Ukraine takes further step in public investment management reform

On 7 October 2026, the Ukrainian Government adopted Resolution No. 1249 approving the Procedure for the Preparation and Implementation of Projects and Public Investment Projects Financed by Loans Raised by the State from Foreign States and Foreign Financial Institutions (“Procedure”). The Procedure became effective upon its official publication on 10 October 2026.

The Procedure marks a further step in Ukraine’s public investment management reform by consolidating previously fragmented Budget Code rules into a single procedure for public investment projects and other projects financed by loans from foreign states and foreign financial institutions. The Procedure clearly establishes the unified contractual structure of such financings, which may include up to three interlinked levels:

(i) Intergovernmental level: framework agreement. The framework agreement is an international treaty of Ukraine that sets out the key parameters of a project, such as its scope, purpose, parties involved and funding arrangements. Where one is in place, it shapes the rest of the transaction: it may designate the lender or define the pool of potential lenders, and all the other transaction documentation must take it into account;

(ii) Financing level: loan agreement. Lenders may be foreign states or foreign financial institutions, such as banks and export credit agencies. Unless the framework agreement designates the lender, the Ministry of Finance of Ukraine (“MoF”) selects it through the request for proposals. Proposals are assessed against the criteria set out in the request, including interest rate, fees and tenor. The MoF may select a single lender (including one responsible for arranging a syndicate) or several lenders and, if no acceptable proposals are received, may rerun the process on revised terms. The loan agreement then establishes the detailed financing terms between Ukraine and the relevant lender;

(iii) Implementation level: domestic agreements. The domestic agreements pass the financing as well as the project undertakings on to the entity implementing the project (“Implementer”). The Implementer may be a state authority, a local self-government authority or a state- or municipally-controlled business entity. Depending on the Implementer’s status, the following agreements may be concluded between the MoF and the Implementer:

• sub-loan agreement – the MoF on-lends the loan proceeds to the Implementer which is not a state authority on a repayable, interest-bearing, fixed-term and purpose-bound basis, reflecting the terms of the loan;
• funds transfer agreement – a non-repayable transfer by the MoF of the loan proceeds, available only where the Implementer is not a business entity;
• security agreement – secures obligations of the Implementer which is not a state authority under the sub-loan agreement and is granted to the MoF by the Implementer or its surety, as the Budget Code requires; and
• other agreements – on reporting, monitoring and evaluation, as well as any other matters needed for the project to be implemented effectively may be concluded with the Implementer and/or the coordinating body, being the central executive authority responsible for the state policy in the project area.

WHY IT MATTERS

The Procedure largely codifies the documentation structure and practices that the MoF has applied to date. For foreign states, export credit agencies and banks, the Procedure provides legal certainty as to the roles of the parties, the transaction documentation and the allocation of project-level undertakings. It is a welcome development and a further sign of Ukraine’s steady progress on public investment management reform, which should help attract foreign financing for the country’s development and recovery.

ADDITIONAL NOTES

This legal alert is issued to inform AVELLUM clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The information above does not constitute legal or other advice and should not be considered a substitute for specific advice in individual cases.

For further information on this legal alert and other issues regarding sovereign financing, please contact our senior partner, Glib Bondar.