WASHINGTON, October 16, 2023¡ªThe Council of Europe Development Bank (CEB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the World Bank have agreed to harmonize procurement practices for public sector investment financed by the MDBs in Ukraine.
Reconstruction needs for Ukraine will be huge. The cost of reconstruction following the Russian invasion of February 2022, based on damage done in the first year of war alone, has been estimated by the World Bank at US$ 411 billion over 10 years. With billions being committed to Ukraine for economic support now, and much more expected when the time comes for reconstruction, keeping procedures for managing investments transparent and simple is crucial.
A Memorandum of Intent (MoI) signed on the margins of the 2023 World Bank Group and International Monetary Fund Annual Meetings in Morocco by the heads of the four MDBs responds to expectations by the Ukrainian authorities and donors that international organisations working in Ukraine harmonise and streamline their procurement practices as much as possible, while exercising proper fiduciary oversight.
The MoI is also an early marker of enhanced cooperation between MDBs, in line with the reform agenda set out by new World Bank President Ajay Banga.
World Bank President Ajay Banga said: ¡°This kind of cooperation represents development work at its best. Harmonizing procurement procedures for Ukraine among the multilateral development banks has huge potential to substantially ease demands on the country at a time when its capacity is already stretched to the limits. For its part, Ukraine¡¯s strong emphasis on digital transparency in procurement has made this collaboration possible.¡±
EBRD President Odile Renaud-Basso said: ¡°Ukraine¡¯s financial needs are vast, and coordination among its international partners to maximise effectiveness is vital. The EBRD, approaching €3 billion of finance for wartime Ukraine, sees this agreement as an important step forward. Enhanced cooperation between multilateral development banks on harmonising procurement approaches will support Ukraine and its people. The MoI reflects the current procurement context and the agreed way forward without losing sight of the need for fiduciary oversight.¡±
EIB President Werner Hoyer said: ¡°This agreement is an example of enhanced cooperation among the world¡¯s multilateral development banks. Our collective commitment to the colossal task of Ukraine¡¯s recovery and reconstruction is carefully coordinated. It can count on EIB financial backing of over €2 billion for Ukraine¡¯s most urgent needs and the roll out of the EU for Ukraine Fund, backed by Member States contributions and European Commission guarantees of €500 million so far. This agreement demonstrates our resolve and we are determined to ensure that each euro we invest advances Ukraine on the path toward a robust and sustainable future.¡±
CEB Governor Carlo Monticelli said: ¡°Harmonizing our procurement practices in Ukraine will speed up the delivery of much needed support to the country through our loans. This MoI is a step in the right direction. The CEB will continue working closely with the Ukrainian authorities, other MDBs and donors to ensure the country¡¯s reconstruction for the benefit of its people.¡±
The MoI builds on progress already made by the four MDBs¡¯ procurement heads in making a series of mutual reliance agreements to facilitate jointly co-financed projects. These have delegated authority for a shared project to a designated lead financier for supervision and approval of procurement transactions.
The MDBs also agree on common approaches in supporting usage of electronic procurement systems together with adequate procurement monitoring mechanisms to support the needs of the Ukrainian authorities. The MDBs recognise the significant progress made by the Ukrainian authorities in aligning the national e-procurement system (ProZorro) with MDBs¡¯ policy requirements and best international practices. The MDBs commit to increase their reliance on Ukraine¡¯s e-procurement system once the upgraded system becomes functional, ensuring adequate transparency, fair international competition and value for money for Ukrainian citizens.
