IMF-WBG Annual Meetings 2023 - Development Committee (Marrakech, 12 October 2023)
Statement by Governor Monticelli, Observer
As prepared for delivery
I am grateful for the opportunity to share an update from the Council of Europe Development Bank (CEB) and its perspective on the road ahead for strengthening the capacity of multilateral development banks (MDBs) to tackle today’s challenges and work together as a system.
The CEB’s mission is to promote social cohesion in Europe. As defined by the Council of Europe, social cohesion is the capacity of a society to ensure the welfare of all its members, minimizing disparities and avoiding marginalisation. The CEB pursues its mission by financing social investment projects, with a focus on serving vulnerable people.
In the current context, the CEB’s mandate is more relevant than ever. The challenges that Europe faces converge to the detriment of the most vulnerable, adding to long-standing development needs and jeopardizing progress towards achieving the 2030 Sustainable Development Goals. With its wide European membership and unique social mandate, the CEB has a special role to play to tackle these challenges.
The CEB welcomes the World Bank’s updated mission and vision, illustrated in the Report to Governors on World Bank Evolution, and its continued focus on ending poverty, boosting prosperity, and promoting inclusion, resilience and sustainability to achieve its goals.
Ukraine is the CEB’s newest member state
Ukraine officially joined the CEB as its 43rd member state on June 15, 2023. At the CEB’s 55th Joint Meeting in July 2022, member states had unanimously welcomed Ukraine’s request to join the CEB. As a tangible sign of solidarity, they also agreed to exonerate the country of any payment required for accession.
Engaging with Ukraine is one of the three overarching goals of the CEB’s Strategic Framework 2023-2027, endorsed by member states in December 2022. In its activities, the CEB will align with the principles of the Council of Europe’s Action Plan for Ukraine 2023-2026. In line with the priorities of the Ukrainian authorities, the CEB will operate in Ukraine with a focus on social sectors, such as healthcare and housing, where it can add the highest value.
The World Bank’s second Rapid Damage and Needs Assessment places the total estimated needs in the health sector of Ukraine at around US$16 billion. The CEB has been working with Ukrainian authorities and the World Bank to help meet these urgent needs and provide co-financing within the “Health Enhancement and Lifesaving” (HEAL) framework operation. HEAL finances the restoration and reconstruction of medical infrastructure, the provision of rehabilitation and mental health services, as well as capacity building efforts.
The CEB will also be active in the housing sector in Ukraine. To date, over 23,000 multi-apartment buildings across the country have been damaged or completely destroyed during the full-scale invasion of Ukraine (as compiled in the Register of Damaged and Destroyed Property). As a first step, the CEB recently approved a €2 million grant to finance housing repairs for vulnerable households. The CEB will continue to work with Ukrainian authorities to identify opportunities to provide housing solutions to the people most in need.
The CEB looks forward to continued cooperation with Ukraine and relevant development partners on reconstruction and recovery efforts for the country, and stands in solidarity with the people of Ukraine.
The CEB has regained the highest ratings with all major Credit Rating Agencies
On July 18, 2023, Fitch Ratings upgraded the CEB’s rating to AAA, with stable outlook. In a press release, Fitch listed the key factors underpinning this upgrade: the CEB’s increasing policy relevance, the strengthening of its capitalisation, its very low credit risk, the resilience of its loan performance, and its excellent liquidity. In its review, Fitch highlighted the particular importance of the CEB’s historic capital increase, the first-ever with paid-in resources, amounting to €1.20 billion, which was approved in December 2022 and will help shelter the CEB from rising credit risk in the countries in which it operates.
The CEB now enjoys the highest credit ratings with all the Credit Rating Agencies that assess its profile: Moody’s (Aaa, stable outlook), Standard & Poor’s (AAA, stable outlook), Fitch (AAA, stable outlook), and Scope Ratings (AAA, stable outlook) (unsolicited rating).
The “Full-AAA” rating clearly conveys the CEB’s excellent credit-worthiness and is a testimony of strong shareholder support. This upgrade will allow the CEB to step up its activity on capital markets. In addition to ensuring lower funding costs and an enhanced capacity to tap capital markets, this status allows the CEB to strengthen its franchise for Social Inclusion Bonds (SIBs), which it has pioneered since 2017 and is now able to issue in additional markets. These improvements ultimately benefit CEB borrowers.
Strengthening MDBs’ capacity to deliver as a system is paramount
The CEB acknowledges and supports the conclusions of the Report of the G20 Independent Expert Group (IEG) on Strengthening MDBs, including: the triple agenda recommended to harness the potential of MDBs, the need to ensure that the MDB system delivers more than the sum of its parts, and the call for an enhanced role of MDBs in addressing global challenges.
The CEB also welcomes the special attention paid in the World Bank’s Report to Governors to the objective of deepening partnerships with other organizations, including regional MDBs such as the CEB, in order to maximize the impact of the new playbook and better serve clients. The CEB looks forward to seeing this objective further operationalized with concrete actions to step up MDB cooperation and achieve greater collective impact on the ground. Identifying new and enhanced ways of working with others will continue to be key for the CEB to deliver on its promise to leave no one behind.
The CEB’s role as Europe’s social development bank of choice and as a trusted partner
At this critical juncture, increased cooperation among MDBs – in line with their specific roles and mandates – is crucial to effectively tackle current and future challenges that are threatening to tear Europe’s social fabric. A continued focus on serving vulnerable and low-income people will be needed to deliver broad-based progress.
The CEB is proud to be joining forces with other development partners to maximize results. Going forward, the CEB will continue to act as a partner of choice, deploying its resources where needs are most pressing, in Ukraine and beyond, to achieve greater social cohesion for all.