Qimiao Fan Kiev, Ukraine
On May 22, 2014, the World Bank’s Board of Executive Directors approved three new projects for Ukraine amounting to US$1.48 billion.
Qimiao Fan, World Bank Country Director for Belarus, Moldova, and Ukraine, talks about the World Bank Group’s support to Ukraine.
Q1: How is the Bank supporting Ukraine?
QF: The World Bank Group received a request for support from the Ukrainian government and stands ready to continue supporting the Ukrainian people. As we announced in March, the World Bank Group aims to provide up to $3.5 billion in 2014. We are moving forward with our pipeline of projects and aim to support the government to undertake the reforms badly needed to put the economy on a path to sustainability. The pipeline includes IBRD and IFC investments, as well as possible budget support of up to $1.5 billion, if the government undertakes reforms and there is a coherent macroeconomic framework in place.
Some of this money ($3.5 billion) was already planned in the projects which have been under preparation - but all of it would come as new money for the Ukrainian people. This includes investment projects that we have announced and already planned as well as the budget support. The $3.5 billion would come on top of the ongoing investment and guarantee program of $3.7 billion.
Q2: How will this assistance help Ukrainians?
QF: First, most of our new investments will go into improving basic public services that directly benefit people of the country, such as water, sanitation, heating, power and health services.
Second, we are working with the government to put in place more targeted social safety net programs that will in a timely way help the most vulnerable people in Ukraine. The investment for the Social Safety Net Modernization project is currently under preparation and is scheduled for Board approval in the coming weeks. This assistance will help expand a cash transfer program - the Guaranteed Minimum Income program and more closely target those most in need. This help for the poorest is very critical, especially as Ukraine embarks on a series of reforms, including reducing gas and heating subsidies. We don’t want the reduction of subsidies, for instance, to have an undue impact on the poorest.
Q3: The Board has just approved a US$750 million Development Policy Loan for Ukraine. How will this money be spent?
QF: The Development Policy Loans (DPL) are direct budget support to the Government of Ukraine to support their reform program. Once reform measures agreed with the World Bank are fulfilled, the World Bank disburses money directly into the budget. This DPL series: i) promotes good governance, transparency and accountability in the public sector; ii) strengthen the regulatory framework and reduce costs of doing business; and iii) reform inefficient and inequitable utility subsidies while protecting the poor.
Q4: Why did the World Bank refrain from providing budget support to Ukraine in the past?
QF: For Development Policy Loans or budget support, the World Bank needs two things to be in place: (i) a sustainable macroeconomic framework; and (ii) strong commitment to and progress in policy reforms. Since these were absent in the past few years, the World Bank did not provide budget support through Development Policy Loans.
Q5: What is the geographical coverage of the projects funded by the World Bank in Ukraine? Are there projects in the east of the country? What will the World Bank do if it proves difficult to implement the ongoing or new projects in Ukraine, in particular in the east?
QF: The World Bank is monitoring the situation very closely with a view to ensuring that all Bank financing is used as intended and projects meet their development objectives. We have several ongoing projects which have national coverage and we are pleased to see that Project Implementation Units for all projects are functioning and projects are being implemented as designed.
Our two new investment projects that were approved by the Board on May 22 (District Heating Energy Efficiency Project and Second Urban Infrastructure Project) also have national coverage and include cities in the east, west, south, and north of the country. These investments are key for the development agenda in the country and, if successful, can be expected to address many of the concerns of the population about poor infrastructure services.
Q6: What is the Bank’s ongoing program in Ukraine?
QF: The ongoing investment and guarantee program of about US$3.7 billion is aimed at improving critical public services and supporting the private sector.
More details about our ongoing program in Ukraine can be found in the Ukraine Country Program Snapshot.
Q7: How can you make sure the money you give to Ukraine is used for intended purposes and is free of corruption?
QF: The Bank has zero tolerance for corruption and we are seen as a global leader in anti-corruption efforts.
At the project level, we have put in place strict procurement and financial management policies and procedures to ensure that funds provided by our financing are used for their intended purposes. Our teams monitor and supervise project implementation regularly and all projects are audited by reputable auditors. We have a zero tolerance policy for corruption in our projects. Any firm or individuals that are found to be engaged in collusive or corrupt practices are debarred from participating in any future World Bank Group projects.
