On 25 September, the Polaris Programme Supporting Multilevel Governance in Ukraine, together with the State Institution “Institute for Economics and Forecasting of the National Academy of Sciences of Ukraine”, organised an expert discussion in the format of a focus group on “Revitalising Municipal Investments for Local Development and Reconstruction in Ukraine through Local Borrowing.”

The event brought together representatives of the Ministry of Finance of Ukraine, the DREAM Project Office, the European Investment Bank, Bank Gospodarstwa Krajowego (BGK), the Ukrainian banking sector (Oschadbank, Ukrgasbank, Ukreximbank, Tascombank), national associations of local self-government bodies (AUC, ASMU, AAATC), hromadas, international organisations, and the expert community.

The discussion was opened by Valeriy Heyets, Academician of the NAS of Ukraine and Director of the Institute for Economics and Forecasting, who stressed the importance of addressing the complex challenges Ukraine faces today, particularly in the context of ongoing reforms and global transformations.

“Empowered hromadas are at the heart of Ukraine’s recovery and European integration. Access to national capital markets for investment is an important factor in strengthening local self-government, provided it is based on transparency, accountability and equal opportunities for all municipalities. The experience of the EU, and Sweden in particular, confirms that cooperation between local authorities and the financial sector can be highly effective for communities when built on these principles. Today’s dialogue — bringing together municipalities and their associations, national institutions and financial organizations — underlines the relevance of this approach for Ukraine’s further development,” said Nathalie Bekier, Deputy Programme Manager of Polaris, greeting the audience on behalf of SALAR International, the organisation implementing the Programme in Ukraine.

 

 

The importance of the topic was also underlined by Oleksandr Koren, Director of the Department for Intergovernmental Fiscal Relations and Local Budgets at the Ministry of Finance of Ukraine: “For hromadas, borrowing means both opportunities for development and major responsibility. The Ministry of Finance is engaged in training and information events to help hromadas strengthen their institutional capacity for attracting debt financing. Such initiatives are important for jointly developing possible solutions for regulatory acts to improve local borrowing procedures.”

Representatives of the EIB and BGK presented key programmes supporting the development and recovery of Ukrainian hromadas. Representatives of the Ukrainian banking sector shared their experience of cooperation with hromadas and outlined the main challenges in attracting debt financing.

Yevhen Bublyk, Doctor of Economics and Head of the Department of Monetary Relations at the Institute for Economics and Forecasting, presented an overview of the state of municipal borrowing in Ukraine. Olena Nykyforuk, Doctor of Economics and Head of the Infrastructure Development Department at the Institute, spoke about approaches to assessing the institutional capacity of hromadas to attract debt financing, using examples from partner regions.

Oleksandr Matsapura, Head of Partner and User Engagement, and Anastasiia Boiko-Derhachova, Partner and User Engagement Manager of the DREAM Project Office, presented opportunities offered by the DREAM platform and the creation of unified project portfolios under the new system of public investment management.

The EU experience with debt financing was presented by Rafal Stanek, Polaris expert. His presentation is available via the link. Piotr Budziak, Treasurer of a small Polish municipality, shared the experience of attracting local borrowing to support rural development.

 

The discussion also featured Tetiana Arseniuk, Deputy Executive Director of AAATC, who shared the experience of a rural hromada in attracting local borrowing and described the process of developing regulatory frameworks for debt financing by rural and settlement hromadas.

Addressing the issue of lending to municipal enterprises, Viktor Mudryi, Board Member of AUC, emphasised that borrowing could improve their financial discipline.

Local finance management expert Serhiy Harashchuk, drawing on practical case studies, highlighted the importance of debt financing for local development and stressed that when preparing medium-term budget forecasts, the planned volumes of local borrowing for achieving strategic objectives should also be included.

The preliminary recommendations of the Polaris Programme, discussed during the event with banks, local government associations, hromadas, and experts, will serve as a starting point for developing a Roadmap for boosting municipal investments.