OREANDA-NEWS. March 31, 2008. The Loan Agreement for the Public Finance Modernization Project for Ukraine was signed by Mr. Victor Pynzenyk, Minister of Finance of Ukraine and Mr. Paul Bermingham, World Bank Director for Ukraine, Belarus and Moldova, reported the press-centre of World Bank.

The World Bank’s Board of Executive Directors approved a US\\$50 million loan for this project on January 8, 2008.   The objective of this project is to strengthen public financial management in Ukraine by improving operational efficiency and transparency.

Enhancing the transparency, efficiency and effectiveness of the public financial management is an important element of the institutional modernization plan of the Government of Ukraine and has been in the agenda of successive governments since the beginning of the decade. Important progress has been made, including the establishment of a Treasury system, the abolishment of National Bank direct financing of the Government, the adoption of a new Budget Code and budget classification system, the creation of internal audit function and the improvement of the availability of fiscal information. Despite impressive economic growth and prudent fiscal policy, there are still significant institutional challenges to address for improving public service delivery.
“The Project will focus on improvements in management of public finances and budget operations, internal audit and public accountability, and institutionalizing these systems to increase effectiveness of business processes. – says Cem Dener, project Task Team Leader. – It will help improving transparency and facilitating better interaction both among the state organizations and between the public entities and citizens they serve.”

The development of the integrated public financial management system (PFMS) and supporting further reforms in budget planning and execution will have positive effects on the timeliness and predictability of public expenditure, including the areas relevant to combating poverty. Arrangements for improving information dissemination to the civil society supported through the Project will strengthen governance and accountability across the executive, and mitigate governance risks. The Project will ultimately have positive social impact through improved management of public finances. The Project’s support of Ukraine’s efforts to join the EU are also socially beneficial, as any step toward EU harmonization helps reduce social tension and will ultimately bring social benefits though increased access to markets and political openness.

The expected duration of the Project is five years. However, some of the reform initiatives it supports have a longer term perspective. The design of project components builds on the Government’s existing strategies for reforms in budgeting, accounting and public internal financial control and audit.

"With this project, we hope to help the government improve the delivery of public services by making it easier to plan, execute and monitor public spending. – stresses Paul Bermingham, World Bank Director for Ukraine, Belarus and Moldova. - This is a core activity within the new Country Partnership Strategy and we look forward to its successful implementation and completion."

Since Ukraine joined the World Bank in 1992, commitments to the country total around US\\$ 5,2 billion for 38 operations.