Direct Budget Support: Ukraine Supplemental Appropriations Act, 2023, Mandated Assessment

Why We Did This Evaluation

• The Ukraine Supplemental Appropriations Act, 2023, required USAID OIG to submit a report on monitoring and safeguards in place over the $4.5 billion in direct financial (also known as budget) support to the Government of Ukraine (GoU), appropriated in the September 2022 Continuing Resolution. The Department of State OIG was required to conduct a related report, which is included in this publication. 
• The $4.5 billion in assistance is being provided by USAID via The World Bank’s multi-donor trust fund known as the Public Expenditures for Administrative Capacity Endurance in Ukraine (PEACE) fund.
• The PEACE fund reimburses the GoU for its expenditures on salaries for civilian government and school employees, healthcare workers, and first responders, payments for social assistance and pensions, and grants to internally displaced persons. Including $5.8 billion from previous disbursements, USAID has provided $10.3 billion to the PEACE fund as of December 2022. 
• Assessing oversight, accountability, and integrity mechanisms of such significant programming aligns with OIG’s mission to “strengthen and safeguard U.S. foreign assistance through timely, relevant, and impactful oversight.” Oversight of USAID’s Ukraine response is and will remain a top priority for USAID OIG.

What We Found

• The monitoring mechanisms and safeguards established for the $4.5 billion appropriated for the GoU in September 2022 align with Federal Standards for Internal Control established by the U. S. Government Accountability Office.
• We could not assess the operational effectiveness of the controls because they had not taken effect during the reporting period.

Why It Matters

• According to USAID, the $4.5 billion appropriated in September 2022, along with prior disbursements of direct budget support to the GoU through The World Bank, will allow the GoU to withstand the immense economic, social, and political pressures from Russia’s aggression in Ukraine.
• It is incumbent on USAID and The World Bank to ensure accountability and transparency in the use of these funds. 
• While not yet assessing the operational effectiveness of the monitoring mechanisms and safeguards over the direct budget support, OIG’s review provides assurance that the design of the mechanisms aligns with federal internal control standards.
• OIG will continue to provide independent assessments and reports on direct budget support to Ukraine and investigate allegations of fraud and corruption compromising USAID funds. Formal information-sharing agreements we have in place with oversight entities at The World Bank will support these efforts.