This report analyses the performance of the State Environmental Protection Fund of Ukraine and recommends how it could be improved. The analysis starts from the view that the use of subsidies for environmental investments is a second-best solution that may be justified in transition economies provided that subsidies are managed and disbursed according to sound principles of public finance and environmental policy. The OECD Council Recommendation on Good Practices for Public Environmental Expenditure Management provides the framework for the report.
The Fund, as a tool for implementing national environmental policy priorities, has been analysed in terms of environmental effectiveness, good budgetary practices and management efficiency. The Review has identified the strengths and weaknesses in the Fund's governance structure and has proposed a set of possible reform measures for its institutional strengthening in line with internationally-recognised standards for such institutions. The methodology and some of the conclusions are relevant for policy makers who plan to reform similar institutions in economies in transition.
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