New EBRD Strategy for Ukraine
The European Bank for Reconstruction and Development has just revealed their investment plans for Ukraine for the next five years. The bank is already the largest financial investor in the country, with some 14 billion USD at work across as many as 400 projects. Over the next five years, the bank has pledged to invest in promoting privatisation and commercialisation in the public sector, promoting the rule of law and fair competition in the private sector, strengthening energy security, strengthening the banking sector, and supporting greater integration with the EU by supporting convergence with EU standards to help increase trade and investment flows. All that, is very good.
The privitisation thing is important because state owned enterprises are either, a) a drain on public finances, b) poorly managed and/or looted by friends of people in high places, or c) a + b combined. The rule of law is also something that needs to be strengthened; well, it needs to become a base expectation really. With neighbours like Russia, energy security is a particularly important focus, but not just because of that. Energy security in the modern world often means switching to renewable energy supplies and making energy efficiencies, both are good not just for Ukraine but for the world.
The banking sector has had a major shake up in the last few years, where a third of the country’s banks have been closed having failed stress (or basic decency) tests. Continuing to help this sector develop now is very wise and will provide a lot more security for Ukrainian depositors. And with regard to boosting trade between Ukraine and nicer neighbours, the good thing is that the trajectory is already right and growth in this regard has been significant since the UA-EU AA and the DCFTA deals came into force. Now it can only get better.
It’s nice for Ukraine to be sitting on the doorstep of a market of relatively wealthy nations and having access to that market is a great benefit (but nobody told the Brexiteers).
