Abstract
<jats:p>Statement of the problem. This article examines the rationale behind the prerequisites and priority areas for transforming the financial mechanism of public-private partnerships (PPPs) as a tool for restoring critical infrastructure and integrating the national economy into the European space. The aim of the study is to analyse the prerequisites for the implementation of PPP projects in Ukraine and to substantiate the theoretical and methodological foundations and practical recommendations for the transformation of the partnership’s financial mechanism in the context of the challenges of European integration and the tasks of post-war recovery of the national economy. The subject of the study is the financial mechanism of public-private partnerships in the context of post-war reconstruction and the European integration of Ukraine’s economy. Methods used in the study: the method of generalisation and comparison – for the analysis of theoretical approaches; logical and substantive analysis, induction and deduction – for justifying the transformation of the components of the PPP financial mechanism. The research hypothesis posits the need to transform the financial mechanism of public-private partnerships (PPPs) in the context of the requirements for Ukraine’s economic integration into the European Union, based on ESG principles and utilising a flexible toolkit for strategic decision-making, which will help to stimulate investment processes and create the necessary conditions for the post-war recovery of the domestic infrastructure market. Summary of the main findings. An analysis of the dynamics of the PPP project portfolio for 2023–2025 has revealed structural imbalances, in particular the dominance of the concession model (42.3% on average) against a backdrop of a high proportion of inactive contracts (85.1% as of 1 January 2026), which indicates high risks. The factors influencing PPP development have been categorised into security, financial and economic, and institutional and procedural factors. To harmonise domestic legislation with the requirements of the European CSRD Directive, recommendations have been provided regarding the mandatory disclosure of non-financial environmental, social and governance (ESG) KPIs as a basic condition for attracting resources from international institutional investors. The proposed approach to the methodological framework for the PPP financial mechanism, based on a combination of ESG validation tools, cash flow stress testing and currency hedging mechanisms to protect EBITDA, enables greater accuracy in assessing the risks and effectiveness of infrastructure projects. Recommendations have been formulated regarding the organisational support for PPPs, based on optimising inter-agency coordination and the digitalisation of project portfolio management processes, which makes it possible to minimise time and transaction costs and also to monitor the fulfilment of contractual obligations throughout the entire partnership lifecycle. The report makes a compelling case for the use of mixed-capital models that draw on resources from international financial organisations and development banks, based on a first-loss guarantee mechanism; by having the public partner cover the initial risks, this significantly reduces project risk and minimises barriers to entry for private investors. The strategic importance of a balanced system of risk management and state guarantees for high-cost projects in distributed cogeneration, renewable energy and cross-border logistics has been demonstrated, thereby enabling the increased mobilisation of private capital in high-risk sectors. A framework for state support of innovation has been proposed through the co-financing of venture capital funds on the basis of strategic partnerships, using budgetary and extra-budgetary resources as well as capital from development institutions, thereby optimising the forms of public sector participation. The recommendations for improving the financial framework of public-private partnerships (PPPs) through the integration of ESG validation, cash flow stress testing and currency hedging of EBITDA, as well as the use of blended finance models with first-loss coverage, which helps to reduce investment risks and create effective conditions for raising capital in the context of post-war reconstruction. Conclusions. The development of theoretical and methodological principles for the transformation of the financial mechanism of public public-private partnership based on a comprehensive approach and ESG validation tools lays the groundwork for a holistic reform of its regulatory, methodological, organisational and financial components, thereby ensuring the attraction of international capital in the context of Ukraine’s post-war recovery and European integration.</jats:p>