After joining the EU, Ukraine will have access to new financial support mechanisms from the European Union. In particular, funding through structural funds designed to help new EU member states catch up with other EU countries in terms of development and living standards. In fact, the name ‘structural’ comes from the goal of these organisations — to bring about qualitative changes in the structure of the region’s economy. Support mechanisms based on the work of these funds have proven their effectiveness. Their impact on the development of countries that joined the EU in 2004-2007 was especially significant.

The Centre for Public Finance and Public Administration Analysis at the KSE Institute analysed the prospects of using structural funds for Ukraine.

The report ‘EU Structural and Investment Funds’ covers key aspects:

• Main EU structural and investment funds;

• Funds’ operating and management principles;

• Dynamics and status of EU funds absorption by funds and countries;

• Ukraine’s access to structural and investment funds financing before and after EU accession.

European Structural and Investment Funds (ESIF) account for up to 30% of the EU budget. Their funds are directed towards leveling the playing field between regions, supporting employment, innovation, green transformation and social programmes. Thanks to the mechanisms provided by these funds, the GDP per capita of new EU member states has grown from 52% to 80% of the EU average in 20 years. Another example is the reduction in unemployment in Poland from 18.6% to 2.7%. According to European Commission estimates, every euro invested by the ESIF generates up to €3 in added value. The total budget of the 6 funds comprising the ESIF exceeds €490 billion for 2021-2027.

Structural funds — the future level of integration for Ukraine. Our country already uses financing mechanisms that are partly related to the structural funds system. Also, until the moment of association, Ukraine has access to pre-accession mechanisms, in particular, the Ukraine Facility. This shows that Ukraine has already begun real participation in the financial architecture of the European Union. At the same time, the country will only become a full participant in structural funds after acceding.

The key requirement for integration into the funds and a test of responsibility to European partners will be the level of institutional capacity demonstrated by our country. In practice, this means creating governing, auditing and intermediate management bodies, a monitoring and reporting system, and regional development strategies. In addition to infrastructure development, it is necessary to strengthen the partnership with the European Commission’s Directorate-General for Regional and Urban Policy (DG REGIO) and to implement standards of transparency, planning and accountability, which are the basic principles of EU cohesion policy.

The EU’s financial framework for 2028–2034, which already includes the creation of a €100 billion Ukraine Reserve, indicates plans to integrate Ukraine into a single system financed by structural funds. However, this doesn’t change the requirements for results, adherence to the rule of law, and improving management efficiency.

The analysis by the KSE Institute is the first systematic assessment of EU structural funds, potential opportunities and conditions for Ukraine to become a full participant in the system. The report was prepared as part of the Swedish Centre for European Future at KSE University project, which is implemented with financial support from Sweden. The full version is available at: https://shorturl.at/iM3uO