ЕС Deputy Director Mathernova: There is very clearly a need to strengthen the capacity within Ukraine to generate good investment projects
Blitz-interview with European Commission Deputy Director-General for Neighbourhood Policy and Enlargement Negotiations Katarina Mathernova
There are talks on about launching European plan for Ukraine in the EU. During the Dragon Capital's investment conference you have also spoken about a new Macro-Financial Assistance programme for Ukraine. I wonder is this possible for these two programmes to exist together?
These are two entirely separate things. EU macro-financial assistance is intended to support a country during balance of payment difficulties. The assistance has its own logic, own rules and conditionality. It is designed to address macroeconomic issues and encourage economic adjustment and structural reforms. So that is one way to support Ukraine.
The External Investment Plan (EIP) that the European Union has put together and has launched, is quite separate; and is a plan to encourage private sector participation in economic development. This is a plan which extends to Africa, and to the EU's Eastern and Southern European neighbourhood. It is very relevant to Ukraine.
And don't forget as well that we also offer a very substantial portfolio of other support programmes to Ukraine through our European Neighborhood Instrument, not to mention the humanitarian assistance that we provide to those Ukrainians who have been affected by the conflict in the East.
At what stage are the discussions about the EU External Investment Plan and how soon Ukraine may apply for the financing under the EIP?
Funding for the European Investment Plan comes through the European Fund for Sustainable Development. Our international partners, the international financial and development institutions (IFIs), will actually implement projects financed through the Fund. They have already submitted 28 project proposals to be guaranteed by the Fund, with each proposal including a portfolio of projects. We consider this a very promising start, and Ukraine is well represented in several of the proposals. We have now started to evaluate them and our idea is to sign the first guarantee contracts after the summer. Once a contract is signed, the IFIs will work through private sector operators. The process has therefore well and truly started and we expect the first projects here in Ukraine to start by the end of the year.
Could you specify who may serve as an intermediate in Ukraine to apply for such project?
We are cooperating closely with European IFIs and EU Member States' national development banks. Let me give you just three examples: the EBRD (the European Bank for Reconstruction and Development), the EIB (European Investment Bank), and KfW (German Kreditanstalt für Wiederaufbau). As our intermediaries they reach out to private sector operators by providing guarantees for local banks ready to get into riskier operations; and they can themselves invest in equity funds as well. In such cases they will take equity stakes in private enterprises. They can also directly guarantee corporate sector investments in specific projects finance schemes.
There is a conference scheduled for June in Denmark, where reforms in Ukraine will be discussed. I was told that one of the announcements to be made there will be launching of some special agency for coordination of financial programs in Ukraine. Could you confirm or refute this information?
I am well aware of the conference, and will be attending myself. It's something I'm very much looking forward to doing. Denmark has been a very good friend to Ukraine and a very supportive country. As friends of Ukraine we are all ready to look into any and all ideas for best enabling Ukraine to coordinate the financial assistance provided to the country by the international community. We will need to reflect on whether setting up a new agency for the coordination of financial programmes is the best way forward. A number of institutions and structures already exist and are already working to better coordinate support programmes offered by Ukraine's various international partners, and it may be more efficient to concentrate on strengthening those existing institutions.
According to my information, initiation of such agency was raised by IFIs, which from time to time point out ineffectiveness of absorption of funds provided to Ukraine.
There is very clearly a need to strengthen the capacity within Ukraine to generate good investment projects, and to implement those projects effectively once financed. There is no question about that. Yet there are different ways of achieving these improvements in capacity. Strengthening the institutions that already exist would seem to me to be the best and most efficient way forward.