Mystetskyi Arsenal National Art and Culture Museum Complex, Kiev
14th Yalta European Strategy Annual Meeting
I am honoured that the organisers of this prestigious conference have asked me to deliver a speech on the EBRD’s perspective on Ukraine’s transition progress in the recent years.
Only a few weeks ago many of us gathered in London to hear Ukraine report on its achievements in pushing through reforms. We pledged in London our continued support for the country.
The fact that so many of those who turned out then are here today is tribute to the scale of the goodwill from the international community towards Ukraine.
The EBRD has been at the forefront of that support, investing more in Ukraine since independence than any other organisation.
When and where appropriate, we have sung the country’s praises as loudly as any other well-wisher, if not more so. And, as good friends should, we have not been shy of offering advice when we perceive reform setbacks.
My earnest hope for the months ahead is that we can help Ukraine achieve much more progress in the areas which will have the most impact on its people and its economy.
Ladies and gentlemen, Ukraine is today a nation on the road to transformation.
Only a few years ago, in 2013, we at the EBRD had stopped investing in the public sector. And our private sector clients were suffocating in the most hostile of environments.
Today the landscape looks quite different.
That is certainly cause for celebration.
Much important groundwork has been done.
The country is benefitting from macroeconomic stability. And growth, while still too modest, has returned.
The situation with public procurement bears no comparison with that previously.
But with the groundwork in place, attention shifts to the building out of the larger structure, one which will deliver sustainable and robust economic growth in the future.
We at the EBRD take great pride in Ukraine’s successes.
We have been very vocal in our enthusiasm for the efforts of Ukrainian governments to undo years of half measures.
Years of missteps. And years of neglect. Of the economy, of the basics of good governance, and of the business climate.
And, as I said, we will not hesitate to challenge the country’s leaders to be more ambitious and more dynamic when we see momentum flagging.
We do so very much as allies in a common cause.
That is the spirit in which I will offer advice as to where the priorities lie in the months ahead.
But first let me tell you quickly about what the EBRD has already achieved on the ground in Ukraine.
- The EBRD’s role
In many ways our record here exemplifies the mission at our creation - in the very same year Ukraine gained its independence.
That mission is to develop open and sustainable market-oriented economies and promote private and entrepreneurial initiative.
We are the largest single investor here. The cumulative figure currently stands at just under €12 billion.
That sum includes almost €3 billion over the last three years alone.
Our commitment, whether in the form of investment, technical cooperation or policy dialogue, is substantial.
I should also mention our role in managing around €2.5 billion in donor funds dedicated to safeguarding the site at Chernobyl – and the €715 million of our own resources we have contributed to that project.
Signs of our activity are everywhere in the country and touch many sectors.
You can’t even travel to Kiev from the EU by road, for example, without using the motorway which we financed.
Our highway maintenance programme brought such welcome changes to some Ukrainian roads it recently earned star billing on TV under the title “200km of happiness”.
When Naftogaz needed financing, in the fall of 2015, to buy gas and get through the winter, the EBRD was the only institution with the will and ability to support it.
The expansion if EBRD activity led, within the last year, to the opening of new offices in Kharkiv and Odessa.
We are particularly proud of our role in helping to create the Business Ombudsman Council, a vital mechanism by which the private sector can register its complaints about unjust treatment at the hands of the state or municipal authorities.
The Council’s work has already yielded a direct financial impact of almost €330 million – and that over a period of less than two years.
And I would also highlight what we have done to help transform the performance of Ukraine’s civil service, a significant constraint on the country’s capacity to pursue reforms.
We devised the idea and championed the setting up of the Reform Support teams within key ministries. And we believe these teams will help with further implementation of those reforms.
- The way forward
Ladies and gentlemen, reforms are not an end in themselves.
They are the means to the ends we all want for Ukraine.
International financial institutions can be of assistance here. But there is only so much we can do on our own.
If Ukraine is to enjoy inclusive and sustainable growth, the remaining barriers to investment, whether foreign or domestic, need to be dismantled.
And dismantled sooner rather than later.
There is still much to do to improve and enhance the business climate.
In fact, I would go further than that.
Ukraine just does not have the luxury of further delaying the reforms required to complete the foundations and build out the structure of its economy.
The rates of growth we see now are, of course, heartening after the experience of recent years.
So are the statistics on business sentiment: 86% of CEOs surveyed by the European Business Association expect significant positive growth dynamics in 2018, 15% plan on 20-30% revenue growth.
According to the American Chamber of Commerce, institutional investors list Ukraine as their number 1 new destination in 2018.
Great news! But – as Ukraine’s leaders recognise - in no way is this enough – or indeed what Ukraine is capable of.
Ukraine needs to do much more to consolidate the rule of law and respect for property rights, indeed everything that advances the struggle against corruption.
This is the single largest obstacle to the return of investment which will drive future growth.
Progress on that front would be hugely beneficial for tackling the challenge of moving more of the parallel economy from darkness into light.
We see signs that vested interests feel under threat and are pushing back.
We also appreciate that reforms do not just happen of themselves. They are part of a political process.
At the same time, the achievements so far need to be preserved and built upon, among them strict bank supervision, discipline in the field of monetary policy, and continued momentum for change at Naftogaz.
And land reform could unlock huge amounts of further funding for agribusiness. Ukraine would then make a decisive contribution to the food security of Europe - and other EBRD regions – once again.
The reforms still to come must be bold in concept and pursued with determination.
And the timeline for implementing reforms should not be held hostage to the electoral cycle. Because reform postponed is transformation postponed.
In that regard, we encourage the government to make faster progress in privatisation and reform of state-owned enterprises.
Indeed more than anything else, a series of successful privatisations would whet the appetite of investors for more Ukraine action.
It would act as a genuine game changer in efforts to attract more FDI. We will continue to help but we need decisions.
Ladies and gentlemen, Ukraine has a firm friend in the EBRD and the other multilateral development banks.
I last pledged our continued support for the country and its people at that conference in London a few weeks ago.
I do so again in front of you here in Kiev.
Our commitment to Ukraine has never been one that is here today, gone tomorrow.
Of course, the more tangible the progress in implementing change on the ground, where it really matters, the more the rest of us can do to invest in Ukraine’s future.
A lot has been achieved already.
Now is the time to rev up the reform engine, to give it real momentum.
The promise of a better tomorrow is within our grasp. Let us reach out and seize it together.
Thank you very much.