Ukraine - Strengthening Government Capacity for Fiscal Reform Implementation Project : Additional Grant

Overview & Synopsis

The development objective of the Strengthening Government Capacity for Fiscal Reform Implementation Project for Ukraine is to enhance the Government's capacity to plan and finance recovery and reconstruction. This paper requires an additional financing of thirty million Additional Financing (AF) from the URTF will establish the conditions necessary for the consolidation of the IT capacity under MoF and address urgent needs to strengthen cybersecurity, establish the foundational analytics and AI capabilities to exploit the value of PFM data, and ensure system reliability and business continuity across the PFM domain. The AF and Project restructuring will expand Project Component 4 to support Ukraine’s revised PFM IT Strategy, align with the Government’s Recovery and Reconstruction Plan, and support EU accession objectives. The AF will strengthen OPF’s capacity and finance: the IT transformation unit and the competence centers; preparation of IT systems consolidation; preparing the foundational infrastructure for a private cloud; creation of a Security Operations Center (SOC); development of data governance and responsible AI use frameworks and supporting protocols for all PFM Institutions; and the establishment of a centralized data warehouse, which will allow piloting advanced analytics. These investments will mitigate cybersecurity and operational risks across PFM institutions, increase fiscal resilience and EU accession readiness, and lay the groundwork for broader modernization to be supported in subsequent investment projects. In addition to the creation of these critical capabilities, the AF will support technical assessments of legacy systems at STS and SCS, to prepare for migration and modernization strategies and associated business process reengineering. This AF is prepared in parallel with the SURGE PforR, including its first Additional Financing, approved on September 1, 2025 (US$246.55 million), and the second Additional Financing, currently under preparation and expected to be presented to the Board on June 23, 2026 (US$584.25 million). The Component 4 investments directly support the implementation of selected SURGE Results Areas by strengthening core digital infrastructure, cybersecurity, and data systems that underpin system interoperability, compliance risk management, and results verification. The AF supports investments identified in Ukraine’s PFM IT strategy that will modernize fiscal management and strengthen revenue administration. The AF is consistent with the World Bank’s Country Partnership Framework for Ukraine and aligns with the objectives of strengthening fiscal institutions, supporting recovery, and preparing for EU accession. The AF contributes to sustaining recovery financing and, indirectly, to protecting essential public services and social spending by strengthening the state’s capacity to mobilize and manage revenues and by addressing critical risks in fiscal IT systems. The AF will be implemented in close coordination with key development partners, including the International Monetary Fund (IMF) and the European Union (EU). The AF complements ongoing support by these partners, notably EU support in financing and developing PFM systems critical for Ukraine’s alignment with EU standards and IMF technical assistance for the implementation of the National Revenue Strategy (NRS).