Ukraine will receive additional financing from the World Bank
As early as November 2022, the World Bank can approve a package of additional financial assistance for Ukraine in the amount of $1 billion, and a decision is also being made to allocate funds to finance the budget deficit and restore infrastructure. This was announced by Deputy Minister of Economy of Ukraine Oleksandr Hryban.
“I have good news from the International Finance Corporation (IFC), which is part of the World Bank. They plan to submit the package for Ukraine for approval by the World Bank Board of Directors as early as this November. The package will provide for the financing for $1 billion – it will be both direct lending and financial guarantees and trade finance instruments. It is expected that such financing will also mobilize private credit capital, as IFC usually finances no more than 30% of the project cost, involving commercial banks in the financial consortium. Thus, the total volume of projects of Ukrainian enterprises that can be financed will amount to more than $3.3 billion,” Oleksandr Hryban reported.
According to him, IFC is also actively working with the European Fund of Sustainable Development (EFSD), to which they have already sent a request for $2 billion. These funds are also planned to be used to introduce financial instruments to support Ukraine. In addition, as early as October, the World Bank should present a trust fund for the support of Ukraine during the annual meeting.
“I think that already at the stage of creating the fund, they will have a certain level of collected obligations, but I do not know whether it will be the entire amount of the fund or only a part of it. But I know for sure that the Ministry of Finance provides for $36 billion to cover the budget deficit for the next year. This gives us hope that by the end of the year we will have an understanding on how to fill this fund,” Oleksandr Hryban said.
According to him, the decision to allocate 36 billion dollars to finance the budget deficit in the next year and also $17 billion to restore the infrastructure and economy of Ukraine is being considered by the World Bank Board of Directors.
“The amount of $17 billion should cover the primary needs for the reconstruction of critical infrastructure and the provision of insurance for foreign investments. These funds will have an impact on the recovery of the Ukrainian economy, because they will become a multiplier at the expense of the involved construction companies and material manufacturers. But the biggest multiplier for the economy will be from the insurance of investment projects,” Oleksandr Hryban assured.
It will be recalled that the Ministry of Economy of Ukraine agreed with the Multilateral Investment Guarantee Agency (MIGA), which belongs to the World Bank Group, to launch an investment insurance mechanism during the war. In the near future, the implementation of a pilot project worth $30 million will begin.