Why do Ukrainian communities almost never issue municipal bonds?

A common assumption is that the problem lies in a lack of money. In fact, one of the main reasons is much more complex: even a financially capable community must go through a multi-level approval procedure, confirm its borrowing capacity, and demonstrate the ability to service the debt throughout the entire term of the loan.

As part of the project "Development of the Municipal Bond Market in Ukraine: Analysis of Regulation, Practice, and Potential for Community Recovery," the EU-LEAP team has prepared the first analytical report dedicated to legislation in the field of local loan bonds.

The study shows that Ukrainian legislation already contains basic mechanisms for the development of municipal borrowing, but a number of regulatory and tax restrictions significantly hinder communities' use of this instrument.

Municipal bonds could become one of the sources of financing for the recovery and modernization of communities, but for this to happen, more favorable and clear conditions need to be created for both municipalities and investors.

Ahead lies an analysis of the practice of municipal bond issuance in Ukraine, international experience, and the preparation of recommendations for the development of this market.

The project is implemented with the support of the Askold and Dir Fund, administered by ISAR Ednannia within the framework of the project "Strong Civil Society of Ukraine – A Driver of Reforms and Democracy," funded by Norway and Sweden.

The content of this publication is the responsibility of the EU-LEAP Analytical Center and does not necessarily reflect the views of ISAR Ednannia, or the governments of Norway and Sweden.

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