At the Ukraine Recovery Conference 2024, European Commission President Ursula von der Leyen announced the signing of €1.4 billion in new guarantee and grant agreements aimed at supporting Ukraine’s recovery and reconstruction. This initiative, part of the Ukraine Facility’s Investment Framework, emphasizes the EU’s ongoing commitment to support Ukraine amid the conflict with Russia.

Strategic Financial Support

“The European Union is rallying financial firepower to help Ukraine resist and recover,” stated President von der Leyen. “We are committed to ensuring Ukraine has all the support it needs. Today, we are launching our investment plan under the Facility, signing agreements worth €1.4 billion with partner banks to attract further private sector investments. Together, we will help Ukraine resist and recover.”

These agreements, the first with international and bilateral public financial institutions under the Ukraine Investment Framework, consist of €1 billion in loan guarantees and €400 million in blended finance grants. They will support private companies, municipalities, and state-owned enterprises in Ukraine, focusing on critical sectors such as energy infrastructure, transport, and municipal services.

Targeted Initiatives

The support framework aims to unlock €6 billion in investments through various targeted programmes:

Support for Ukraine’s Private Sector: Enhancing access to finance for small and medium-sized enterprises (SMEs), particularly those affected by the war, with €190 million in guarantees and €10 million in investment grants via the European Investment Bank (EIB) Group.

Better Futures Programme: Accelerating investments in renewable energy, digital sectors, and industrial projects, including steel production and construction materials. The EU will provide €350 million in guarantees and €17.5 million in technical assistance via the International Finance Corporation (IFC).

Financial Inclusion Recovery Programme: Boosting SMEs’ production capacity and access to finance with €140 million in guarantees, €30 million in investment grants, and €7 million in technical assistance via the European Bank for Reconstruction and Development (EBRD).

Hi-Bar Programme: Supporting the net-zero transition in the energy sector with €150 million in guarantees and €7.5 million in technical assistance via the EBRD.

Municipal, Infrastructure, and Industrial Resilience Programme: Providing emergency support and future reconstruction efforts with €150 million in guarantees, €25 million in investment grants, and €7.5 million in technical assistance via the EBRD.

Promoting Green Lending via the Green for Growth Fund: Enhancing financing for mid-caps and SMEs in green and circular economy initiatives. The EU will provide €45 million in first loss capital, €7 million in investment grants, and €3 million in technical assistance via the Kreditanstalt für Wiederaufbau (KfW).

EU4Business Programme: Supporting micro and small enterprises, especially those in de-occupied and front-line regions, with €45 million in first loss capital, €9 million in investment grants, and €1 million in technical assistance via the KfW.

Reconstruction and Rehabilitation of Electricity Transmission Infrastructure Programme: Strengthening electricity infrastructure resilience with €100 million in investment grants via the KfW.

Support for Ukrainian MSMEs Programme: Enhancing finance access for war-affected businesses with €20 million in guarantees via Bank Gospodarstwa Krajowego (BGK).

Municipal Infrastructure Development Programme: Supporting water and sanitation infrastructure in Chernivtsi with €17.75 million in investment grants and €2 million in technical assistance via the KfW.

Immediate Ukraine Extension of JASPERS: Providing capacity-building and advisory services for large-scale infrastructure projects with €10 million in technical assistance via the EIB.

Ukraine Recovery and Reconstruction Guarantee Facility: Offering war insurance for movable assets with €50 million in guarantees via the EBRD.

Additional Measures and Support

In response to the extensive damage to Ukraine’s energy infrastructure, the EU is deploying over 1,000 additional power generators from its rescEU strategic reserves and mobilizing further stockpiles for shelter equipment and medical supplies. The EU Civil Protection Mechanism has also facilitated the provision of more than 15,000 solar panels to support Ukraine’s energy sector.

Additionally, the EU has increased its support through rapid response instruments for the Integrated Response Hub, adding €18 million to bring the total contribution to €36 million. This initiative provides critical infrastructure, demining equipment, and support for civilian security to ensure justice and collect evidence of war crimes in de-occupied areas.

Long-Term Stability Commitment

Since the onset of the conflict, the EU’s support to Ukraine has totaled nearly €100 billion, covering financial, humanitarian, emergency budget, and military assistance. The Ukraine Facility will provide up to €50 billion in grants and loans from 2024 to 2027, supporting Ukraine’s macro-financial stability, recovery, and modernization efforts in line with EU standards and reforms.

The Ukraine Plan, developed by the Ukrainian government and endorsed by the Council, aims to drive sustainable economic growth and attract investments, setting the stage for a modern, greener economy integrated with Europe.

Enhanced Donor Coordination

At the conference, Commission Executive Vice-President Valdis Dombrovskis chaired the first ministerial meeting of the Multi-agency Donor Coordination Platform. The platform reaffirmed its commitment to Ukraine’s recovery and launched the Business Advisory Council to enhance the business environment and attract private investment.

This initiative represents a significant step in the EU’s ongoing efforts to support Ukraine’s resilience, recovery, and long-term development amidst the ongoing conflict and towards a future integrated within the European Union.

photo source: Google

By: Montel Kamau

Serrari Financial Analyst

12th June, 2024