Ukraine's Finance Ministry says the country's Agency for Restoration systematically fails to perform its functions

The EU Delegation to Ukraine has expressed concern about the failure of Ukraine's State Agency for Restoration and Infrastructure Development to use €150 million for repairs, and this is not the first case of "ineffective management". 

Source: Ukraine’s Finance Ministry's response to an EP (Ekonomichna Pravda) request

Details: It has previously been reported that Ukraine's State Agency for Restoration and Infrastructure Development received a €150 million tranche from the European Commission in time but presented the financing plans to contractors without official government approval. 

The Ukrainian Ministry of Finance therefore noted that the Agency for Restoration is systematically failing to fulfil its functions. For example, it is supposed to ensure the construction of a water pipeline in Mykolaiv Oblast by 31 December 2024, with funds from international financial institutions, including the European Investment Bank.

"The procedure stipulates that the Agency for Restoration must submit a project proposal to the Ministry of Finance to determine the feasibility of preparing a joint project with international financial institutions. As of today, the Ministry of Finance has not received the said project proposal from the Agency for Restoration", the statement said. 

The Agency for Restoration not only sometimes acts at its own discretion without proper government approval, but also does not ensure the use of the allocated funds, the agency claims. 

In total, the state budget provided UAH 195.7 billion (US$4.8 billion) for the Agency in 2023-2024. In 2023, only UAH 82 billion (US$2 billion) of the allocated UAH 130.4 billion (US$3.2 billion) was used, and UAH 48.4 billion (US$1.1 billion) was not used by the Agency for Restoration and was instead returned to the state budget. 

In 2024, the Agency for Restoration was allocated UAH 65.3 billion (US$1.6 billion), of which UAH 10.3 billion (US$254,000) was used as of 1 May 2024. 

"The problem with the implementation of projects is not the lack of funds, but their inefficient use", the Ministry of Finance added. 

Background: 

• Ukraine's State Agency for Restoration and Infrastructure Development received a €150 million tranche from the European Commission, but presented the financing plans to contractors without official government approval. 
• Earlier, EP sources reported that the Finance Ministry and the government allegedly obstructed the distribution of €150 million from the EU for the protection of energy facilities due to "bureaucratic obstacles". This adds a further block to the allocation of the second part of the grant intended for the recovery of port infrastructure.

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