Building on progress: CEB in 2023

Indeed, it was an exceptional year for Europe’s oldest multilateral development bank, with a stand-out achievement being the accession of Ukraine as its 43rd member state on 15 June 2023.

This was a crowning moment following nearly a year of detailed preparation. The CEB was one of the first institutions to provide support for refugees fleeing Ukraine following Russia’s aggression in February 2022, and the country’s accession marks the start of a new phase of engagement in Ukraine, which is fully in line with the CEB’s social mandate. Heads of State and Government at the 4th Council of Europe Summit held in Reykjavík, on 16-17 May 2023 explicitly recognised the CEB’s key role in supporting Ukraine’s reconstruction efforts.[1] In particular, the summit highlighted the Bank’s capacity to support the restoration of schools, hospitals and homes as well as other social investments.

Government representatives of Ukraine participating in the CEB’s annual Joint Meeting, hosted by Greece on 8-11 June 2023, also hailed the “indispensable” role of the Bank, which their country formally joined less than a week later (see Joint Meeting). Immediately following accession, the CEB moved into action: it sent a first operational mission to Ukraine in August, signed a grant for repairing war-damaged houses in September and approved the first loan project for Ukraine in November.

A solid performance in a challenging global context

Ukraine’s accession was a momentous occasion in a year during which the CEB began to implement its Strategic Framework 2023-2027 and build steadily on the progress it had made in 2022. Financial results for 2023 confirm the CEB’s solid operational and financial position. On the operations side, the Bank approved €4.1 billion in new loans for 48 projects in 25 countries, covering a broad range of sectors such as healthcare, education and vocational training, and affordable housing. Over half the total loan volume (€2.1 billion) was approved for 15 of the CEB’s Target Group Countries, mostly in central and eastern Europe. All projects reflect the areas of action laid out in the Strategic Framework and are in line with the political and social aims of the Council of Europe (see Leaving no one behind).

The Bank reported solid financial performance for 2023, with a net financial profit of €109.2 million, 37.1% higher than in 2022, driven mainly by the high interest rate environment.[2] On the funding side, the CEB registered its highest ever borrowing volume of just under €7 billion and set yet another record issuance of its trademark Social Inclusion Bonds (SIBs), this time worth €2.3 billion, while also extending the programme into three additional currencies. Moreover, the Bank regained its full triple-A status with all major credit ratings agencies, which not only recognised the CEB’s strong loan performance, improved capitalisation and low credit risk, but also its increasing policy relevance that it gained, for instance, by helping member countries address recent refugee crises.

It is precisely the resurgence of these and other challenges that has given new urgency to the CEB’s social mission. From COVID-19 to the war in Ukraine to a cost-of-living crisis, in addition to the looming climate emergency, a succession of interwoven crises has threatened the social fabric on which European prosperity and solidarity depend.

There were some signs of respite in the European economy when energy prices eased in 2023, but high core inflation (excluding food and energy prices) kept exerting upward pressure on interest rates. The global geopolitical situation remained fragile as the war in Ukraine continued, and the Israeli-Palestinian conflict escalated, affecting trade and supply chains in Europe and worldwide.

Migration rose in Europe, driven in large part by conflict and climate-related pressures. Data from the International Organization for Migration (IOM) show that almost 290 000 migrants arrived in the EU in 2023, the highest level since 2016.[3]

In addition, a major tragedy struck Europe when Türkiye’s border area with Syria was devastated by earthquakes in February 2023, causing a heavy loss of life and widespread destruction as well as population displacement in a region that was already hosting a large number of refugees. The CEB reacted swiftly by issuing a loan to support Türkiye’s healthcare efforts. A new Disaster Prevention and Recovery Fund was established, with an initial endowment from the CEB’s Social Dividend Account (SDA; see Responding to catastrophe in Türkiye and the Trust funds section).

Leaving no one behind

Addressing such daunting challenges demands determination and agility on the part of the Bank as it endeavours to fulfil its social mission. In particular, the CEB adopted a “vulnerability lens” as a key element of its Strategic Framework 2023-2027, to continue to promote equity and inclusion and ensure that no one is left behind.

To this end, the Bank has taken the social dimensions of climate change more firmly on board with the aim of achieving a fair and inclusive transition. This was also called for by Heads of State and Government in the Council of Europe’s Reykjavík Declaration in May 2023, urging the Bank “to focus on the social dimensions of climate change and environmental degradation, and to help member states achieve a fair and inclusive transition that leaves no one behind.” (see Reykjavík declaration)

Donors and partnerships are pivotal

Donors play a pivotal role in helping the CEB fulfil its mission by providing additional support for projects with particularly high social impact, notably among vulnerable groups. In 2023, contributions to CEB trust funds from donors and the Bank’s profits amounted to €48 million.

The transformational value of these funds on people’s lives cannot be underestimated. A notable example of this is the Regional Housing Programme (RHP), a joint initiative between Bosnia and Herzegovina, Croatia, Montenegro and Serbia managed by the CEB in collaboration with the UN Refugee Agency (UNHCR) and the Organization for Security and Co-operation in Europe (OSCE), which formally drew to a close in 2023 after over a decade in operation (see page RHP outcomes).

In collaboration with the EU, the CEB launched investments worth €370 million in 2023 for social housing, training and microfinance, which were backed by the InvestEU guarantee agreement signed in 2022.

Close cooperation among peer multilateral development banks (MDBs) has also become increasingly important. Governor Monticelli signed two MDB joint statements in 2023: first, in October, on the occasion of the IMF-WBG Annual Meetings in Marrakech and second, in December for the UN Climate Change Conference (COP28) that took place in Dubai. On both occasions, MDBs committed to scaling up their joint action on sustainable development and climate change. This collaboration underscores the CEB’s linchpin role within the international development finance architecture and as a partner dedicated to achieving greater social impact for all.

[1] “United around our values” Reykjavík Declaration (2023), Council of Europe, May, available at coe.int
[2] See CEB’s Financial Report 2023
[3] See https://dtm.iom.int/europe/arrivals

Further reading

Read the 2023 Report of the Governor
Members agree to strengthen the Bank's capital base

©CEB 2024