Ways to finance Ukraine’s rebuilding

Every day of the full-scale military conflict in Ukraine brings untold human suffering and enormous material losses. The destruction covers industry, agriculture, housing, civilian and critical infrastructure, and the economic losses are estimated at billions, as many businesses have either closed or been destroyed.

ENERGOPROMPROEKT is actively involved in the reconstruction of Ukraine, so it is well aware of the urgency of financing reconstruction projects.

The assistance of the international community in the form of loans, grants, credits, etc. is needed not only to strengthen the country’s finances, but also to implement specific projects aimed at restoring and helping the victims. Grants are becoming the most important tool for the revival of Ukraine’s regions. Their distinctive feature is that they are gratuitous and dependent on the fulfilment of conditions set by grantors or fund managers. These funds serve as a lifeline for the revival of infrastructure, social services and economic recovery. In addition, they play an important role in drawing international attention to Ukraine’s economic recovery efforts and building alliances with foreign organisations.

An example is the World Bank’s PEACE in Ukraine project, organized by the Ministry of Finance, which has received $19.5 billion and €1.44 billion in grants and loans, the main source of gratuitous fiscal support. Since the beginning of the full-scale conflict, the total amount of US grants has amounted to USD 20.4 billion (Source: https://www.radiosvoboda.org/a/news-grant-ukrayina-usa-minfin/32527539.html).

The Fund for the Restoration of Property and Destroyed Infrastructure, which is under the jurisdiction of the Ministry of Communities, Territories and Infrastructure of Ukraine, covers real estate of individuals and legal entities, as well as infrastructure facilities that have suffered from the consequences of Russian armed aggression. The Fund for Assistance to Victims of Armed Aggression is used for a variety of purposes, including the construction of public buildings, civil defense facilities, and the restoration of vital infrastructure. The recipients of the funds are executive authorities, military authorities, state-owned enterprises and institutions.

Government subventions play a key role in the financial support of recovery efforts. The Government of Ukraine allocates funds to the regions based on damage assessments and needs. This support enables the regions to take an active part in restoring infrastructure, social services and providing assistance to those affected by the conflict.

Cooperation with international partners is a key pillar in financing Ukraine’s recovery. Grants, loans and credits serve as channels to rebuild infrastructure and improve the quality of life of the affected population. Some countries have promised to provide support in the form of “patronage” to certain regions, facilitating further recovery efforts.

Source: https://decentralization.gov.ua/news/15192

The reconstruction of the country also depends on the participation of businesses and investors. They often provide financial support at the community level or invest in infrastructure rehabilitation, thereby contributing to regional growth, job creation, and the recovery and development of local economies.

Entrepreneurs from the most affected and de-occupied regions can receive grants from the EU4Business program to implement initiatives aimed at restoring their operations.

Prioritizing recovery projects is a collective effort that requires coordination between the state, local communities and international partners. The identification of facilities and areas that require immediate attention depends on constructive dialogue.

The most important tool in this work is the DREAM digital ecosystem for responsible recovery management, which combines information from government portals, local communities, and key statistics into a single project package. This provides a comprehensive overview of needs and progress, facilitating more effective cooperation between government, donors and communities. As of August 2023, the DREAM digital ecosystem has more than 2,000 projects and project ideas.

Government subsidies, international grants, and corporate investments are contributing to the country’s revival. Further efforts to secure funding and allocate it wisely are crucial for Ukraine’s recovery and further development.

One of the key areas is cooperation between the public and private sectors. While public budgets and subventions play a key role in financing reconstruction, attracting investment and resources from private enterprises is equally important. Such partnerships promise to use resources more efficiently and accelerate the recovery process.

Reconstruction financing allows not only to physically rebuild the regions, but also to stimulate job creation, develop entrepreneurship and improve the quality of life of the population. This is an investment in Ukraine’s future.