Infrastructure Policy Review of Ukraine

1. Improving the governance and financing architecture for Ukraine’s reconstruction: Key findings and recommendations

Abstract

Ukraine’s reconstruction challenge is defined not only by the scale of needs but by the governance and financing capacity required to translate scarce resources into durable infrastructure outcomes. This synthesis chapter consolidates the main findings from the report, highlighting reforms needed to strengthen project selectivity, readiness and delivery credibility under wartime disruption, fiscal constraints and EU‑accession objectives. The review finds that Ukraine has made substantial progress in upstream reforms, including strategic planning, fiscal gatekeeping, appraisal procedures and the creation of a unified digital pipeline through DREAM. However, these advances are not yet matched by downstream delivery discipline. The review also emphasises that public and donor funding will remain the backbone of reconstruction in the medium term, while private participation should expand selectively where project economics, governance and risk mitigation are credible. Further efforts will also be needed for sustainability, resilience and integrity to be embedded across the full infrastructure lifecycle.

Ukraine’s infrastructure challenge is not only one of scale. While the country faces exceptionally large reconstruction and modernisation needs under wartime disruption, fiscal scarcity and EU-accession pressures, Ukraine is also under conditions of unusually strong international attention, reform momentum and external support that create opportunities for deeper institutional upgrading. The central policy question is how scarce public resources and private capital are mobilised and allocated to well-prepared projects. In that sense, the review presents the policy measures needed to establish a reliable system for project selection, delivery and long-term asset stewardship that can support investor confidence and mobilise private capital for reconstruction.

This Review examines, first, infrastructure governance across the lifecycle, and second, the enabling environment for infrastructure investment and financing. With this, the report builds on a distinction between funding and financing. Funding refers to the ultimate sources of payment for infrastructure that is public, including budget resources, donor grants, concessional funding and user revenues. Financing refers to the provision of private capital through loans, bonds, equity, guarantees and other types of instruments. Ukraine’s constraints are binding on both sides. Scarce and uncertain funding makes it essential to be selective and to focus on completing projects. At the same time, underdeveloped financial intermediation and capital markets, combined with war risk, limit the availability and cost of private financing. This matters because Ukraine’s immediate constraint is not only a shortage of finance. It is also the limited availability of durable funding and the need to strengthen the state’s capacity to channel both funding and financing into a credible, prioritised and implementable infrastructure portfolio.

RDNA5 estimates recovery and reconstruction needs at USD 588 billion over 2026-2035, It also estimates USD 195 billion of direct damage and USD 667 billion of economic and social losses. For 2026, priority recovery and reconstruction needs are estimated at USD 15 billion, with an overall funding gap of about USD 9 billion against confirmed state budget allocations and partner financing. The Review does not assess Ukraine’s budget system as such. References to budgeting are limited to the infrastructure‑governance interface: medium-term fiscal ceilings, affordability screening, commitment control, portfolio prioritisation, and the link between project selection and budget allocation.

1.1. Ukraine’s first-order challenge is to make scarce funding more selective, credible and durable

Ukraine’s reconstruction needs are vast, while confirmed budgetary and partner resources remain far below total needs. Under these conditions, the state cannot afford a broad or weakly filtered investment portfolio. The practical implication is that public funding, donor funding and guarantee capacity must be allocated through stronger gatekeeping and stricter selectivity rather than through dispersed project accumulation.

The review therefore supports public investment management reforms that link project initiation more tightly to medium-term planning, budget constraints and portfolio discipline. The move towards a smaller and more selective Single Project Pipeline, together with the stronger role of the Strategic Investment Council and the use of DREAM as a common data environment, is broadly sound. The main issue is no longer whether Ukraine has started to build a pipeline and set the procedures right. It is whether the pipeline is credible enough that projects entering it are sufficiently prepared, costed, screened and institutionally owned to justify scarce funding commitments.

Portfolio credibility also depends on public integrity. A more selective pipeline will only improve delivery outcomes if project selection, costing, procurement strategy, contract changes and payments are protected from undue influence and manipulation. This is particularly important in reconstruction, where urgency, large works contracts and exceptional procedures can weaken ordinary controls. Integrity safeguards should therefore be treated as part of infrastructure governance, not as a separate compliance layer added after projects have already been selected and designed.

1.2. The reform frontier has shifted from pipeline creation to project preparation and delivery readiness

A repeated finding across the governance chapters is that Ukraine’s reform challenge is broader than appraisal in the narrow sense. The emerging framework now covers preparation, screening, prioritisation, appraisal, selection, implementation and monitoring. This broader scope is important because the quality of selection depends heavily on the quality of preparation before formal appraisal begins: whether needs are translated into credible concepts, whether options are compared, whether technical solutions are sufficiently developed, whether cost estimates are realistic, and whether project sponsors have access to preparation support before they are expected to compete for portfolio entry.

This is why DREAM should be treated not merely as a transparency or registry tool, but as a strategic-planning and learning instrument. A persistent project identifier, common maturity tiers, standard project information and stronger interfaces across planning, budgeting, procurement and monitoring would allow the state to move from seeing projects as isolated approvals towards managing them as part of an evidence‑based portfolio. The point is to reduce the gap between formal prioritisation and actual readiness to procure and deliver. This does not mean that DREAM can substitute for procurement oversight, internal control, audit or enforcement. Its role is to make decisions, documents, identifiers and implementation records traceable. Accountability depends on whether responsible institutions use that information to detect anomalies, challenge weak documentation, scrutinise contract modifications and act on identified risks.

1.3. Ukraine’s stronger upstream architecture is not yet matched by downstream delivery discipline

The IGI results sharpen the central governance diagnosis. Ukraine performs relatively strongly on long‑term strategic vision and especially on fiscal sustainability, affordability and value for money, but is weaker on procurement strategy, stakeholder systematisation and evidence‑informed management across the asset lifecycle. This suggests that reforms have advanced further in planning, appraisal and fiscal-control functions than in the downstream functions that determine whether approved priorities are converted into delivered and well-managed assets. That indicated progress in the reformed areas, while also exposing the next reform frontier: advancing on infrastructure projects’ delivery strategy and packaging, procuring, managing and learning from them. This will help Ukraine convert priorities into infrastructure outcomes.

The operational risk is therefore not that upstream improvements in infrastructure governance may not deliver their full effect without stronger procurement strategy, contract management, asset-management evidence and feedback into future portfolio decisions. Procurement remains too price‑driven for complex works, competition is limited even where procedures are formally competitive, and wartime flexibility has expanded non-competitive routes in areas where pricing and integrity risks are already high. At the same time, asset management remains underdeveloped, with weak condition evidence, limited service‑level monitoring, and insufficient distinction in budgeting between routine maintenance, major rehabilitation and replacement. Decommissioning is also treated too narrowly as a late disposal issue rather than as a lifecycle consideration. Ukraine therefore needs to connect planning strength to delivery strategy, balanced contractual relationships, stronger contract management, asset-management plans and more explicit end-of-life planning.

That downstream weakness appears in several forms. Procurement remains too price‑driven for complex works, competition is limited even when procedures are formally competitive, and wartime flexibility has expanded non-competitive routes in areas where pricing and integrity risks are already high. At the same time, asset management remains underdeveloped, with weak condition evidence, limited service‑level monitoring, and insufficient distinction in budgeting between routine maintenance, major rehabilitation and replacement. Decommissioning is also treated too narrowly as a late disposal issue rather than as a lifecycle consideration. The practical conclusion is that Ukraine must connect planning strength to delivery strategy, balanced contractual relationships, stronger contract management, asset-management plans and more explicit end-of-life planning.

1.4. Public funding and donor support remain the backbone, but financing capacity must be built around them

The financing chapters show that publicly backed structures dominate infrastructure transactions in Ukraine. Road and rail investment has been funded largely through state budget resources and loans from multilateral development banks, while private investment has been concentrated in ports and, to a lesser extent, airports. In the 2025 budget, large shares of infrastructure‑related allocations were supported by state guarantees and bilateral or multilateral funding. This confirms that the immediate reconstruction model is still driven primarily by public and donor funding rather than by a mature domestic infrastructure‑financing market.

That reality should not be obscured by the language of mobilisation. Ukraine does need more private financing, but financing cannot replace weak project preparation, poor governance or unstable risk allocation. Domestic bank lending remains shallow relative to peers, capital markets are underdeveloped, domestic project-finance capability is limited, and state‑owned banks and enterprises still present governance and balance‑sheet issues that affect investor confidence and intermediation capacity. The immediate task is therefore dual: preserve and allocate public and donor funding more credibly, while gradually building the institutional, financial-sector and risk-mitigation conditions that make more sophisticated financing structures possible.

This is also where the distinction between funding and financing has direct policy implications. Donor grants, concessional loans, budget transfers and guarantee envelopes are primarily funding-side enablers or risk absorbers. Bank lending, equity participation, bond markets, securitisation and blended finance structures belong to the financing-side architecture. Ukraine will need both, but in sequence and with discipline. Weakly prepared projects cannot be made bankable merely by layering guarantees on top. Conversely, well-prepared projects in viable sectors may still require public or donor funding support, especially where war risk, affordability constraints or limited user revenues make purely commercial financing unrealistic.

1.5. Private participation should be expanded selectively

Ukraine still faces significant implementation challenges in developing bankable PPPs, including fragmented institutional responsibilities and weak project preparation capacity. At the same time, debt sustainability remains a real constraint, and the fiscal implications of PPPs and guarantees need to be identified, assessed, disclosed and managed within the relevant fiscal-risk and budgetary frameworks. Private participation should expand where the underlying project economics, contractual structure and risk-mitigation tools are credible, building on recent public investment management reforms.

The transport sector findings reinforce this differentiated approach. Ports are the clearest near-term area for private financing and private participation because they can generate freely usable currency revenues and build on past experience with concession structures. Airports may become candidates when airspace conditions allow. Roads and rail remain strategically important, but for now rely on public funding and MDB-backed structures. Here, better maintenance planning, stronger integrity safeguards and, in due course, more disciplined use of blended finance structures may be more realistic than a rapid expansion of commercially financed PPPs.

1.6. Sustainability, resilience and integrity need to be built into the core system

The report also shows that sustainability and resilience are no longer peripheral concerns. Ukraine is aligning its sustainable finance and disclosure architecture with the EU acquis, climate adaptation has become materially relevant for infrastructure performance, and recent reforms have clarified the need to integrate environmental and social considerations into feasibility studies. The next step is to move from compliance at the point of approval to lifecycle integration: climate risk, environmental and social reporting, resilience measures and broader non-financial performance need to inform planning, design, financing and asset management rather than sit only in stand-alone environmental impact assessment (EIA) documents.

Ukraine has made progress in strengthening its anti-corruption and public integrity framework, but reconstruction creates concentrated risks because large volumes of funding, urgent delivery pressures, complex works contracts and wartime exceptions interact across the infrastructure lifecycle. The main risks extend beyond the tender procedure itself and can materialise across the infrastructure lifecycle: project identification, appraisal, design, cost estimation, tender documentation, bidder selection, contract modification, supervision, payment and asset operation. For this reason, digital tools, open data and traceable project records are necessary but insufficient. DREAM, Prozorro and related disclosure platforms can make project information more visible and comparable, but they do not automatically prevent tailored specifications, collusive bidding, manipulation of cost estimates, unjustified amendments or weak quality control during execution. Integrity safeguards therefore need to be embedded in the operating system for infrastructure delivery: internal controls, audit follow-up, competition enforcement, beneficial ownership transparency, civil-society scrutiny, investigative capacity and credible sanctions must work together with project-preparation, procurement and contract-management reforms. Stronger integrity safeguards are not only needed to prevent waste, misappropriation and corruption in public spending. They also support investor confidence, competitive markets, public trust and continued international support.

1.7. Transport provides the clearest test case for integrated reform

Transport provides a strong sectoral illustration of the report’s wider argument. It combines very large reconstruction needs, major relevance for economic recovery and EU integration, a mix of funding and financing models, and clear differences across subsectors in their readiness for private participation. It also concentrates several of the report’s hardest governance challenges at once: project prioritisation, land acquisition, procurement strategy, maintenance under fiscal stress, SOE governance, cross-border connectivity, and climate and resilience pressures.

For that reason, transport should be treated as a lead sector for phased implementation of the wider reform agenda. The sector offers the strongest case for using the new public investment management (PIM) framework aimed at strengthening the planning and execution of public investments through inter alia DREAM interoperability, better preparation support, more disciplined procurement strategy, stronger maintenance planning, targeted use of guarantees and blended instruments, and closer alignment with EU network and sustainability objectives. If these reforms cannot be made operational in transport, it is difficult to see them taking hold elsewhere at scale.

1.8. Priority recommendations

Ukraine does not primarily need a larger list of projects or a broader menu of financial instruments for now. It needs a tighter system that allocates scarce funding more selectively, prepares projects to a higher and more comparable standard, uses financing instruments where underlying project conditions justify them more effectively, and manages infrastructure as a full lifecycle responsibility rather than as a sequence of disconnected approvals and contracts. The strategic direction of reform is already visible. The decisive task is to turn that direction into repeatable practice across planning, preparation, procurement, financing, management and renewal. The key recommendations can be summarised as follows:

• Treat the pipeline as a fiscally bounded portfolio, not as a registry. Enforce readiness tiers and minimum data standards as conditions of entry and continued inclusion and use periodic portfolio correction to reallocate funding from non-performing projects to implementation-ready projects.

• Consolidate appraisal and preparation requirements into a single framework. Align project proposal grading, feasibility thresholds, independent challenge and quality assurance gates, and ensure consistent application across sectors and levels of government through standard templates and training.

• Make procurement strategy a mandatory pre‑tender decision for major infrastructure. Assign clear ownership on the client side, require structured market analysis and packaging logic, and ensure risk allocation and price adjustment choices are decided before the launch of a tender.

• Integrate PPP screening into the same front-end governance chain. Use early screening followed by value for money (VfM), affordability, fiscal risk and market interest assessment where warranted, and avoid separate PPP pipelines outside PIM and DREAM.

• Strengthen contract management and integrity controls where wartime derogatory regimes and exceptions may exacerbate risk. Prioritise complete disclosure, disciplined change control, and traceable links between project records, procurement documentation and payment systems, using DREAM identifiers as the backbone.

• Build credible evidence base for asset management and lifecycle performance. Focus initially on condition evidence, service‑level monitoring and maintenance planning for critical networks, with systematic feedback into planning and portfolio choices.

• Target financing mobilisation to where governance and project readiness justify it. Expand war-risk and political-risk mitigation tools in collaboration with international partners but treat them as complements to bankability rather than substitutes for preparation and integrity safeguards.

• Strengthen financial intermediation for infrastructure over time. Improve state‑owned bank governance and gradually reduce the amount of government debt held by domestic banks, develop project finance capability in the domestic banking sector through syndications with international banks, and progress capital market reforms to enable longer-term instruments when conditions permit, including in local currency, and allow for securitisations that leverage Ukraine’s existing asset base to undertake new investments.

• Mainstream climate resilience and sustainability across the lifecycle. Move from EIA compliance at approval to routine climate‑risk assessment, resilience measures in design and maintenance, and stronger non-financial reporting that can support EU-aligned funding and financing requirements.

• Use transport as the lead sector for operationalising reform. Prioritise maintenance and integrity in roads, interoperability and cross-border connectivity in rail, and selective private participation in ports and airports where war-risk coverage, governance safeguards and revenue fundamentals make it credible.