As early as November 2022, the World Bank may approve a $1 billion package of additional financial assistance to Ukraine, and a decision will also be made to allocate funds to finance the budget deficit and restore infrastructure. This was announced by Deputy Economy Minister of Ukraine Oleksandr Hryban.
“I have good news from the International Finance Corporation (IFC), which is part of the World Bank. They plan to present the Ukraine package to the World Bank board for approval as early as November. The package will provide $1 billion in funding – it will be direct loans as well as financial guarantees and trade finance instruments. It is expected that such financing will also mobilize private debt capital as IFC typically finances no more than 30% of project costs and involves commercial banks in the financing consortium. Thus, the total volume of fundable projects of Ukrainian companies will amount to more than 3.3 billion US dollars.” Oleksandr Hryban reported.
According to IFC, IFC is also actively working with the European Fund for Sustainable Development (EFSD), to which they have already submitted an application for $2 billion. These funds will also be used to launch financial instruments to support Ukraine. In addition, the World Bank is expected to present a trust fund to support Ukraine during the annual meeting in October.
“I think they will already have some level of revenue at the stage of setting up the fund commitments, but I don’t know if it will be the whole amount of the fund or just part of it. But I do know for sure that the Treasury Department is providing $36 billion to cover next year’s budget deficit. This gives us hope that by the end of the year we will have an agreement on how to fill this fund.” said Oleksandr Hryban.
According to him, the decision to allocate $36 billion to finance next year’s budget deficit and $17 billion to restore Ukraine’s infrastructure and economy will be considered by the World Bank Board.
“The $17 billion amount was intended to cover key needs for rebuilding critical infrastructure and providing insurance for foreign investment. These funds will affect the recovery of the Ukrainian economy, as they will become a multiplier at the expense of the involved construction companies and manufacturers of materials. But the biggest multiplier for the economy will be the insurance of investment projects.” assured Oleksandr Hryban.
It is worth remembering that the Ministry of Economy of Ukraine has agreed with the Multilateral Investment Guarantee Agency (MIGA), which is part of the World Bank Group, to Investment Insurance Mechanism during the war. Implementation of a $30 million pilot project will begin in the near future.