The document proposes a "European Plan for Ukraine" to boost economic growth through increased investments. It recommends establishing a Ukrainian-Lithuanian development financial institution that would manage projects co-funded by international donors and IFIs. The institution would work to improve Ukraine's investment environment and absorption capacity. With annual investments of €5 billion over 10 years, supported by necessary reforms, annual economic growth of 6-8% could be achieved, totaling €200 billion in increased economic output by 2027. Key aspects of the plan include establishing central project management, using blended finance from IFIs and donors, prioritizing sectors like infrastructure, MSMEs and SOEs, and making investments conditional on continued reforms.

1. EUROPEAN PLAN FOR UKRAINE
Building a Story of Success
An outline of a joint Ukrainian-
Lithuanian proposal for the
consideration of international donors,
EU&MS institutions, IFIs

2. ➤ Reforms and success of Ukraine are not irreversible. The EU has an
experience of bringing long-term stability and winning the hearts and minds of
people to keep the motivation for reforms. This was done by the soft power of
Marshall Plan in 1947 or by the EU enlargement in 2004.
➤ Today, the EU is facing another challenge in the Eastern Neighbourhood of
regional and political stability that can become an opportunity if addressed
properly also by economic policy means. To this aim, grand narratives and
incentives are necessary to sustain the momentum of reforms. Now, it is time for
the Marshall Plan for Ukraine.
➤ In this light we should offer the European Plan for Ukraine to boost
investments and economic development. According to the international experts
a sizeable doubling of the volume of investment up to 5 billion EUR annually can
result in 6 -8 % annual economic growth in Ukraine over the next 5 to 10 years.
➤ This initiative must be taken by a collective effort of Western community to
mobilise investments, boost the institutional capacity and sustain the momentum
of reforms. It must be instrumental, as institutions do matter and are smart in
creating investment incentives, attracting private and public capital, packaging
bankable investments and consolidating the instruments.
2
WHY THE NEW PLAN?

3. ➤ The European Plan for Ukraine should use the experience and success of the
Juncker Plan for Europe and the EU External Investment Plan. It should be
based on the same assumptions as recently announced by the EU Commission
regarding the mini Marshall Plan for Western Balkans, which aims at investing
more than 13B EUR into development of infrastructure and real economy in the
Western Balkans.
➤ The investments under the European Plan for Ukraine should be directed at the
infusion of funds into real economy with conditionality on revitalising structural
reforms and creation of investment friendly environment. The plan will not foresee
inclusion of budgetary support. The investments shall be visible in order to win
the support in Ukraine of ordinary people for reform efforts. To this aim we shall
think globally and act locally on energy savings, road infrastructure, jobs, public
services or reconstruction works.
➤ The investments under the European Plan for Ukraine will be channelled via
appropriate absorption capacity, a development financial institution in
Ukraine to manage and implement projects, make necessary governance
changes, create investment friendly environment, especially, in financial, land,
energy and SOE sectors. This will be done in meeting huge investment
opportunities in Ukraine.
3
WHY THE NEW PLAN?

4. ➤ How to increase a slow disbursement of funds committed in Ukraine? How to improve
absorption capacity in Ukraine?
Around 10B EUR are committed out of 12.5B EUR pledged since 2014. Disbursement of committed funds in Ukraine is very slow.
This issue can be addressed with an increased absorption of investment, especially in areas of MSMEs, large scale infrastructure
projects, SOEs, regional development. To this aim the absorption should be institutionalised with centralised project management
capacity (PMC), as for example reconstruction development agency, which gradually will be upgraded into an investment instrument
– development financial institution (DFI). This institution will be financially regulated and will be a trusted partner of participating IFIs.
➤ How to ensure the new instruments will be investment friendly and with zero tolerance to
corruption factors?
PMC and later DFI will be mandated and managed by representatives of participating IFIs and donor agencies together with Ukraine
authorities. PMC, DFI activities will be annually audited and based on transparency, OECD led corporate governance practices,
common set of rules (procurement, standards) agreed with donors and investors. The DFI will be second tier market friendly, an
independent, supervised and financially regulated institution.
➤ How to maintain the motivation of Ukraine authorities to continue reforms? How the
conditionality of investment plan will work?
The reform implementation will be periodically assessed by partner institutions – EU SGUA, IMF, IFI offices in Kyiv. Every year a list
of benchmarks will be produced to start the implementation of the next package of investment projects. Separate sections of large
long term projects can be conditional as well. The reform roadmap (governance, investment climate) will be adopted at the kick-off
event - Investor conference in Brussels and will be an integral part of a Compact (MoU) for investment mobilisation, institutional
setup and reforms in Ukraine.
4
FAQ

5. POTENTIAL AND PERSPECTIVE
2014: EU and IFIs pledged 11B EUR.
2017: 12.5B EUR pledged in total, of
which around 10B EUR committed
2017-2020: EIB mid-term review of
External Lending Mandate (ELM) - ?
2021-2027: the next EU multiannual
financial framework - ??
5
2017: Ukraine sold 3B USD of
Eurobonds in September, the first time
since debt restructuring in 2015
plan for 2018: raising 8B USD on
domestic and external markets with
additional 2B USD via the IMF

6. LEARNING FROM JUNCKER PLAN FOR EUROPE
➤ Juncker Plan for Europe: expected to trigger 236B EUR in investments
➤ External Investment Plan: two regional investment platforms (Africa and
EU Neighbourhood countries) with a one-stop-shop to receive proposals; a
new guarantee (750M EUR), of which 100M EUR will come from
European Neighbourhood Instrument, will be passed on to intermediary
financing institutions, which in turn will lend support, via loans, guarantees,
equity or similar products, to final beneficiaries; blending facilities to use
existing funding (2.6B EUR), of which 1B EUR to come from
Neighbourhood Investment Facility. Expected leverage - 44B to 88B EUR
➤ technical assistance to help local authorities and companies develop a
higher number of sustainable projects and attract investors; regional
development cooperation programmes targeted at improving the
investment climate and the overall policy environment in the countries
concerned
6
MAKING A PLAN FOR UKRAINE (A ‘MARSHALL’ PLAN)
➤ Adoption of EU lending mandate for Ukraine investment platform and
initiating credit lines from EIB, EBRD, other IFIs and international donors.
Anchoring the 2014-2016 IFI investment portfolio as a starting position for
a take-off (e.g. EIB with 3B EUR in 3 years or EBRD with 1B EUR per year)
➤ Investment support conditional to achieving structural reform and investment
related benchmarks, especially in area of anti-corruption.
➤ Increasing investment absorption and establishing development financial
institution founded by IFIs and Ukraine with adequate advisory, financial and
project management in-house capacity; it will have direct cooperation with
EIB, EBRD, IFC and other IFIs and international donors
➤ Juncker plan for Ukraine: expected leverage of 10 x 10 x annual 500M
EUR by 2027

7. ➤ Funding investments via IFIs and donors – IFI Compact
➤ Central project management capacity, Development
Finance Institution (DFI) in Ukraine
➤ MSMEs, infrastructure, SOE and regional components
➤ Conditionality, funding in tranches according to agreed
reform benchmarks (financial sector, justice, SOEs, red
tape)
➤ Creating favourable environment to investors, technical
component
➤ Building investor confidence, shared management with
representatives of IFIs, steering by donors, in-house
experts, annual audits, common rules of engagement,
trusted pool of financial intermediaries
➤ Sub-loans, guarantees, equity investments, ranging from
microfinancing to PPPs, risk sharing, marketing strategy
➤ Winning hearts of people, making investments visible
➤ Timeline: 10 years, until the end of the next EU financial
framework
PROPOSAL
7

8. BRUSSELS CONFERENCE IFI COMPACT
➤ High-level IFI stakeholders Invest Ukraine Conference in
Brussels (beginning of 2018)
➤ Investors Compact on Ukraine signed by EU, IFI, donor
agencies and Ukraine representatives
➤ Roadmap to include the setting of central project
management capacity (to be upgraded to DFI in Ukraine with
initial capital from IFIs, EU, EUMS and Ukraine) managed by
trusted representatives from founding parties
➤ Investment support under the Compact on Ukraine will be
conditional to implementation of reforms and creation of
predictable environment to entrepreneurs and investors
8
Partners to be invited:
as well as other donor agencies and IFIs
REFORM
ROADMAP
INSTITUTIONAL
CAPACITY
FINANCE
MOBILISATION

9. ➤ Prioritisation of investment needs, upstream preparation of
sector strategies (ownership), coordination of priorities with line
ministries and IFIs, ensuring there is a commitment to reforms
(labelling projects having a national interest), consideration of
macroeconomic parameters, adequate staffing and expert
outsourcing together with SGUA support to public administration
reform
➤ Administration of investment projects (transparency, analysing
and drafting programmes, planning projects, making ex-ante
evaluation, public procurement and preparation of tenders,
administering contracts and financial agreements, providing on
spot checks and audits, controlling and reporting, working with
publicity and visibility)
➤ Competence centre – advisory and technical assistance
(investment support to MSMEs, Public-Private Partnerships, fund
of funds, specialised funds, trust with financial intermediaries,
investment climate check-list, asset management, hub advisors,
reform roadmap, extension of Jessica and Jaspers models)
➤ Cooperation and trust with EU, international financial
organisations, DFIs, donor institutions, including with EIB
investment facility designed for this purpose, which is detrimental
to the revision of EIB external lending mandate
9
STEP 1: PROJECT MANAGEMENT CAPACITY

10. STEP 2: DEVELOPMENT FINANCIAL INSTITUTION
➤ A mix of national, foreign and multilateral participation or
ownership involving IFIs and other DFIs as part of development
cooperation. A mix of funding sources, including raising money
on capital markets, borrowing, budget allocations, using own
equity; working with European Plan for Ukraine and EU External
Investment Plan
➤ Subject to transparency, financial and supervisory
regulations (obligation to provide adequate information, audits,
standards similar to private financial institutions, NBU supervision,
state aid and competition regulations, corporate governance)
➤ Mix of final recipients of investments to include private and
state-owned firms, government, municipalities; selection through
the competitive tender and further development of trusted
financial intermediaries (second tier)
➤ A mandate to promote economic development of Ukraine,
could be managed by AMC, adequate in-house capacity linked
with EU SGUA, IMF, donors. Fund of Funds operations, using
market friendly policy instruments
➤ A toolkit to include financing to MSMEs, housing, infrastructure,
utilities, credit to local governments, access to finance,
guaranties, venture, equity capital, securitisation, advisory,
promotional services 10

11. INSTRUMENTS
11
UKRAINE RECOVERY FUND
A proper management of SOE assets will have a profound
effect on investment climate and would contribute to
attracting IFI and international donor investment support to
Ukraine
An increased marked value and profits of SOEs will
contribute to DFI Ukraine investment support operations,
especially in areas of public services, infrastructure and
regional development
Over time Recovery Fund shares can be sold to IFIs
participating in DFI Ukraine to strengthen the partnership
A proper management of SOE portfolio will create new
opportunities to guarantee instruments and equity investment
by DFI aimed at increasing the resilience of Ukrainian
companies
FINANCIAL INTERMEDIARIES
An effective instrument in supporting investments into MSME
sector. Use of trusted financial intermediaries helps to reduce DFI
costs, increases the access to finance for final recipients,
facilitates risk sharing and leverage of investments by private
companies
Specialised funds in areas of energy efficiency, East Ukraine
reconstruction can operate as financial intermediaries under DFI
acting as Fund of Funds (FoF) to maximise the coverage of final
beneficiaries, including households.
Use of FoF revolving funds will increase quality of projects,
access to capital and will reduce dependency on grants
The second tier lending model, involving financial intermediaries,
is more competitive compared to only direct DFI financing
PUBLIC-PRIVATE PARTNERSHIPS AND INFRASTRUCTURE FUND
Public-Private Partnerships between DFI and private companies to build, reconstruct, operate large-scale infrastructure projects in areas
of transport, utilities, public buildings at state and municipality levels. DFI with IFIs to use blending instruments with loans and guarantees,
to ensure transparency and competitive procurement, design, bankability of projects, to provide technical assistance and advisory services

12. Visibility test
Marketing strategy, branding, acting locally
Investment assistance
Human resources, in-house capacity, common rules of
engagement, transparency objectives
Conditionality test
Funding in tranches according to agreed reform
benchmarks (IMF, EU SGUA, EBRD Donor Account
etc.) in areas of EU association, financial, justice, land
reform, SOEs, etc. Supported by technical assistance
to attract investments (e.g. investor rights, concession,
risk management)
Ukraine Development Financial Institution
Subject to financial and transparency regulations, can
be managed by AMC, corporate governance practices
IFI Compact on Ukraine
at High-level conference in Brussels, February 2018
Guarantees from EU Budget, EIB, EU Member States, other IFIs
(EBRD/KfW/CdD/IFC/ICO/CDC/ …) and International donors (US/CA/JP/ …)
Building Project
Management Capacity
(PMC)
(Step 1)
Assembly of shareholders, Board with IFI and Ukraine
representatives, possibility together with IFIs to raise
funds, blend loans and guarantees, make equity
investments (Step 2)
PPPs, Fund to
raise financing
Infrastructure
Trusted financial
intermediaries
and funds (e.g.
energy efficiency)
MSMEs,
households
Recovery fund
SOEs
East Ukraine
fund,
municipalities
Reconstruction
and returning of
IDPs, utilities
Regions
12

13. UKRAINE 2027
➤ At least 50B EUR investment support from IFIs and international donors
leveraged under European Plan for Ukraine for the period of 2018-2027
➤ SOEs alone, if managed properly, could make profits of up to 6B EUR per year
with an increased market value; land reform, if accomplished, in a long-term
perspective could generate a mortgage market of 40B EUR and give an additional
impulse, in particular to MSMEs loan market; potential of energy efficiency savings
up to 2B EUR per year (up to 60% of the total gas consumption for heating
purposes)
➤ Financial sector, land, SOEs reforms, investment friendly environment with
innovative support instruments to MSMEs, PPP and investor protection related
regulations to create at least a fivefold effect on economy by aggregate amounts of
up to 200B EUR in the period of 2018-2027.
➤ Over this period Ukraine Development Financial Institution operates with a full
inventory of investment support financial instruments, among them diversified
guarantees, securitisation or venture capital, applied via financial
intermediaries/PPPs with a contribution of up to 6-8 % of annual economic
growth
➤ Investment visibility stimulates public awareness and support to reform process
(energy savings, road infrastructure, jobs, public services, reconstruction); reform
orientated political parties being re-elected
13

14. INDICATIVE TIMELINE
14
Passing lending mandates
(EU EIB, IFIs, EUMS DFIs,
US, CA
3M
Signing IFI Compact at
Brussels Invest Ukraine
Conference
(February 2018)
1M
MoU to establish Project
Management capacity in
Ukraine. Starting the
recruitment (Step 1, PMC)
Selecting intermediary
financial institutions,
launching specialised funds
and partnerships with
regions
Launching a first tranche of
investment support
instruments and signing of
contracts
3M
Starting MSMEs,
infrastructure, municipal,
reconstruction and
specialised funding projects,
first capital investments
Launching a second tranche
of investment support
instruments and signing of
contracts (Step 2, DFI)
3M
Next group of MSMEs,
infrastructure, municipal,
reconstruction and
specialised funding projects,
capital investments

15. FURTHER REFERENCES
15
LITHUANIA’S PLAN ON
UKRAINE IN 2017–2020
KYIV
VILNIUS
03 03 2017
BRUSSELS
26 06 2017
10 10 2017
…
BERLIN
19 06 2017
…
PARIS
24 10 2017
…
LUXEMBOURG
18 07 2017
…
FRANKFURT
…
WASHINGTON
27 05 2017
11 12 2017
LONDON
06 07 2017
20 11 2017
TOUR DES
CAPITALES
Verkhovna Rada National Council of Reforms
Ministry of Foreign Affairs
Government
Strategic Advisory Group for
Support of Ukrainian Reforms
National Investment Council
Ministry of Economic
Development and Trade
National Securities and
Stock Market Commission
Ministry of Finance
Mr Stepan Kubiv, First vice-Prime Minister, minister for Economic Development and Trade
Ms Hanna Hopko, Chairperson of Verkhovna Rada Committee on Foreign Affairs
Mr Ostap Yednak, Member of Parliament, Secretary of Committee on Environmental Policy
Mr Borys Lozhkin, Secretary of the National Investment Council
Mr Dmytro Shymkiv, Secretary of the National Reform Council
Ms Yulia Kovaliv, Head of the Office of the National Investment Council
Mr Timur Khromaev, Head of National Securities and Stock Market Commission
Ms Oksana Markarova, First Deputy Minister of Finance
Ms Olena Zerkal, Deputy Minister of Foreign Affairs (European integration)
Ms Nataliya Mykolska, Deputy Minister – Trade Representative of Ukraine
Mr Ivan Mikloš, Co-Chairman of Strategic Advisory Group for Support of Ukrainian Reforms
Mr Pavlo Kukhta, Deputy Chairman of Strategic Advisory Group for Support of Ukrainian Reforms
Ms Ulyana Khromyak, Deputy Director of UkraineInvest
Mr Gediminas Kirkilas, Vice Speaker of Seimas, former Prime Minister of Lithuania (2006-2008)
Mr Andrius Kubilius, Member of Parliament, former Prime Minister of Lithuania (1999-2000, 2008-
2012)
Mr Deividas Matulionis, Advisor to the Prime Minister of Lithuania
Mr Ramūnas Stanionis, Advisor on Eastern Partnership Association Countries at the Ministry of
Foreign Affairs of Lithuania