Speech by Simonas Krėpšta at the closing event of the EU Twinning Project in Ukraine

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Dear Ms Rozhkova, Dear Ms Kightley, Dear Ambassadors, Distinguished Guests, Ladies and Gentleman,

It is my honour and pleasure to participate in today’s event which concludes a very successful EU Twinning project aimed at strengthening the institutional and regulatory capacity of Національний банк України. Let me hope, that our project has contributed to the common list endeavours carried out by Ukrainians, Poles, and Lithuanians throughout the long sweep of history.

Perhaps the first and the most notable of common projects was the establishment of the Commonwealth in 1569. It united most of what today is contemporary Lithuania, Poland, and Ukraine. Despite being a response to the increasing threat coming out from the tsardom of russia, it also laid the ground for cooperation across economic, cultural and civic dimensions.

The course of history has exposed our cooperation to numerous challenges. Yet the Lublin Triangle is as united as ever after Ukraine has come under an unjustified and brutal russian attack. Polish and Lithuanian voices are among the most hawkish in the push for more sanctions against russia and help for Ukraine.

Let me proudly say that today central banks are not bystanders. Both Lietuvos bankas and Narodowy Bank Polski made sizable investments in Ukraine’s sovereignty bond.

Not only that. At the end of the last year, Lietuvos bankas issued a coin dedicated to Ukraine’s fight for freedom which is engraved with a phrase by the famous Ukrainian poet Taras Shevchenko – “There shall be liberty and right”. Nearly a third of a million euros were collected and already transferred to the war-torn country. The demand from Lithuania, but also elsewhere, including Poland, was so strong that the last week we issued a second special coin dedicated to Ukraine. This time it symbolises freedom, courage, but also superhuman abilities to overstep existing limits. We expect the demand to be equally strong.

Thus, perhaps it should not come as a surprise that Ukrainians view Polish and Lithuanian nations as being the most friendly and supportive.

Ladies and Gentlemen,

Before I turn to the Twinning project itself, let me speak about Ukraine’s economy in more general terms. Arguably the most important fact about it is a contraction of more than one-third in the last year. To my mind it is an underestimation – cumulative losses since 2014 are much larger compared to the no-war scenario.

Let me tell you that throughout the entire first world war, the French economy contracted by one quarter. The US economy fell by almost one third during the Great Depression, and similar numbers were observed in interwar Germany. These are among the largest economic fallouts and pessimism prevailed in all these cases.  

Fast forward to today and despite the economic crunch we observe the contrary – business expectations are improving in Ukraine. In February, after a year in the war, the economic activity has been gradually reviving across most sectors. Businesses declared intentions to step up production, while also expecting an increase in the number of new export orders for products.

Optimism about the future is also captured by Національний банк України projections which see economic growth in the positive territory throughout 2023.  Real wages are expected to grow this year and onwards.

Not only that. The International Monetary Fund stressed the strong performance of Ukrainian authorities under the Fund’s non-financial program. Національний банк України was ensuring adequate international reserves and limiting direct financing of the budget deficit. These developments have given the rise to the expectation that Ukraine can be equally successful while implementing the financial program of the Fund.

Dear friends, one of the rationales to start the EU Twinning project was to improve the governance and institutional capacity of the National Bank of Ukraine. When looking at its current performance I conclude that we did clearly underestimate the Bank’s potential to start with.

Ladies and Gentlemen,

The importance of good governance cannot be overstated. An institutional anchor is especially needed in the down phase of the business cycle and the elevated uncertainty which we currently face.

Before my colleagues speak on the specific results, let me emphasize that the EU Twinning project achievements could never have come to fruition without the commitment, professionalism, and deep engagement of our Ukrainian counterparts both on expert and management levels.

Importantly, technical cooperation is not only about the recipient. It is a two-way street. Whereby a truly positive and mutually beneficial outcome is only possible when both sides are dedicated and actively engaged.

Accordingly, the Bank of Lithuania exchanged, rather than transferred knowledge in this project. This allowed us to grow as an institution and broaden our own perspective.

Dear Friends,

Let me thank you for that by extending my appreciation to the colleagues and partners from Narodowy Bank Polski, the project managers, the leaders of the components, the experts, and the persons responsible for financial accounting and logistics.

Thank you for being such powerful and reliable locomotives that brought this project to its successful conclusion.