At a ceremony in Kiev, the government joined the EBRD and economic grouping the OECD in signing a Memorandum of Understanding that promises an anti-corruption drive.

“We salute the government of Ukraine for its determination to tackle this fundamental problem regardless of the adverse geopolitical situation in the country,” EBRD President Suma Chakrabarti said at the launch.

The signing comes as the European Bank for Reconstruction and Development prepares to host its annual conference in Warsaw on Wednesday and Thursday, where the EBRD will address the issue of anaemic recovery in former ex-Soviet bloc countries, including Ukraine and in particular Russia.

It will look also at the problem of stalled government reforms and how this is in part preventing former communist nations from delivering economic growth.

The EBRD said in a statement on Monday that “combatting corruption in Ukraine has become increasingly urgent because of the impact it is having on the willingness of companies to invest in the country”.

It added: “The government of Ukraine has pledged to do more to combat corruption with the support of the EBRD, multilateral organisations as well as domestic and foreign business associations.”

EBRD investment in Ukraine is rising back to 1.0 billion euros ($1.4 billion) this year compared with around 600 million euros in each of the previous two years, when the bank decided to pull out of public sector projects because of corruption.

“Corruption is a scourge, hollowing out the economy, eating away at political life and undermining democracy,” Chakrabarti said on Monday.

“Signing this memorandum and launching this initiative will not stop corruption. It is, though, an important step, but just the first step, down a very long road,” added the former top British civil servant.

Under the new initiative, an independently-funded business ombudsman is to be set up for the first time in Ukraine.

“The new institution will provide for greater transparency of business practices in the region and it will make its reports public,” said the EBRD, which was founded in 1991 to promote the transition of post-communist countries to market economies.

Addressing reporters Friday in a briefing given ahead of the annual meeting, Chakrabarti said: “Ukraine has passed a whole set of laws for 20 years which make it look really, really modern. But it’s the implementation of those laws which has been dreadful.”

This year’s annual EBRD meeting takes place almost 25 years after the fall of the Berlin Wall and a decade after eight former communist nations, including Poland, became members of the European Union.

After years concentrating on investment partnerships with private and public sector firms across former communist countries, the EBRD has since lent money for projects in Turkey, as well as countries in north Africa and the Middle East.

At the annual meeting this week, EBRD shareholders will decide on whether Libya should become a member of the bank, which would precede a move to begin investing there.

Within the north Africa and Middle East region, the EBRD currently invests in Egypt, Morocco, Tunisia and Jordan.

The EBRD will decide this week also on whether the Cyprus bailed-out economy should temporarily receive financing from the bank.

The institution has 66 shareholders, comprising 64 countries plus the European Union and the European Investment Bank.