Funding the achievement of the Sustainable Development Goals in Ukraine: four key factors for success
August 16, 2022
The Government of Ukraine has been exploring different modalities for development financing since its independence in 1991, a discussion that was streamlined in 2000 into funding the Millennium Development Goals (MDGs) and again in 2015 into financing the Sustainable Development Goals (SDGs). The Government is well aware that achieving the SDG by 2030 requires ensuring optimal use of its public resources while mobilizing and effectively using funding from governments, international organizations, and private businesses.
What are Sustainable Development Goals ?
The Sustainable Development Goals, also known as the Global Goals, are a general call for action to end poverty, protect the planet, and ensure peace and prosperity for all people in the world, leaving no one behind. There are a total of 17 Goals, which include, among other priorities, areas such as climate change, economic inequality, innovation, sustainable consumption, peace, and justice. The 17 SDGs are integrated and interrelated. Action in one area affects outcomes in others, and as such, all economic and social development efforts must balance social, economic and environmental sustainability.
For the past two years, since mid-2020, the United Nations Development Programme (UNDP) in Ukraine, together with its UN partner agencies WHO, UNICEF and UNECE, have been working to develop better ways to manage existing and potential financial flows to strengthen SDGs funding. The work is being carried out within the context and framework of a joint programme (JP) called “Promoting Strategic Planning and Financing for Sustainable Development at National and Regional Levels” (Joint Programme). The JP covers four interrelated but separate initiatives: 1) developing an Integrated National Financing Framework (INFF); 2) conducting a Rapid Integrated Assessment of SDGs mainstreaming into national and subnational planning; 3) reviewing all current development financing modalities; and 4) assessing the budgeting system for the SDGs.
Factor 1 - Integrated National Financing Framework (INFF)
To create an effective SDG implementation system, an Integrated National Financing Framework (INFF) was introduced in 2019, linking development financing to national development strategies. Facilitating and supporting the creation of an Integrated National Financing System for the SDGs is a key objective of the Joint Programme, which will improve the relationship between public policy implementation and the ongoing decentralization reform. The INFF will contribute to a mutual vision of development priorities and objectives in the country and ensure their financing, considering the country’s current development priorities and existing challenges, obstacles, and opportunities. The INFF envisages the coordination of efforts of all stakeholders to achieve the Sustainable Development Goals. Leveraging the INFF as a framework, the Government of Ukraine should be able to reach a consensus on financial flows and reforms related to the implementation of its SDGs agenda.
The Government of Ukraine established an interagency working group in the spring of 2021 to implement the INFF. The working group, which was set up with UNDP support, consists of the Government representatives, regional authorities, and business associations. The Deputy Prime Minister for European and Euro-Atlantic Integration of Ukraine and the Deputy State Secretary of the Cabinet of Ministers of Ukraine also serve in the working group.
The INFF focuses on national and regional reforms and decentralization processes in selected regions (oblasts). This way, the INFF will improve the links between public policy implementation and ongoing decentralization reforms. In addition, it will provide a model that can be more widely replicated and integrated into different areas of development, including those processes related to the financing and planning of SDG implementation and follow-up at both the national and regional (decentralized) levels.
Factor 2 – Rapid Integrated Assessment of SDGs mainstreaming into national and subnational planning
UNDP developed and proposed a Rapid Integrated Assessment (RIA) tool to assess the extent to which SDG targets and indicators have been integrated into Ukraine’s strategic planning processes. It quickly became evident, however, that merely including the SDGs in policy documents is not a sufficient step to achieve them – there needs to be budget lines attached with sufficient levels of funding for the targets set out in the relevant strategic and policy documents. UNDP then modified the approach to rapid integrated assessment by creating the RIA+ tool, which is designed to assess the compliance of available funding with the objectives of achieving SDGs as defined in strategic and programme documents.
At the request of Government, the Rapid Integrated Assessment (RIA+) is focused on two sectors: regional development and environmental protection. Strategic and programme documents were assessed for the inclusion of selected SDGs related to energy (SDG 7) and environment (SDGs 6, 12-15) as well as SDGs related to regional development. Considering the Association Agreement between Ukraine and the EU is a key strategic document, it was also analyzed for the inclusion of all SDG indicators.
The assessment reviewed all comprehensive development strategies of the Cabinet of Ministers and plans for their implementation, as well as the Action Plan for the implementation of the Association Agreement and found no clear link between strategic planning and budgeting. Thus, although the tasks attributed to SDGs 12-15 are included in strategic documents, they have insufficient budget allocations to support their achievement.
The analysis also revealed that the budget programmes of the Ministry for Communities and Territories Development of Ukraine, the Ministry of Energy of Ukraine and the Ministry of Environmental Protection and Natural Resources of Ukraine include selected SDGs, but the key performance indicators (KPIs) of the budget passports of these programmes are not directly related to the SDG targets. As a result, it is impossible to assess the effectiveness of budget spending in terms of implementing a particular SDG target.
The results from the RIA+ informed a new set of policy recommendations on integrating SDG targets and timetables into strategic and budgeting documents, as articulated in the new Roadmap for the implementation of the SDGs.
Factor 3 – Development Finance Assessment
To assess funding sources for specific Goals and priorities, UNDP created the Development Finance Assessment (DFA) tool. This tool, also developed under the UN Joint Programme on Financing for Sustainable Development Goals, was designed to identify opportunities to increase the effectiveness of existing development funding and mobilize additional funding.
As part of the Joint Programme, and at the request of the Government, the Institute for Economic Research and Policy Consulting, with the support of UNDP, conducted initial data collection and the assessment for this tool. The DFA was conducted from mid-April to late December 2021. The analysis focused on the assessment of sources of development financing in terms of SDGs in Ukraine (both private and public), and was conducted at the national level, as well as at the level of Donetsk and Kherson oblasts. Separate reports on DFA in oblasts are important in view of decentralization reform, as well as the differences in the levels of development, challenges, and objectives between the oblasts.
Initial DFA results revealed the current approach to strategic planning for the SDGs is fragmented, not systematic and that numerous strategic documents are not consistent with each other. Furthermore, one of the key national and subnational findings is the lack of proper communication and awareness of the importance of achieving the SDGs.
The assessment also revealed the need to upgrade the capacity and skills of civil servants – for example, on conducting development finance and rapid integrated assessments. It is also necessary to introduce special training programmes for sustainable development and implementation of the SDGs based on the analysis of poverty and social impacts.
In addition, a national assessment found that most SDGs are funded from state and local budgets, international financial institutions (IFIs) and private investment. The assessment revealed a clear financing gap for SDGs 13, 14 and 15.
The DFA reports include detailed policy recommendations to the Government and to local government entities on how to enhance the effectiveness of available development financing. The report includes ways to mobilize more financing from both public and private, domestic and external sources. Implementing the recommended reforms should lead to better possibilities for human development in the country, better access to public services, and a more favourable business environment.
Factor 4 - Assessment of the SDGs budgeting system
UNDP has developed a number of tools to support the implementation of the INFF in Ukraine. One of them is the assessment of the SDGs budgeting system, which includes tagging the Ukrainian budget with sustainable development goals. Based on these data, the Government can effectively adjust government spending plans to meet SDGs commitments and assess the budget gaps in financing SDGs.
To assess the budget financing of SDGs, UNDP developed the “Methodology on SDG budget tagging,” describing how SDG budget targeting should be included in the three-tier accounting of Ukraine’s budget. This approach will facilitate further reporting on SDGs funding at the national, regional, and local levels. It establishes links between fiscal allocations to financing SDGs on the level of defined indicators needed to achieve each SDG. It then helps to identify the country’s progress in achieving the SDGs by assessing gaps in SDGs financing from the budget, and evaluating the Government’s performance.
Ukraine’s budgets provide funding for all 17 goals with corresponding targets. However, the diversity of budget programmes and lack of explicit tagging do not make it possible to estimate the amount of funding for each Goal. The UNDP methodology for assigning budget codes to the SDGs targets for further monitoring consists of three stages:
- Fiscal budget / programme tagging; and
- Developing supporting documents for the integration of the SDGs budget tagging.
By establishing budget tagging for SDGs at state and local budgets within programme classification of expenditures, the Government can:
- Monitor budget financing of SDGs through a transparent instrument and assess the financing gaps that obstruct the achievement of particular SGDs at national and local levels;
- Analyze the lack of the necessary public investments needed to implement a particular SDG; and
- Assess the distribution of international aid for SDG financing.
During the assessment conducted by UNDP experts in Ukraine, it was found that SDG 1 (poverty alleviation) has direct financing from the state budget at 100 percent. Others, including SDG 9 (innovation and infrastructure) has 98.9 percent; SDG 12 (responsible consumption) has 88.5 percent; and SDG 17 (Partnership for Sustainable Development) has 81.5 percent. All other SDGs do not have direct programme funding from the state budget and may be the basis for future development assistance.
Only eight out of the 17 Goals received international assistance through state budget programmes over the past six years. Of the total, innovation, and infrastructure programmes (SDG 9) are currently a higher priority for international funding. Previously, support for the energy sector was in the top spot (SDG 7).
The results outlined in the report have become the foundation on which the Government relies to integrate SDGs tagging into Ukraine’s budget system. Using the methodology developed by UNDP in Ukraine and following the described stages of the organization of the work process, other UN member states will be able to develop their own appropriate methodology for the implementation of SDGs budgeting within the country.
The tools developed by UNDP in Ukraine under the Joint Programme are aimed at increasing funding for the Sustainable Development Goals at all levels. But it was not enough to develop a strategy to achieve this, we still need to have a tool to monitor the results of the implementation of projects that support the achievement of the SDGs in Ukraine. That is why UNDP has developed an Open SDGs Platform, providing access to national indicators for the implementation of SDGs for the Government and the world community.
The Open SDGs Platform, administered by the State Statistics Service of Ukraine, facilitates the collection, dissemination and tracking of national and local data on SDG progress. It provides improved access to official statistics and metadata, thereby promoting transparency, and helping to identify data and funding gaps. With it, the Government, international partners and interested Ukrainian citizens can monitor progress in the implementation of SDG-support projects, programmes and initiatives, as well as progress in achieving the SDGs.
Achieving the sustainable development goals adopted by the UN in 2015 and shaping the international agenda requires a collaborative partnership (SDG 17) between all countries. For such a global partnership to work, each country needs to ensure that its national indicators and data are open to other countries. The development of the Ukrainian version of the Open SDGs platform has allowed Ukraine to join the countries currently using it and provide up-to-date information on its progress, thereby strengthening Ukraine’s international partnerships (SDG 17) to achieve and finance the Global Goals.
In addition to the above-mentioned tools developed by UNDP in Ukraine, there are a number of other steps the Government of Ukraine can take to further improve the process, including:
Separating areas of responsibility:
- at the national level - determination of strategy, volume of funding, directions, etc.
- at the local level - determination and participation in the implementation of specific programmes, events, projects.
Increasing the institutional capacity of civil servants, primarily through their participation in interstate cooperation programmes, attracting funding from donors, creditors, specialized organizations;
Articulating the KPIs of budget programmes to include SDG indicators. This would help the Cabinet of Ministers of Ukraine in general and the Ministry of Finance and line ministries in particular to monitor the effectiveness of financing their policy measures.
The importance of the SDGs in Ukraine’s reconstruction
Three years ago, in September 2019, UN Secretary-General António Guterres called on all sectors of society to mobilize for a Decade of Action on three levels: global action to secure greater leadership, more resources and smarter solutions for the SDGs; local action embedding the needed transitions in the policies, budgets, institutions and regulatory frameworks of governments, cities and local authorities; and people action, including by youth, civil society, the media, the private sector, unions, academia and other stakeholders, to generate an unstoppable movement pushing for the required transformations.
UNDP is doing its best in Ukraine to heed the Secretary-General’s call for accelerated and coordinated actions to keep the country on track to achieving its SDG commitments by the year 2030. Before the invasion of February 2022 Ukraine was reporting progress in 15 of the 17 SDGs. Now the war is threatening to derail much of Ukraine’s development progress. According to UNDP projections, 90 percent of the Ukrainian population could face poverty and extreme economic vulnerability should the war deepen, setting the country – and the region – back decades and leaving deep social and economic scars for generations to come.
Achieving the SDGs in Ukraine in the less than eight years left in the Decade of Action may seem like an impossible task, but the framework provided by Agenda 2030 is the best way forward. It makes no sense to simply rebuild what used to be. The reconstruction of Ukraine will provide the opportunity to create need something fundamentally new and of the highest quality possible, under the principle of “Build Forward Better” in a way that integrates the central SDG value of “no one is left behind.”
The SDGs are a comprehensive programme for solving the key problems of humanity in the 21st century, providing a high level of prosperity, comfort, and quality of life. Implementing SDG-related activities will be an organic process covering three key areas of the state’s development trajectory: economic, social, and environmental.
The SDGs are not just Goals, they are tools for attracting resources through specialized international organizations, donors, and creditors. They also provide a framework for attracting support for the reconstruction of Ukraine. The framework furthermore provides additional tools related to methodological support of the processes of planning, managing, and monitoring implementation. In short, the SDG framework is increasing the effectiveness of the Government of Ukraine and helping to ensure high efficiency and better value of money invested in its development and soon, in its post-war reconstruction.
About the project:
The project “Promoting Strategic Planning and Financing of Sustainable Development of Ukraine at both National and Regional Level” is implemented by the United Nations Development Programme (UNDP) in Ukraine together with UN partner agencies WHO, UNICEF and UNECE. The project is implemented with the support of the Government of Ukraine and international organizations.
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