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EBRD approves new strategy for Ukraine
The European Bank for Reconstruction and Development will try to spur investment in Ukraine by continuing its support for private business, local and foreign-sponsored, while pursuing selective commercialisation of the public sector, according to a new strategy approved by the Bank's Board of Directors. The strategy paper is now available on the EBRD website: www.ebrd.com.
Having agreed to invest €1 billion in more than 40 projects over the past nine years, the Bank remains the biggest and most diversified investor in Ukraine. Going forward, the Bank will remain a catalyst for still-cautious foreign investors by offering them a wider range of risk-sharing products. It will also continue to pay special attention to the development of the banking sector as the demand for financial services grows.
The strategy notes that the level of the Bank's future investments will depend on the extent to which Ukraine can improve its investment environment by making progress towards a consistently implemented tax regime, properly managed regulation, and a truly independent judiciary. This includes the implementation of concrete steps to combat corruption, a major deterrent to investment.
The Bank, together with international donor agencies, is keen to continue its dialogue with Ukraine's authorities on energy sector reform and privatisation. The EBRD's approach to this sector has proved successful in recent years, resulting in landmark privatisations of electricity distribution companies and significantly increased cash collections. The Bank will also seek to invest in projects that improve energy efficiency, increasing state and public awareness of the need to relate energy prices to true costs.
Besides the financial and energy sectors, the new strategy envisages active involvement in road, rail and air transportation projects, where the Bank can have an impact on tariffs, procurement practices, sector consolidation and further privatisation. The EBRD will also continue to invest in the municipal services sector. The document outlines the Bank's efforts to encourage municipalities to introduce administrative and tariff reforms with the ultimate goal of providing better services to their citizens.
The Bank will play an active role in Ukraine's other sectors, particularly agribusiness - the country's largest potential comparative advantage - working with strong international and local investors. Following record grain crop yields and recent changes in agribusiness legislation, the Bank intends to introduce seasonal working capital finance for farmers and grain traders through warehouse receipt credits.
Those are only some of the wider range of funding facilities contemplated. In addition to continuing its institution-building work with local banks, the EBRD will also continue its work with the non-bank financial sector with the aim of developing mortgage lending and leasing.
The EBRD will continue its efforts to improve nuclear safety through the Nuclear Safety Account and Chernobyl Shelter Fund. The Ukrainian government withdrew in December 2001 from a final Board decision on the project to complete the nuclear reactors known as K2 and R4. The project awaits an indication from the Ukrainian authorities on whether they will seek financing under the original loan conditions.
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