VIENNA: The European Bank for Reconstruction and Development (EBRD) increased its investment in Ukraine to 1 billion euros ($1.2 billon) this year, its president, Suma Chakrabarti, said on Monday.
Kiev is locked in a conflict with pro-Russian rebels in its eastern regions and accuses Russia of military involvement. Russia says it supports the rebel cause but denies accusations it has sent in troops and armour to bolster the separatists.
"This year we'll be at about 1 billion euros of investment," from about half a billion in recent years, Chakrabarti told a central bank conference in Vienna when asked about the EBRD's Ukraine programme.
He said administrative bottlenecks and corruption were slowing down disbursement of EBRD funds.
"We are backing the public sector.
But my god things are tough there. If you look at even with our 1 billion euro investment this year, including the public sector, the public sector projects like roads are not disbursing quickly enough because the administrative capacity in many ministries is quite weak still. There's a lot to do to fight corruption," he said.
Another area needing action in Ukraine was the banking sector. "The banking sector troubles me a lot. (There are) 170 banks in Ukraine. Turkey, which has a larger economy than Ukraine, has 40 banks. I think Ukraine has a major consolidation, recapitalisation exercise to go through and we'll be part of that I'm sure," Chakrabarti said.
According to its website, the EBRD invested around 800 million euros in Ukraine in 2013.
Chakrabarti did not say how much the bank planned to invest next year.
Ukraine's economy is suffering as a result of the conflict in the east and the government forecasts gross domestic product will shrink by 4.5 percent next year, after a more than 7 percent decline this year, even though the country is receiving billions of dollars of support from international lenders.
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