Executive Summary

1. In October 2022, the government established and introduced a new mechanism to systematically address the financing of recovery for facilities damaged or destroyed as a result of Russian armed aggression. As part of the special fund of the state budget, the Fund for Eliminating the Consequences of Armed Aggression began operating. Until a certain point, Ukraine lacked a single, unified database of the Fund’s expenditures that would enable a comprehensive assessment of the efficiency of using these budgetary resources.

2. The Center for Fiscal Policy Research implemented a unique project and created:

• a unified database of planned and actual Fund expenditures, verified using Treasury data and confirmed with spending units where discrepancies between budget reports and Treasury payment orders were identified;

• an interactive monitoring tool for Fund expenditures, enabling all stakeholders to quickly and easily access relevant information.

3. The study was conducted in stages following a logical and consistent methodology:

• systematization of government decisions (with amendments) on Fund allocations by legally defined areas;

• processing of relevant payment orders from the E-data portal;

• aggregation of amounts by individual projects based on payment transactions;

• reconciliation of results with Treasury reports;

• submission of requests to spending units where discrepancies were identified;

• visualization of the dataset on an interactive map (monitoring tool) with four levels of detail: region, district, territorial community, and locality.

4. To assess the distribution and actual use of the Fund’s resources, expenditures under the following budget programs were verified: 3121450, 3111370, 3111360, 1501040, 3111340, and 2201160 (excluding expenditures on the security and defense sector, critical infrastructure, and the eRecovery program).

5. Based on the verification of open Fund expenditures, a database of 426 projects was compiled, with a total allocated amount of UAH 24.9 billion. In practice, funds were used for the recovery (construction) of 324 projects (76%), for which UAH 20.6 billion was planned and nearly UAH 12.9 billion was actually spent (63%).

6. The largest share of the Fund’s resources was used in accordance with Resolution No. 566—UAH 8.3 billion (64% of actual expenditures)—for the experimental construction of three main water pipelines. The largest number of projects (276, or 85%) was funded under Order No. 534-r, totaling over UAH 3.4 billion (nearly 27% of the Fund’s allocated resources).

7. The largest number of projects (155) concerned housing construction and restoration, particularly under budget programs 3121450 (131 projects), 3111360 (20 projects), and 3111370 (4 projects). However, only 31% of allocated funds were utilized (UAH 1.9 billion out of UAH 6 billion), the lowest rate among all funding areas.

8. Up to UAH 10 million was spent on each of 200 projects (62%), mainly for capital repairs and reconstruction of residential buildings, as well as the restoration of municipal education and healthcare facilities. Another 105 projects (32%) received between UAH 10 and 50 million each, primarily for housing reconstruction, educational facilities, and procurement of specialized equipment. The remaining groups (UAH 50–100 million and UAH 100–300 million) mainly covered housing and water pipeline construction/restoration, and less frequently healthcare facilities and specialized transport. The largest amounts were spent on new water pipeline construction in Dnipropetrovsk region: UAH 1.3 billion for one project and over UAH 3 billion each for two others.

9. The majority of projects (238, or 57%) demonstrated unsatisfactory levels of fund utilization (less than 50%); 93 projects (22%) had no actual spending, and 72 projects (17%) utilized between 21% and 50% of allocated funds. Among the 22 projects that fully utilized allocated funds, most (nearly 80%) involved procurement of specialized transport for municipal enterprises in Kherson, Chernihiv, Donetsk, and Sumy regions. Additionally, 35 projects were close to full completion, of which 21 (60%) were located in Kharkiv region, primarily related to housing restoration (14 projects) and procurement of specialized equipment (10 projects).

10. The top 10 spending units accounted for nearly 90% of the Fund’s utilized resources, while the top 10 contractors received over 75% of total expenditures. In total, there were 63 spending units and 284 recipients of Fund resources in 2023.

11. The largest contracting authority, accounting for 73% of utilized funds, was the Recovery Service in Dnipropetrovsk region, which received UAH 8.3 billion. This funding was allocated for the experimental construction of main water pipelines following the destruction of the Kakhovka Hydropower Plant. The majority (95%) of these funds was received by three contractors: Avtomagistral-Pivden LLC (UAH 3.5 billion), Autostrada Group LLC (UAH 3.4 billion), and RDS LLC (UAH 1.3 billion).

12. Dnipropetrovsk region used the largest share of Fund resources—UAH 8.34 billion for 7 projects, almost entirely (except for UAH 58 million) for the construction of three main water pipelines. Kyiv region (91 projects, with Bucha district receiving nearly UAH 1 billion) and Kharkiv region (120 projects, with Kharkiv district receiving over UAH 600 million) together utilized nearly UAH 2.5 billion (UAH 1.24 billion and UAH 1.23 billion respectively).

13. Changes in the number of projects and allocated funding volumes during 2023 occurred only under the budget program “Implementation of projects financed by the Fund for Eliminating the Consequences of Armed Aggression”:
    13.1. For 186 projects (54%), allocated funding remained unchanged throughout the year; however, 41 of these projects (22%) recorded zero actual spending. For the remaining 159 projects, funding was adjusted: 120 projects had one revision (mostly reductions—109 projects or 91%), while 39 projects had two revisions, also primarily involving phased reductions (34 projects or 87%).
    13.2. Funding increases were recorded for 13 projects, mainly in Kharkiv and Mykolaiv regions, related to water pipelines (7), housing restoration (2), administrative buildings (1), education (1), and equipment procurement (2), totaling UAH 344 million. Most changes (10 out of 13) were introduced in December, while one project (UAH 102.7 million) was removed from the list. Funds for a water pipeline reconstruction project in Mykolaiv were not used.
    13.3. Funding reductions were applied to 143 projects, totaling UAH 2.8 billion, of which 16 projects (11%) had zero implementation.
    13.4. Nine projects were excluded from the list (with zero actual spending), including eight projects with unchanged funding totaling UAH 100 million (mostly housing restoration in Kharkiv), and one project in Mykolaiv where funding was nearly doubled.

14. The largest share of Fund expenditures occurred in October (53%) and December (27%). In October, most payments were advance payments under budget program 3111340 “Experimental construction of main water pipelines”—UAH 6 billion (88% of monthly expenditures). The lowest spending occurred in July.

15. The top 10 days with the highest payments also mainly fell in December. Payments on these days totaled UAH 10.1 billion, or nearly 79% of total Fund expenditures in 2023 (UAH 12.9 billion), excluding defense, critical infrastructure, and eRecovery expenditures. The majority (UAH 7.9 billion, or 78%) was allocated to the construction of three main water pipelines.

16. In December 2023, UAH 3.4 billion (27% of total Fund expenditures) was used, of which UAH 2.4 billion (71%) was disbursed during the last week of the year (December 23–29).

17. A significant number of payments were made on December 27—the last payment day—amounting to UAH 1.6 billion (46% of monthly expenditures), covering 157 projects. Over half of these projects related to housing restoration (85 projects, UAH 378 million), while more than half of the funds were directed to water pipeline construction/restoration (UAH 818 million for 18 projects). Among 63 spending units, 35 (56%) received payments on that day.

18. On December 27, full (100%) payments were made for 18 projects totaling UAH 173 million. Additionally, 9 projects received 96–99% of allocated funding (UAH 125 million), and 10 projects received 81–95% (UAH 100 million). The largest allocation—UAH 547 million—was directed to 25 projects with prior co-financing levels of 6–20%.

19. On December 27, 13% of payments (nearly UAH 200 million) were processed by the Treasury with delays exceeding three banking days, while 87% (UAH 1.4 billion) were processed within three banking days: 29% on the same day (UAH 451 million), 34% on the second day (UAH 533 million), and 24% on the third day (UAH 382 million).