The introduction of a mechanism that allocates at least 20 per cent of non-repayable financial support from Component I of the Ukraine Facility to subnational authorities represents a historic opportunity to establish a modern system for planning and financing regional development in Ukraine that aligns with European standards.

Anatolii Tkachuk, Director of Science and Development at the Institute of Civil Society (ICS), explained this in a comment to the Decentralisation Portal.

‘This requirement is not just about money. It is about a new philosophy of territorial development management, where decisions are based on strategies, programmes, and transparent criteria rather than political expediency,’ Anatolii Tkachuk emphasised.

Under the Ukraine Facility mechanism, the European Commission will assess whether Ukraine has fulfilled its commitment to allocating at least 20 per cent of grant funds to subnational needs. To this end, the State Treasury Service must report on these expenditures based on a methodology that has yet to be agreed with the EU. The first assessment is planned for the ninth payment request after the second quarter of 2026 (the threshold is at least 5 per cent), with the final assessment planned for the end of 2027.

‘Unfortunately, there is no methodology yet. However, its development is not a technical matter, but rather a question of defining approaches to managing territorial development,’ notes the expert.

Anatolii Tkachuk points out that European cohesion policy is legally based on Articles 174–178 of the Treaty on the Functioning of the EU. The policy aims to reduce disparities between regions and support depressed, border, mountainous and rural areas – i.e. areas with structural and demographic problems.

‘In Ukraine, there are all types of territories that fall under the definition of cohesion policy – mountainous, border, old industrial, and war-affected territories. We need to create our own system of support tools that is compatible with the European one,’ he explained.

According to the expert, Ukraine’s main task is to transition from sectoral funding with no territorial ties to programme funding based on regional development strategies (RDSR-2027, regional strategies and recovery plans).

‘There can be no plans without money, and no money without plans. This is the fundamental principle of EU cohesion policy, and it must become our guiding principle,’ emphasised the ICS director.

Rather than financing individual projects, a system of regional development programmes similar to the European one should be implemented, taking into account both European priorities and Ukrainian needs. These programmes could support affected, border, rural, and mountainous areas, and promote the development of mobility infrastructure, human capital, ecology, and digitalisation.

According to Anatolii Tkachuk, the State Regional Development Fund (SRDF) is the most logical place to accumulate and manage these 20 per cent of funds. However, this fund currently operates as a budget programme rather than a financial instrument, contradicting European practice.

‘The SRDF needs to be modernised. It should become a genuine fund that allows resources to be accumulated from various sources, financing regional development on the basis of programmes rather than political decisions,’ said Anatolii Tkachuk.

For the effective use of such funds, Ukraine must ensure:

• long-term development programming (at the national, regional, and community levels);
• a reliable system of financial control and audit;
• compliance with EU legislation in the areas of public procurement, partnership, competition, gender equality, and statistics;
• a permanent interdepartmental coordination commission on regional policy issues.

‘Our membership in the EU will not mean that communities will simply receive funding for development projects. They will have to co-finance project costs, as the EU will only reimburse up to 85 per cent of them. Therefore, we need to consider loan mechanisms for communities, such as setting up a specialised development bank,’ the expert stressed.

In conclusion, Anatolii Tkachuk states that EU funds should act as a catalyst for creating a new regional development system in Ukraine that is programme-based, transparent, and strategic. This will require legal and organisational changes, as well as a new culture of financial management for territorial development.

‘Twenty per cent of EU funds is not just support; this is an opportunity. It is an opportunity to finally establish a system in Ukraine that functions in the same way as it does in Europe: transparent, smart, and programmatic,’ he concluded.