EBRD to invest €1.5bn into Ukraine until the war ends

EBRD to invest €1.5bn into Ukraine until the war ends
The EBRD is the biggest investor into Ukraine and plans to commit €1.5bn a year until the war ends / bne IntelliNews
By bne IntelliNews May 29, 2024

The European Bank for Reconstruction and Development (EBRD) will invest €1.5bn into Ukraine until the war ends making the development bank the country’s biggest investor, the bank said on May 28.

Since the onset of the full-scale invasion of Ukraine, the EBRD has provided €4bn of funding for projects across all sectors of the Ukrainian economy, according to Anna Lebedynets, Associate Director and Senior Agribusiness Banker at the EBRD, Ukrayinska Pravda reports.

This support will continue until military actions cease, says Lebedynets, after which additional funds will be raised to aid in the country's reconstruction.

"Since the commencement of the full-scale invasion, we have sponsored projects worth €4bn, I mean all sectors of the economy. There is a belief that we should assist the economy in roughly the same proportion during the conflict, till the situation changes. [The sum is] approximately €1.5bn annually," Lebedynets stated at the Grain Storage Forum conference in Kyiv, as reported by Interfax-Ukraine.

Lebedynets said that post-conflict, businesses will require increased financing to rebuild destroyed infrastructure. Estimates for the cost of the reconstruction range from around $150bn to repair physical damage through to circa $450bn estimated by the World Bank and up to $1 trillion for a complete recovery and compensation for lost business.

How these enormous funds will be raised remains a topic of debate. Much of the focus has been on confiscating the frozen $300bn of Central Bank of Russia (CBR) reserve assets, but that option looks increasingly distant as the EU remains nervous about the reputational damage and financial consequences it would have for the EU banking system and trust in the euro.

Analysts estimate that the total funds already earmarked for Ukraine’s assistance from governments and development banks totals around $75bn, which is half of the minimum needed to just repair the physical damage wrought by Russian attacks.

In the meantime, the EBRD has already started work and played a key role in keeping Ukraine’s economy functioning. The bank’s agricultural clients frequently seek to develop crop and livestock output, and there is growing interest in bioenergy projects, said Lebedynets.

"Companies seriously consider and calculate the development of biogas and bioethanol. We have previously seen examples of funded projects in Ukraine. In addition, many people consider how they might process more in Ukraine and bring value to the country," Lebedynets added.

The EBRD has already devised several procedures to cover military risks for enterprises and investments. Starting from late 2024, the bank will offer methods for insuring objects held or moved within Ukraine, where the risks are significantly higher.

"This is not a simple process. I think that by the end of the year it should start working," she concluded.

The EBRD plans to invest up to €10bn in Ukraine over the next five years, reinforcing its commitment to supporting the country through the conflict and subsequent rebuilding phase.