Posts State Cabinet of Ministers 1364 22 July 2025
The Cabinet promises to present an industrial strategy for 2026-2030 by the end of 2025
On July 16, the longest premiership in Ukraine’s history came to an end – Denys Shmyhal had headed the Cabinet of Ministers since March 4, 2020. He himself considers the greatest achievement of his government to be the preservation of macrofinancial stability and the attraction of $137 billion in Western support. However, the price of his Cabinet’s mistakes in the context of the war is extremely high and may not yet have fully manifested itself.
However, the new composition of Yulia Svyrydenko’s government is the same as the previous one. Experts have certain hopes for the new government, without expecting radical changes in economic policy. The most that can be expected from the new Cabinet is deregulation and another suspension of business inspections. These measures simply do not require additional funds, which are not available in the state budget anyway.
Current industrial policy
Neither before the war nor during it did the Ukrainian government have a systematic and consistent industrial policy. Ukrainian industry is developing in conditions of market self-regulation and constant external shocks, rather than within the framework of a state strategy.
Since the beginning of the war, Denis Shmygal’s government, according to many experts, has not taken sufficient measures to support and restore the economy.
The previous Cabinet of Ministers managed the economy manually, with decisions being made in response to an event or deterioration of the situation, rather than preventively. As a result, the Ukrainian economy is now surviving the war “in spite of” rather than “thanks to” it.
The authorities now refer to the use of a number of stimulus tools, some of which are “squeezed” into the “Made in Ukraine” program, as industrial policy:
- the “Affordable Loans 5-7-9%” program and support for projects with significant investments of over €12 million;
- compensation of 25% of the cost of Ukrainian agricultural machinery and 15% of various machinery and energy equipment;
- localization of machine-building production;
- industrial parks with tax and customs privileges for residents;
- grant programs for businesses (for the development of processing enterprises, starting or developing your own business, for veterans and women);
- insurance through the Export Credit Agency (ECA), etc.
“Ukraine already has an industrial policy. Industrial parks, localization, grants for processing, the ”5-7-9%» program are all instruments of industrial policy. However, it remains fragmented and limited in terms of resources and instruments. This is not enough for significant structural changes in the economy,» said Volodymyr Vlasyuk, director of the state-owned enterprise Ukrpromvneshekspertiza, in a comment to GMK Center.
Due to the limited funds allocated, these programs generally do not have a significant impact on the Ukrainian economy. No more than $1 billion per year is allocated for incentives, and the size of some programs is 1-3 billion UAH per year. For example, in 2024, the ECA supported the exports of 69 companies with insurance totalling only 7.5 billion hryvnia, while the total volume of exports was $41 billion.
In addition, the use of these funds is often ineffective. For example, the “Affordable Loans 5-7-9%” program (UAH 18 billion is allocated for it in the 2025 state budget) is largely used by agricultural and trading companies to repay old debts, rather than for investment purposes. Under this program, UAH 93 billion in loans were issued in 2024.
“Practically everything is dictated by memoranda with the IMF, which are a cover for what the Ministry of Finance wants. The Ministry of Economy can do practically nothing except for small programs like ”5-7-9%,» explained economic expert Daniil Monin in a comment to GMK Center.
It can be stated that at the moment, Ukraine does not have an effective and systematic industrial policy in the classical sense of the term. There are a number of programs and initiatives, but they are fragmented, often unsynchronized, and not backed by the “political will” to implement them and the financial mechanisms for their implementation.
The lack of a clear industrial policy is clearly reflected in decisions that are made without considering the consequences for the economy in wartime. These include raising state monopoly tariffs without considering the negative consequences for Ukrainian businesses and without seeking internal reserves to improve performance.
Is a strategy needed?
In such cases, economists of the old school propose developing an industrial policy strategy and creating another analogue of the Ministry of Industrial Policy, which was liquidated in 2014 by being incorporated into the Ministry of Economy. Supporters of such measures even had hopes for the newly created Ministry of Strategic Industries, which appeared in 2020.
In turn, the Ministry of Strategic Industries did not become the starting point for new industrial development, due to the lack of systematic political will to develop industry and the war. Since the beginning of the war, the ministry has been dealing only with the defense industry, which does not quite correspond to its original functions. Following the vote on the new Cabinet, the Ministry of Strategic Industries will become part of the Ministry of Defense. This means that the management of the industrial sector will once again be lost in the depths of the new “Ministry of Resources” — the economy, environment, and agriculture.
However, the Cabinet of Ministers is currently developing an industrial strategy for 2026-2030. It is aimed at developing a competitive, innovative, and export-oriented industry, strengthening integration into the EU market and production networks, etc. Within its framework, it is planned to redesign support instruments in accordance with priorities, introduce Smart Specialisation Strategies in line with EU standards, etc. The priority sectors are identified as mechanical engineering, infrastructure and construction, IT and digital industries, defense and dual-use technology, steel industry (including green sector), energy, and agro-processing. The strategy is scheduled to be finalized by the end of 2025.
However, strategic documents in Ukrainian public administration have their own peculiarities. In our country, strategy writing has become a self-sufficient task, largely for the sake of fulfilling the IMF’s structural benchmarks. Ukraine already has dozens of strategies that no one is implementing. Any strategy without realistic goals, funding, and a control mechanism will inevitably become a useless document.
New goals
Among the plans announced by Yulia Svyrydenko for her government, the following are noteworthy:
- the introduction of a 5-year moratorium on business inspections;
- simplification of business conditions: from construction and connection to energy supplies to the abolition of 90% of permits and licenses;
- controlled opening of arms exports;
- launch of grant support for startups in the field of defense technologies;
- special economic regime in frontline regions.
“We will make every effort to support Ukrainian entrepreneurs. We need quick and tangible steps, namely comprehensive deregulation, an end to unauthorized pressure on business, acceleration of large-scale privatization, and further implementation of effective support mechanisms,” notes Yulia Svyrydenko.
In turn, businesses expect the new Cabinet to deregulate, reduce the role of the state in the economy, stop pressure from law enforcement agencies on businesses, etc. This roughly coincides with how the new prime minister himself sees his tasks.
The new Cabinet’s list of plans seems logical given the current economic conditions and the range of available solutions that do not require significant additional funding.
Cosmetic changes
The need to change the state’s economic policy in the context of war has been long overdue, so economists have greeted the personnel changes in the Cabinet with some hope.
“Yulia Svyrydenko implemented these instruments in her position as Minister of Economy, so she understands what industrial policy is. She was the one who advocated for the preservation of the ”5-7-9%» program, the purchase of agricultural equipment, and grants for processing in the Cabinet of Ministers. She traveled extensively to enterprises at the invitation of people’s deputies. This gives us hope that in her new position, she will be able to significantly scale up these tools and add new ones,» says Volodymyr Vlasyuk.
Parliament is also optimistic about the results of the new government’s work.
“Industry remains one of the government’s priorities. This means that all state budget expenditures planned for 2025 to finance business support programs will be fulfilled 100%. And we will try to expand some of them,” notes Dmytro Kysilevsky, deputy chairman of the Verkhovna Rada Committee on Economic Development.
At the same time, experts doubt that Yulia Svyrydenko’s Cabinet can be expected to make any significant breakthroughs, even though it will receive more powers and a certain carte blanche.
«I highly doubt that there will be any significant changes under her, but some policies will definitely change. There will likely be a reduction in the number of civil servants and an end to business inspections. The authorities are already starting to think about the elections. Finance Minister Sergei Marchenko is also in the new Cabinet, which means that 90% of economic policy cannot change in principle,» says Daniil Monin.
A different approach is needed
The war could trigger the final decline of industry in the Ukrainian economy—many industries have been left in the occupied territories, damaged or destroyed, and those that are still operating lack manpower and working capital.
After the war, our country will have to rebuild its industrial base largely from scratch, although it will have the opportunity to make a technological leap forward. To take advantage of post-war opportunities, the state needs to fundamentally change its attitude toward industry and industrial policy. Ukrainian business needs greater and more systematic support, above all in terms of access to long-term and cheap money. This will enable it to achieve one of the goals of the new Cabinet of Ministers: to increase the share of the processing industry in GDP from 8% to 20% over 10–15 years.
«To do this, it is necessary to stimulate capital investment in the construction of new plants in order to reduce some of the business risks and make the project cheaper, as well as to significantly scale up the existing instruments. For example, the cost of building an agricultural processing plant starts at $10 million, a grain processing plant at $100-150 million, and a bioethanol plant at $30 million. Meanwhile, under the “5-7-9%” program, the state only provides loans of $1-3 million. The same applies to other instruments, the scale of which also needs to be increased. To implement large projects, it is necessary to create a National Development Bank,» believes Vladimir Vlasyuk.
The costs of environmental modernization of enterprises will be even greater, which is inevitable within the framework of European “green” policy and CBAM. According to some estimates, the modernization and construction of new metallurgical facilities using green technologies alone will cost approximately $11 billion. Domestic metallurgical companies do not have such funds of their own, and attracting loans on Western capital markets is now significantly limited by the war.
The global trend toward the use of renewable energy sources will require billions of dollars in investments to implement green energy in Ukraine. This trend must be very large-scale in order for green electricity to ultimately become affordable for industrial consumers.
According to him, it is also very important that our industrial policy be consistent and have an implementation horizon of 10 years. It should not depend on political cycles. However, Ukraine has not yet learned how to implement long-term strategies.
Everyone understands that while the country is at war, any large-scale support for business is impossible due to the enormous costs of defense and security. Some improvement in the financing of industrial projects is possible in the process of post-war reconstruction and acceleration of European integration. Integration with the EU implies adaptation to European standards and industrial policy and access to EU structural funds for candidate countries.
