In signing four projects with Ukrainian officials in Brussels today, EIB will have fulfilled its €3 billion obligation to Ukraine. Instead of providing general aid, the EIB supports very specific projects, writes Vazil Hudák.
Vazil Hudák is the vice-president of the European Investment Bank.
For many Ukrainians these are times of painful sacrifice. The fruits of pro-market and anti-corruption reforms aren’t immediately apparent but higher energy prices are. Reforms are necessary to make Ukraine a stable, prosperous country.
However, it is easier to bear the sacrifices when they also bring visible benefits, such as modernising Soviet-era water supplies, safer roads, repaired hospitals, or buildings winter-proofed for people displaced by the country’s conflict.
As part of the overall support provided to Ukraine by the European Investment Bank (EIB), the EU bank launched its Special Action for Ukraine in 2014 with the aim of providing €3 billion in financing for infrastructure, private sector development and climate action by the end of this year.
This goes along with the EU’s Association Agreement with the country. In signing four projects with Ukrainian officials in Brussels on Monday, the bank will have delivered on this pledge. The EIB loans are part of €11 billion in support for Ukraine announced by the European Commission in March 2014.
The Ukrainian leadership has done a lot during this time. They have gone a long way in fighting corruption, improving public administration and public procurement, compliance regulations on money laundering and financing of terrorism, as well as overhauling financial regulatory practices and the tax code.
It is my profound belief that Ukraine has much to contribute to Europe. Our projects are aimed at bringing Ukraine closer to Europe and making relations mutually beneficial.
Private sector development
Instead of providing general aid, the EIB supports very specific projects. We know in detail the tangible results they bring to ordinary people. For example, we are providing €120 million towards improved energy efficiency in Ukrainian universities.
This is a well-devised investment with many benefits. Not only will this reduce the environmental impact and the cost of university study in one of the world’s most energy-intensive countries, it will help create a comfortable teaching environment for thousands of young Ukrainian students. The lessons they learn will soon translate into research and development, innovation and, thereafter, economic advantage.
Already Ukraine is well-placed to develop a strong Information Technology sector. I foresee future projects in that area with our bank. EIB assistance should also help stop the heavy brain drain Ukraine has experienced.
Another example is the €200 million EIB loan to modernise public transport in 20 Ukrainian municipalities, including new buses, trams and trolleybuses that we hope will contribute to a major shift from fuel- to electric-powered transport. The project should pay off through energy savings, not to mention the improved quality of life for the customers, and a positive impact on the environment.
The EIB goes further than commercial banks, and beyond just providing financial assistance. Its advisory services also build up local capacity to develop and manage complex investment projects.
As the EU’s policy-driven bank, loans from the EIB must achieve a positive economic, social and environmental impact. We strive for private sector development to crowd-in private financing. In the Ukraine our investments aim to lay the groundwork for a greater flow of private finance, as much as to promote immediate economic growth. Let’s hope the first signs of this investment are evident. In the last year trade between Europe and the Ukraine rose 7.5%.
We are happy to have fulfilled our €3 billion obligation to Ukraine. But this is not the end of the story. We will also be signing a new Memorandum of Understanding with the government to outline future cooperation in financing and technical assistance.
In this way, the EIB will continue to be a partner to Ukraine, promoting reforms and bringing tangible results to its citizens.