Statement by Governor Monticelli to the Council of Europe Committee of Ministers Rapporteur Group on Social and Health Questions* (GR-SOC) (Strasbourg, 17 June 2025)

As prepared for delivery

Dear Chair, Dear Ambassadors,

It is a great pleasure to be with you today.

During this exchange, I would like to update you on the Bank’s activities, provide a look at what’s ahead and, most importantly, hear from you.

Let me start by noting that in recent months, the global landscape has changed rapidly, exposing our region to new challenges.

We are witnessing a significant shift away from the rules-based order that was established after World War II – driven by a sweeping overhaul in trade policy and attacks on the international trade system and multilateralism more broadly.

In this challenging environment, the global economy is now headed for its lowest growth since the COVID-19 pandemic, according to the OECD’s latest Economic Outlook, which was released earlier this month.

Our economies are no exception. The increased uncertainty negatively impacts both consumer and investment demand, ultimately further hampering economic growth.

Already prior to the tariff announcements, the growth prospects across Europe were subdued, as many economies grapple with significant structural challenges, notably population ageing and low productivity.

The latest developments have pushed CEB economies into an even lower growth trajectory.

Governments in our region are therefore facing challenging decisions related to balancing calls for greater defense spending with investments to stimulate growth, all while ensuring adequate social spending.

For the CEB, this uncertainty presents implications on two main levels.

First, uncertainty translates into high volatility in financial markets, which underscores the importance of the Bank maintaining prudent financial management and sustaining ample liquidity.

Second, while there may be a potential increase in demand for CEB operations, the reduced fiscal space in many countries makes it more difficult to translate this potential demand into actual demand.

At the same time, Russia’s brutal aggression continues to rage in Ukraine, causing destruction and devastation.

The latest “Rapid Damage and Needs Assessment”, undertaken jointly by the World Bank Group, the Government of Ukraine, the European Commission and the United Nations, and released earlier this year, indicates that the damage could exceed half a trillion dollars over the next decade.

Housing and energy remain the most heavily impacted sectors, accounting for two-thirds of the destruction.

Against this gloomy backdrop, the CEB is determined to do even more to fulfil its mandate in alignment with its Strategic Framework.

The positive news is that the Bank is now better equipped to assist its member countries to overcome the challenges ahead following the completion of its capital increase (the first ever with additional cash resources), with a stellar participation rate of above 95%, which translates into more resources for its work.

This excellent result is a clear testimony to the trust and value placed in the CEB and its mandate, but it is also vital for the Bank’s operations.

2025 is a special year for the CEB in two respects:

First, this year, the CEB chairs the Heads of MDBs group.

This informal, yet influential, coalition consists of the leaders of ten major Multilateral Development Banks (MDBs) and the International Monetary Fund, and it aims to strengthen collaboration and coherence across the system.

Last year, the group developed a “Viewpoint Note,” which outlines shared priorities for MDBs to enhance their cooperation for greater development impact and scale.

This note became a crucial contribution to the “G20 Roadmap Towards Better, Bigger, and More Effective MDBs”, which was endorsed by G20 Leaders at the G20 Summit in Rio last November.

As Chair of the Heads of MDBs Group, the CEB coordinates the collaborative efforts of MDBs to deliver on the G20 recommendations, working closely with the South African G20 Presidency.

Chairing this Group is both a great honour and a significant opportunity for the Bank to enhance its visibility and raise awareness of the vital role of social development.

2025 is also the year of the mid-term review of the CEB’s Strategic Framework, which was discussed by the Administrative Council last week and will be presented to the Governing Board at the earliest opportunity.

As you will recall, the Strategic Framework guides the Bank’s activities until 2027. It reaffirms the CEB’s unique social mandate and reinforces its focus on the most vulnerable.

It also sets out a path for the CEB’s operations in its newest member country, Ukraine, while maintaining flexibility to address persistent and emerging social development and inclusion challenges in all member countries.

In this regard, I want to emphasise that last year, 2024, was marked by strong delivery on the implementation of the Strategic Framework.

On the operational front, the CEB has redoubled its efforts to respond to member countries’ evolving social development and inclusion needs, including in the context of disasters, while further bolstering its operations in Ukraine.

In 2024, the CEB approved 44 new loan projects totalling €4.5 billion, 59% of which went to Target Group Countries.

The newly approved projects range from support for social infrastructure investments in municipalities across Croatia and improving access to microcredit for small businesses and entrepreneurs in Bulgaria to providing affordable housing, including assisted housing for elderly people in Spain and improving education infrastructure in Hungary.

The CEB also focused on enhancing the sustainability and impact of its social projects through the deployment of grants and guarantees, as well as improved project design and screening.

To this end, in 2024, the CEB began systematically applying a vulnerability lens, identifying the sources of vulnerability that each project aims to address, and a gender-tagging approach to its new loan projects.

It is also worth noting that as of 2024, all operations are aligned with the Paris Agreement, while 61% of projects contain climate finance elements, underscoring the CEB’s ambitions to address the climate-social nexus.

Moreover, in 2024, to ensure it is fit for delivery, the CEB launched the implementation of an IT Masterplan to foster modernisation and address critical technology gaps, implemented additional organisational adjustments to enhance efficiency and effectiveness, and realigned its HR activities to respond to evolving operational demands, while maintaining its small staff size.

Taking a closer look at the CEB’s activities in Ukraine, I am pleased to note that since the country’s accession in 2023, the CEB has approved €553 million in loans to date to support urgent health, housing, support for displaced persons, and microfinance needs.

This is complemented by additional grant support and ongoing assistance for other member countries hosting those who have fled the country.

I am particularly pleased to highlight that the CEB’s support extends beyond mere commitments, as the CEB has also delivered its assistance in record time.

The CEB’s first two loan projects in Ukraine, HEAL and HOME, addressing critical health and housing needs, began disbursing funds in 2024.

Indeed, as a result, more than 3 000 beneficiaries whose houses were destroyed have already been able to acquire new homes under the HOME project.

Additionally, the CEB successfully established its liaison office in Kyiv in 2024, which enhances responsiveness and strengthens relationships with local authorities and partners, contributing to successful project outcomes.

At the same time, the CEB continues to demonstrate its agility in assisting member countries with emerging needs, particularly in response to disasters. This was also the focus of our annual joint meeting in Reykjavik in June 2024.

This support included a second €250 million loan to strengthen healthcare facilities in Türkiye following the tragic earthquake of February 2023 and a €150 million loan to support the Government of Iceland in addressing the fallout from the volcanic eruption during 2024.

The CEB has also marked important achievements on the funding side, reaching the milestone of more than €10 billion in Social Inclusion Bond (SIB) issuances since the establishment of the program in 2017 last year, which we celebrated with bell-ringing ceremonies in stock exchanges in New York and Luxembourg.

A powerful financial tool to channel capital market resources to projects with high social benefits and contribute to the Bank’s unique social mandate, SIBs are issued in seven different currencies and overall represented more than 40% of the Bank’s borrowing volume in 2024, surpassing the previous year’s record.

To date, €13.65 billion in SIB have been issued, buttressing the CEB’s leadership in the social bond market – which is further testimony to the breadth of the scope of the Bank’s activity in carrying out its social mandate.

Let me add that the social impact unlocked by our SIBs is recognised by markets, which was reaffirmed when the CEB recently won – for the second time – the ‘Social Bond of the Year Award – Supranational’ this year.

In summary, the implementation of the Strategic Framework is well on track, and the CEB maintained strong financial and operational performance in 2024, which continues into the year 2025.

So far this year, the CEB has already recorded several milestones.

On the funding side, the CEB issued its first SIB in British Pounds, which also happens to be the first sterling-denominated supranational social bond listed in London.

The CEB has also further strengthened its collaboration with partners and peers:

With the EIB, for example, the CEB signed a Mutual Reliance Agreement to facilitate project co-financing in non-EU countries through mutual recognition of procurement policies and procedures. This helps reduce transaction costs and administrative burdens.

The CEB also continued to foster alignment with best practices, notably with an update to the Bank’s Internal Audit Framework and the adoption of a formal Evaluation Policy.

Recent shifts in the world order, the ongoing war on our continent, a fragile economy, and the increasing impacts of climate change in Europe have bred uncertainty and anxiety in people’s lives.

We know that together, we can overcome these challenges. We also know that in times like these, it is all the more important to ensure that no one is left behind.

The CEB remains committed to standing by its member countries and helping advance social cohesion as the social development bank of choice for Europe.

* The Governor holds his exchange of views with the Committee of Ministers only in even years (i.e., in 2026).

In odd years (such as in 2025), the Governor exchanges views with the Rapporteur Group on Social and Health Questions (GR-SOC)