SEPTEMBER 2024
Removing Bottlenecks
for the Private Sector
Ukraine’s Current State of Reforms
By Romina Bandura, Daria Figlus, and Ilya Timtchenko
U
kraine is an incredibly resource-endowed country in terms of its land, talented workforce, and
geographic proximity to Europe, Asia, and the Middle East. Once the war is over, Ukraine has
the potential to be an economic powerhouse in Europe. However, its economy has inherited
many Soviet-era ailments, including a centralized and inecient enery system, excessive red tape, and
endemic corruption, making the business environment dicult. Russia’s war of aggression has added
even more challenges to the economy. As a result, companies operating in Ukraine have limited access
to nancing, are dealing with labor shortages, and suer from the infrastructure damage the war has
caused, particularly on enery facilities, transportation networks, housing, hospitals, and schools.
Despite this complicated scenario, Ukraine has been undertaking a series of reforms to combat
corruption, prepare the country for EU membership, and improve the overall business environment.
From strengthening anticorruption institutions to reinstating asset declaration requirements
and bolstering competition, the Ukrainian government—with the help of civil society actors and
international donors—is working to build a modern economy aligned with the West. This short paper
provides an overview of some of the country’s most important reforms aimed at strengthening the
private sector and attracting foreign direct investment. It also highlights the bottlenecks that the
business community is still experiencing and oers principles that the Ukrainian government and the
international community could follow to better engage the private sector.
Framework for Reforms
Despite ghting a brutal war, Ukraine wants to build a modern economy within the EU family. This
requires changing laws and regulations across sectors, building new institutions, and attracting fresh
investments into the economy. If there is a silver lining during this dicult time, it is Ukraine’s (and
Moldova’s) current path to EU membership.
