At URC 2024, the Government has presented the Reforms Matrix developed in collaboration with Kyiv School of Economics

13 June 2024

At the Ukraine Recovery Conference 2024 in Berlin, the Government of Ukraine has presented the Reforms Matrix, a new analytical tool for effective decision-making and management of the process of implementing changes. 

The team of the Ministry of Finance and the Ministry of Economy of Ukraine in cooperation with the Reforms Delivery Office of the Cabinet of Ministers of Ukraine, Kyiv School of Economics and the Centre for Economic Strategy worked on the Reforms Matrix. During the preparation process, consultations were also held with the Growth Lab of Professor Ricardo Gausman at Harvard University and with the assistance of the World Bank.

In total, the Matrix includes 206 conditionalities and recommendations to be fully or partially implemented in 2024. In particular, they include the European Commission’s Recommendations set out in the Report on Ukraine as part of the EU Enlargement Package, the IMF’s Structural Adjustment Framework, Indicators under the Ukraine Facility program, and the World Bank’s Development Policy Loan (DPL).

The Reforms Matrix will help to continuously monitor the progress of reforms. This, in turn, will enhance the effectiveness of the reform process and ensure transparency to the public and international partners. For 2024, we have an ambitious agenda – more than 200 conditionalities and recommendations identified in cooperation with our partners. The priorities remain the same: meeting significant defense needs, economic development and European integration, said Minister of Finance Sergii Marchenko. 

With the BI tool, users can visualize information by any criteria: time of implementation, responsible authorities, types of indicators, etc. For this purpose, ready-made templates are available, as well as the ability to define their own criteria for grouping and visualizing information.

Despite the full-scale war, we continue reforms at all levels. However, internal transformations cannot ensure our sustainability without reliable external support. The implementation of reforms within the state should be combined with investments, access to markets and technology transfer”, said Deputy Minister of Economy Oleksiy Sobolev during the presentation of the Matrix. 

The reform measures envisaged by the Matrix were analyzed by the Ministry of Economy, Kyiv School of Economics and the Centre for Economic Strategy using the methodology of the Harvard University Growth Lab and with the assistance of the World Bank. According to the analysis, the reforms were prioritized as follows:

• Macroeconomic policies that will have the strongest general impact on economic growth. They include tax and customs reforms to broaden the domestic revenue base, eliminate quasi-fiscal distortions, and maintain overall price stability.

• Public sector and institutional governance. This process includes strengthening regional policy coordination, developing measurable action plans to reform law enforcement and fight corruption, and improving the capacity of public investment management, including the judiciary. 

• Structural reforms. Cover labor market programs and human capital policies, trade facilitation measures, and the business environment, including reforms of state-owned enterprises and corporate governance, as well as regulations that integrate and reform sectors such as energy, critical materials, agriculture, and transportation.

The analysis of the reform measures envisaged in the Matrix has shown that they will not be sufficient to meet the critical needs of the state. To maximize the effect of reforms, Ukraine needs long-term and predictable financing from partners, commitments to investment and technology transfer, as well as steps to overcome existing constraints, namely the restoration of electricity generation, air defense and stable access to markets, said Natalia Shapoval, Head of KSE Institute.

Thus, it was determined that in order to maximize the effect of reforms, Ukraine, together with its international partners, should focus on three key areas: 

1. Eliminate macroeconomic risks with the help of partners within the donor platform and ensure long-term (until 2027) external financing and in-kind support. In addition, Russian assets worth about $300 billion frozen in the EU and G7 countries should be used for the benefit of Ukraine;

2. Promote faster recovery by removing the main obstacles to development. It is necessary to ensure air defense, energy sustainability, stable and predictable access to foreign markets, overcome labor shortages, and restore logistics (SEAL+);

3. Enhance potential growth – reforms need to be complemented by time-bound and scaled investments and technology transfer commitments from partners that will increase productivity and capital growth.

The Reforms Matrix is available at the following link: https://reformmatrix.mof.gov.ua