Why We Did This Evaluation
Russia’s February 2022 full-scale invasion of Ukraine and the ongoing war has caused catastrophic loss of life and livelihood. Prior to 2024, the United States, through USAID, provided $22.9 billion in direct budget support to the Government of Ukraine (GoU) to ensure the continuity of operations and delivery of essential services. USAID provides this support to the GoU through World Bank trust funds.
On July 12, 2024, USAID obligated an additional $3.9 billion to the GoU through the World Bank’s Public Expenditures for Administrative Capacity Endurance (PEACE) multidonor trust fund. This additional funding is from the Ukraine Security Supplemental Appropriations Act of 2024 (the Act), enacted on April 24, 2024. The Act appropriated $7.8 billion in funding to provide direct budget support to the GoU.
The Act also required USAID Office of Inspector General (OIG) to submit a report to Congress detailing and assessing the monitoring mechanisms and safeguards in place to prevent corruption and ensure accountability over USAID’s direct budget support to the GoU.
Accordingly, the objective of this evaluation was to assess the design of these monitoring mechanisms and safeguards per the statutory directive.
USAID OIG submitted prior reports to Congress assessing monitoring mechanisms and safeguards over USAID’s direct budget support to the GoU in January 2023 and March 2023.
What We Found
The mechanisms and safeguards over U.S. direct budget support contributions to the GoU aligned with Federal and Agency standards. Specifically, the World Bank and USAID had implemented multiple monitoring mechanisms and safeguards over the Agency’s direct budget support to the GoU. These 12 mechanisms and safeguards include reviews, reports, and other methods that aligned with Federal internal control standards.
Specifically, the World Bank had six existing procedures to manage direct budget support contributions. These procedures were (1) recipient financial statement audits, (2) World Bank financial reports, (3) annual and final progress reports, (4) anticorruption and fraud protocols, (5) implementation status and results reports, and (6) expenditure verification reports. The World Bank also had internal control principles that aligned with each mechanism. In addition, the World Bank provided enhanced support to the PEACE project through three other mechanisms: (1) agreed-upon procedure reviews, (2) consultants embedded within the GoU’s Ministry of Finance, and (3) beneficiary phone surveys.
Moreover, USAID implemented three due diligence safeguards over direct budget support contributions by using contractors to conduct spot checks, financial statement audits, and capacity building. These safeguards were (1) technical assistance to the GoU’s Ministry of Finance, (2) financial and internal control audits of the GoU’s ministries, and (3) capacity building of the Accounting Chamber of Ukraine.
We are not making recommendations in this report but will continue to monitor USAID’s management of direct budget support to the GoU.