Brussels dials up pressure on Kyiv to speed up reforms amid budget crunch

Brussels is dialling up the pressure on Kyiv to speed up the reforms indispensable for unlocking roughly €20 billion in financial assistance, which the country badly needs as the budget deficit swells and Russia escalates the war. ADVERTISEMENT ADVERTISEMENT "It is essential that Ukraine continues to deliver on the reforms and policy conditions jointly agreed with the European Union," a European Commission spokesperson said. "Their timely implementation is key to enabling the Commission to proceed with the corresponding disbursements as planned." It comes as the Commission is engaged in intense talks with the Ukrainian authorities to pin down the precise extent of the country's financial shortfall. The International Monetary Fund, which runs a separate assistance line, is also involved. Ukrainian President Volodymyr Zelenskyy initially flaggeda $27 billion (€23.75 billion) gap in the Ministry of Defence, a number that caught EU officials off guard and raised serious questions about its origin. Separately, the country faces a €32.6 billion hole next year. As a solution, Zelensky proposed to front-load a share of the EU's €90 billion support loan from 2027 to 2026. The loan is split into two halves of €45 billion each, which means any change to the timeline would leave less money for next year. Zelenskyy also floated the idea of tapping into the immobilised Russian assets, a controversial project that the bloc tried and failed last year. But Brussels contested the logic and stressed that before requesting additional resources, Ukraine should focus on completing the reforms that it has committed to approving and that are stalled in the Verkhovna Rada, the unicameral parliament. The reforms are a precondition to accessing two financial envelopes: €13.5 billion from the support loan and €6.45 billion from the Ukraine Facility. A combined payment of €2.9 billion was greenlighted on Thursday. However, the slow legislative pace has delayed a second one worth €3.9 billion. The situation prompted Commissioners Valdis Dombrovskis and Marta Kos to send a letter to Ruslan Stefanchuk, the speaker of the Rada, alerting him of the stakes at play. "Timely adoption of the necessary legislation is essential to secure available EU financing, to sustain momentum on Ukraine's EU accession path and to strengthen Ukraine's economy and public finances," they wrote. "Continued dialogue with the European Commission remains crucial to ensure that the final law adopted is compliant with the EU requirements." The letter, seen by Euronews, includes an annex of reforms "pending adoption" that Brussels wants approved and implemented in the short term. Some laws, such as those related to SME insolvency, civil service and VAT simplification, are already under consideration in the Rada. Others, such as state aid, anti-money laundering and the disciplinary system for prosecutors, have not yet been submitted. One piece of legislation, designed to remove the duty-free exemption for international parcels, has proven particularly contentious among Ukrainian legislators due to the popularity of Chinese marketplaces Temu and AliExpress in the country. The bill was rejected twice in the Rada, earning a rebuke from Brussels. It was adopted on first reading last week, but another reading is still needed. Further reforms are required to unlock the remaining €17 billion available for this year. The Rada is currently on recess until mid-October, though the speaker has said he is ready to call an extraordinary session as soon as the legislation is ready. Ursula von der Leyen raised the issue of reforms when she met with Zelenskyy on the sidelines of the UN General Assembly in New York earlier this week. Following a Bloomberg report that described the meeting as "tense", Zelenskyy said the talks with the Commission chief had been "absolutely positive". The Ukrainian president asked Brussels to be more flexible regarding the timeline and take into consideration that the Rada's activity has been affected by airstrikes. "Ukraine has demonstrated a remarkable capacity to pursue and implement far-reaching reforms in the face of Russia's war of aggression for more than four years. We recognise these considerable efforts, undertaken under extraordinarily difficult circumstances," the Commission spokesperson said in response to Zelenskyy's comments. "At the same time, we continue to recall the importance of maintaining the momentum of reforms."