What Yulia Svyrydenko’s government plans to do for the economy

On July 17, the Verkhovna Rada approved the appointment of Yulia Svyrydenko as prime minister and the updated composition of the Cabinet of Ministers. A month later, the government presented a draft action program that outlines 12 key areas of government policy for 2025-2026, as well as step-by-step implementation plans and performance indicators.

Government intentions

The key points of the action program that are important for the economy and business include the following:

1. Section “Macroeconomics and Reforms”:

• attracting $37.4 billion in macro-financial assistance from partners for 2026-2027;
• conducting an audit of public expenditures and measures to reduce the shadow economy;
• adopting an updated Customs Code next year.

2. Section “Business”:

• attracting investments, in particular $5 billion through joint investment funds with the EU, IFIs, and partner governments;
• creating conditions for growth: introducing a five-year moratorium on inspections, 200 procedures will be transferred to a declarative principle, and another 60 will be abolished by the end of 2026;
• the “Made in Ukraine” program will provide UAH 55 billion in financing for production by the end of 2026.

3. Section “Winter Stability”:

• protecting critical infrastructure from drones and missile strikes;
• preparing the power system for the 2025/26 heating season, accumulating 13.2 billion cubic meters of gas in storage facilities;
• introducing 200 MW of distributed generation by the end of the year.

It is very important that the government has added to the European integration action program a postponement for Ukraine of the Carbon Border Adjustment Mechanism (CBAM). This will help Ukrainian exporters remain competitive in the EU market and support the national economy in wartime. Also important in the context of European integration is the intention to open negotiations on an “industrial visa-free regime,” for which the adoption of two key draft laws is planned.

On the other hand, it is already clear that the implementation of certain points of the action program will be difficult due to external circumstances beyond the government’s control. In particular, the section on European integration stipulates that the government will be ready to start negotiations with the EU on six clusters by the end of 2025. However, it is already known that Hungary will not agree to open the first cluster of negotiations on Ukraine’s accession to the EU, and it is unclear whether the European Union will implement a specific “Plan B” in this case.

Among other government intentions outlined in the action program, it is worth noting those that are extremely important for Ukrainian business and iron and steel companies in particular:

1. Stimulating economic activity – introducing the Industry Development Strategy until 2030, insuring military risks, special conditions for business in frontline regions, compensating capital investments through tax breaks, expanding affordable mortgage programs such as “єОселя.”
2. Performance of state functions and regulation – risk-based approach to inspections, deregulation, launch of the State Migration Service reform, adoption of a new Labor Code.
3. Logistics – increasing the capacity of border crossings for freight and passenger transport by at least 15%, ensuring the financial stability of Ukrzaliznytsia.
4. Energy – protection of energy infrastructure, repair and restoration of generation and networks, development of distributed generation, and expansion of the capacity of inter-state crossings.
5. Ecology – reform of environmental control (preventive control), adoption of legislation on emissions trading, optimization of the process of obtaining an environmental impact assessment conclusion.

Business assessment

Ukrainian businesses have submitted numerous proposals to the Cabinet of Ministers’ action program. In particular, the European Business Association has proposed the following list of priority issues for the government’s immediate attention:

1. Improving the work of customs and tax authorities and the Economic Security Bureau (ESB).
2. Ensuring a balance between the country’s defense and economic interests, in particular through the introduction of economic reservations for employees and a transparent, predictable reservation procedure based on criticality criteria.
3. Supporting businesses in frontline regions, including through tax breaks, grants, access to financing, etc.
4. Further currency liberalization.
5. Developing tools for accessing business financing and insurance against military and political risks, etc.

The Ukrainian Business Council proposes to refine the government’s action program. In particular, instead of a moratorium on inspections:

• introduce quality KPIs for the State Tax Service and the State Customs Service, as well as for the State Bureau of Investigation, aimed at minimizing the tax gap, improving the quality of analytics, and reducing inspections of conscientious businesses;
• introduce a high-quality risk-oriented inspection system for the State Tax Service, aimed exclusively at minimizing large-scale “gray” schemes;
• amend the Code of Administrative Offenses (increase penalties for “black” trade in excisable goods, reduce penalties for technical errors in reporting and receipts, increase liability for illegal provision of financial services), etc.

According to the business community, the creation of a State Agency for Military Risk Insurance (provided for in draft law No. 12372) is ineffective, as these functions are already performed by insurance companies. Therefore, it is proposed to provide partial state subsidies for voluntary military risk insurance by insurance companies and to provide for the use of ECA for reinsurance, instead of creating a new state body.

In addition, businesses propose introducing clear criteria for labor relations within the new Labor Code to minimize the use of sole proprietorships and simplify the working conditions for conscientious businesses. The new Tax Code should include a reduction in the number of taxes, a reduction in payroll taxes, etc.

For its part, the Ukrainian Union of Industrialists and Entrepreneurs (USIE), within the framework of the Anti-Crisis Headquarters for Economic Stability under Martial Law, proposes the following:

1. Introduce a predictable mechanism for protecting specialists in critical professions in manufacturing, logistics, and energy.
2. Launching public-private programs to attract new labor resources to the economy, including young people, internally displaced persons, and senior citizens.
3. Creating incentives to support producers, including access to working capital, support for modernization, and reduction of tax pressure.
4. Implementation of a modern industrial policy through industrial and innovative development and prioritization of processing industries.«War is not only about the front, but also about the rear, the economy, and national resilience. If we do not stabilize the situation at the enterprises, we risk losing not only GDP, but also tens of thousands of jobs, exports, and tax revenues,» emphasizes Anatoliy Kinakh, President of the ULIE.

First decisions

The following steps are among the positive decisions of the new government to stimulate business development:

1. Launching a comprehensive program to support frontline regions. Authorizing the reservation of 100% of employees of critical enterprises in the frontline areas.
2. Adoption of amendments to the legislation to improve the mechanism for suspending the registration of tax invoices, which will halve the number of taxpayers facing blocking.
3. Expanding the list of Ukrainian industrial machinery and equipment, 15% of the cost of which is compensated by the state to buyers.
4. Adding six new parks to the register of industrial parks.

At the same time, the government’s first decisions will resemble a traditional imitation of the activity. The draft program states a moratorium on business inspections for five years, while the NSDC decision of July 21 provides for a one-year restriction. In addition, on July 22, the SES launches regional inspections of fire safety and civil protection with corresponding fines for non-compliance. Moreover, regulatory authorities are finding ways to circumvent the moratorium.

«Despite the PR, the government hasn’t actually imposed the moratorium for even a day. But it is already successfully reporting on its virtual existence. Nothing has been done at all. Check out the news of the State Bureau of Investigation, the National Police or the BES… they all work in the same mode,» said MP Yaroslav Zheleznyak.

Implementation issues

It should be noted that the government’s action plan only mentions addressing the urgent current needs of Ukrainian businesses in a fragmented and incomplete manner. In particular, the issue of reserving personnel only concerns frontline regions, where companies are allowed to have a 100% “reserve.” This is very important for ferroalloy and pipe plants, but does not affect large mining and metallurgical enterprises in other territories that also have this need.

The problem of expensive logistics can only be partially solved, more through improving logistics capabilities than through reducing costs. The state could cover the losses from Ukrzaliznytsia’s passenger transportation in the amount of UAH 20-22 billion per year, but the question remains open as to whether such funds will be found against the backdrop of huge defense expenditures.

At the same time, the Cabinet’s action program does not address the issue of currency restrictions, which falls under the jurisdiction of the National Bank of Ukraine, the timely return of VAT to exporters, or the high cost of electricity.

In general, experts have certain hopes for the new government, but without expecting radical changes in economic policy. In fact, nothing else could be expected, since there was only a formal reboot of the government without the appearance of “new faces” and a fundamental change in approaches to economic management under martial law.

Moreover, the previous composition of the Cabinet of Ministers did not even report to parliament. And it is clear that the previous government was directly involved in the partial failure to implement many of the most important programs in wartime: the timely provision of all necessary supplies to the Armed Forces, mobilization, the construction of fortifications, and the maximum de-shadowing of the economy.

The main point is that the measures outlined in the draft action program of the Cabinet of Ministers are not capable of solving the key current problem—strengthening economic growth.

At the end of the first half of the year, there was a slowdown or decline in key macroeconomic indicators:

• GDP – 1.3% y/y (according to IER estimates);
• industrial production – -3.9% y/y;
• construction – 2.4% y/y.

Since the beginning of the war, the economy has been managed in a rather haphazard manner, and the scale of support for business remains extremely limited. As long as the war continues, this situation is unlikely to change due to the enormous expenditures on defense and security.

Businesses will already be satisfied if management decisions in Ukraine are made taking into account the consequences for the economy in wartime. These include increases in state monopoly tariffs without considering the negative consequences for Ukrainian businesses and the search for internal reserves to improve performance.