Multilateral development banks agree to harmonize procurement systems in Ukraine

The 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 multilateral development banks (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,” reads the World Bank’s press release.

As noted, the 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.

 “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,” Banga said.

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 agreements 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.