Ukraine - Supporting Reconstruction Through Smart Fiscal Governance Program : Second Additional Financing

Overview & Synopsis

The development objective of the Supporting Reconstruction through Smart Fiscal Governance (SURGE) for Ukraine is to establish the institutional foundations for implementation and financing of climate-smart recovery and reconstruction. The additional financing is requested to close the original financing gap and scale up previously appraised but unfunded results so reforms move from regulatory design to sustained system use during an expanding reconstruction program, while reinforcing alignment with the European Union’s Ukraine Facility and broader economic governance expectations. The Bank will continue working in three areas: first, public investment management by making registration of all budgeted public investment projects in the Digital Restoration Ecosystem for Accountable Management (DREAM) mandatory, establishing regular interoperability with the Prozorro procurement platform, the State Treasury Service system, and budget information systems, operationalizing climate modules in DREAM, and ensuring that the Single Project Pipeline remains aligned with strategic priorities and integrates climate risk and mitigation in feasibility studies; second, local public financial management by expanding gender-informed medium-term budgeting and public reporting by hromadas, introducing systematic environmental and climate assessments for local investment proposals submitted through DREAM, requiring monthly reporting on local debt and guarantees, upgrading the Local Government Informational Analytical System for Managing, Planning, and Execution of Local Budgets (LOGICA) to digitally collect and analyze performance and gender information, and issuing and applying a Methodology for the Application of Gender Indicators in Budget Program Passports; and third, revenue administration by completing installation and operational use of an information technology solution for the Standard Audit File for Tax in Ukraine (SAF-T UA), publishing a State Tax Service Digital Development Plan aligned with the National Revenue Strategy 2030, and using compliance risk management data to inform the selection of large taxpayer audits. As a results-based operation with no physical components, the project intends to consolidate measurable improvements in transparent investment selection, climate- and gender-informed budgeting, reliable local fiscal reporting, and risk-based, digitally enabled tax administration, with independent verification of results and an extended closing date to allow completion and validation.