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KfW is increasing its support for business, energy systems, and municipal infrastructure development in Ukraine

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KfW is increasing its support for business, energy systems, and municipal infrastructure development in Ukraine

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Deputy Minister of Finance of Ukraine Olga Zikova, Deputy Minister of Finance for European Integration Yuriy Draganchuk, and Director of the Representation Office of the Reconstruction Credit Institute (KfW) in Ukraine Lorenz Hessner discussed the implementation status of joint projects and plans for further cooperation.

"The German government and KfW are making a significant contribution to the development and restoration of Ukraine's energy sector, infrastructure, and small and medium-sized businesses. Currently, the portfolio consists of eight investment projects, the largest in our cooperation history, amounting to 265.1 million euros," noted the Deputy Minister of Finance.

Additionally, Olga Zikova highlighted that the majority of KfW's support is provided in the form of grants, which is crucial in the conditions of full-scale war and resource constraints. The parties discussed the preparation of new grant agreements to support the energy system and municipal infrastructure under the Ukraine Facility.

"In general, financial assistance from KfW is directed towards the development of small and medium-sized businesses, support for the energy sector, construction and energy efficiency, restoration of social and critical infrastructure, as well as water supply and sanitation," she added.

"One of the notable examples of support for small and medium-sized enterprises is the State Program 'Affordable Loans 5-7-9%,' supported by KfW, which provides preferential financing for businesses and promotes their development even amid full-scale war. The program is implemented by the Enterprise Development Fund, currently undergoing institutional development modeled after the German Development Bank KfW," noted Yuriy Draganchuk, Deputy Minister of Finance of Ukraine for European Integration.

In the context of energy shortages due to systematic shelling of critical energy infrastructure in Ukraine, the Enterprise Development Fund (EDF) is increasingly focusing on supporting energy independence for citizens and businesses in line with the priorities set by the President of Ukraine.

Since 2022, KfW has played a crucial role in supporting the stability of Ukraine's energy sector. Agreements totaling 261.1 million euros have been concluded since February 2022, of which 174.1 million euros have been provided in the form of grants.

During the meeting, the parties also discussed the outcomes of the International Conference on Reconstruction held in Berlin in June 2024. Several agreements were signed at the conference for further cooperation with KfW, including:

  • Minister of Finance Serhiy Marchenko signed a Guarantee Agreement, involving NEK "Ukrenergo" in a 30.4 million euro loan from KfW to enhance the reliability of Ukraine's energy infrastructure.

  • The Minister of Finance of Ukraine and the Federal Minister of the FRG signed a Joint Declaration of Intent to strengthen cooperation for institutional development, coordinated by the Reconstruction Credit Institute (KfW). The Joint Declaration provides support to the Ministry of Finance of Ukraine for oversight and coordination of activities of national institutions for development and institutional capacity strengthening.

Moreover, several significant initiatives were agreed upon during the Conference, forming a comprehensive package of assistance for the development of modern and sustainable infrastructure to support small and medium-sized enterprises (SMEs) in Ukraine. This includes institutional development of the EDF (Vision: Business Development Fund 2.0) and the establishment of the SME Resilience Alliance.

Following the meeting, the parties agreed to continue active work within the existing portfolio of KfW projects and to expand it, including structuring projects with new beneficiaries.

The Odessa Journal
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