Money for reforms: The EU has warned Kyiv about the link between funding certain programs and the operations of the NABU and SAPO.

The EU sent Kyiv a diplomatic warning about potential funding cuts if the parliament does not fully repeal the provisions of Law No. 12414 this week, which restrict the powers of the National Anti-Corruption Bureau and the Specialized Anti-Corruption Prosecutor’s Office.

If Ukraine fails to act, the EU might suspend further loans taken from the proceeds of Russian assets under the ERA program, as well as funding from the EBRD and EIB. However, no payments under the Ukraine Facility program are expected to be halted, with €3.05B scheduled for August instead of the original €4.5B. Meanwhile, the IMF and Ukraine will negotiate the launch of a new four-year program this fall. This program will promote macroeconomic stability, a primary IMF goal.

It will also continue to focus on reforms of executive institutions, including the appointment of the head of the Bureau of Economic Security, reforming customs operations, and mobilizing domestic funding sources. The agreement may also include a permanent safeguard to protect the NABU and SAPO’s independence. The $4.79B tranche, originally scheduled to be transferred by March 2027, may be included in the new program.