https://rrr4u.org/.