Decentralization reform in Ukraine have posed new challenges for local governments related to the development of local infrastructure. This includes sectors where DESPRO has traditionally been an active contributor to change: water supply, waste water treatment, and solid waste management.

The main sources of financing for the development of communal infrastructure are local budgets and rarely regional and state budgets. External borrowings in the form of loans from domestic banks and international financial institutions (World Bank, EBRD, EIB, NEFCO), although present in the financing system, are accessible to larger cities and are in fact isolated cases. Emission of municipal bonds was periodic and non-systemic, and it did not play a role in borrowing for the development of local community infrastructure, but was mainly carried out under the general obligations of local councils.
Existing forms of local borrowing are not adequate to meet the current requirements and needs of communities in a long-term financing of infrastructure. For this reason, since mid-2017, DESPRO takes action to promote local government borrowing tools among both the stakeholders and the public, to influence the regulatory environment development in this area.
The undertaken activities are:

Establishing a stakeholder platform
Under DESPRO initiative, a Stakeholder Platform was created in 2019, with key players in the local borrowing sector involved - National Securities and Stock Market Commission, Committee of the Verkhovna Rada of Ukraine on Financial Policy and Banking, the Ministry of Finance of Ukraine, the National Bank of Ukraine, and banking sector, professional communities of the capital market sector, separate local councils.

The main objective of the platform is to improve the legal framework for regulating the municipal bonds sector. In particular, joint efforts resulted in the development of draft laws:

"On bonds of local development fund"


amendments to the Law of Ukraine "On Securities and Stock Market", the introduction of which will
accelerate the development of local borrowings to finance infrastructure projects in Ukraine


amendments to the Law “On Securities and Stock Market”, which will be reformatted into the Law on
Capital Markets and Organized Commodity Markets, which opens up new opportunities for using the
Local Development Funds instrument and others

Improving methodology
Improving methodology is ensured by the collaboration of DESPRO, the expert environment and beneficiaries. 5 educational and scientific-practical publications were issued with the purpose of enabling local governments to make extensive use of municipal bonds to finance local infrastructure projects, including the following:

   Emission of Municipal and Corporate Bonds: 
a Practical Guide (2017, in Ukrainian)
Financial Instruments: Operations
   with Municipal Bonds 
(2019, in Ukrainian)    
   Financial Instruments: Municipal Bonds Emission    
(2019, in Ukrainian)

Disseminating methodology
Jointly with the V. Hetman National Economic University of Kyiv, the curriculum for the training "Financing Local Investment Projects" was developed for professionals of local self-government bodies and communal enterprises of communities. Purpose of the training course is mastering knowledge of theoretical, regulatory and applied aspects of financing local investment projects and providing practical skills in developing the budget of development for a territorial
community, business plans of local investment projects, ways of attracting financial resources for the implementation of local investment projects, preparation of the emission prospectus bonds of municipal and corporate bonds, preparation of financial and budgetary reports, management of financial risks during development and implementation of local investment projects. The course is scheduled to begin in September 2020.

Another component is aimed at dissemination of information on bond instruments to fund local infrastructure projects to a wide audience. So far, 4 training and practical seminars and 2 webinars on the topic “Funding Tools for Local Infrastructure Projects” have been held, with about 200 participants.

Follow DESPRO Facebook page to get updates on events and news on the project’s support of financial tools’ development.