* EBRD launches a new five-year strategy for Ukraine
The European Bank for Reconstruction and Development (EBRD) has launched a new five-year strategy for Ukraine, now its biggest single investment destination in the former Soviet Union (FSU), the bank said in a press release on October 10.
“The EBRD board of directors has approved a new strategy for Ukraine which sets out the bank’s priorities in the country for the next five years,” the bank said.
“The EBRD will pay special attention to projects that will integrate investment and policy engagement in areas such as privatisation, energy security and efficiency, the financial sector, trade and infrastructure.”
The core of the strategy rests on five pillars:
Promoting privatisation and commercialisation in the public sector to increase competitiveness and good governance: The EBRD will help stimulate private sector participation across sectors and further commercialisation of public sector firms. The bank will continue to support the implementation of modern public sector procurement as well as the introduction of proper public governance.
Promoting the rule of law, fair competition in the private sector and support of companies that use best practice: The EBRD will foster competition and support anti-corruption efforts. Special attention will be paid to improved skills and to the employability of disadvantaged groups.
Strengthening energy security through effective regulation, market liberalisation, diversified and increased production and energy efficiency: The EBRD will pledge more resources to create a market structure for sustainable energy and improved energy connectivity.
- The Bank will assist in the creation of increased resource efficiency and will help promote renewable energy.
- Enhancing the resilience of the financial system by strengthening Ukraine’s banking sector, and by developing capital markets and non-bank finance: The EBRD will promote a stable and efficient banking sector, a greater variety of non-banking financial channels and the use thereof.
Improving integration by facilitating trade and investment, expanding infrastructure links, and supporting convergence with EU standards: The Bank will invest in improvements to connectivity through better infrastructure. It will also help facilitate increased trade and investment flows.
- Since the shareholders of the EBRD suspended operations in Russia, Ukraine has taken Russia’s place to become the largest investment destination in the bank’s portfolio.
- At the same time, the EBRD is already the biggest single foreign investor into Ukraine. To date, the bank has made a cumulative commitment of almost €12.1bn across some 400 projects since the start of its operations in the country in 1993.
- While the EBRD still has investments in Russia, its shareholders ordered the management to freeze all new investment activity in the country and it is slowly exiting its existing projects. The EBRD used to invest well over $1bn a year into Russia.
The beefing up of the EBRD’s operations in Ukraine is a godsend for the government that has been struggling to attract any significant foreign direct investment (FDI) at all since the Euromaidan revolution four years ago.
New FDI in Ukraine was $1.9bn in 2017, the State Statistics Service reports. With EBRD investment already about a $1bn per year the bank is in a position to almost double the FDI going into Ukraine on its own. About one quarter, or $506mn, was from Cyprus, presumably offshore Ukrainian or Russian money.
The next four sources were: Russia — $396mn; the Netherlands — $262mn; Britain — $212mn; and Germany — $119mn.
However, the bank has run into trouble recently after several member states called for the president of the bank Sir Suma Chakrabarti to be investigated over claims the lender inappropriately gathered personal information on some of its directors, according to a document seen by Reuters.
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