Ukraine needs genuine long-term financing guarantees to safeguard the lives of Ukrainian citizens, Ukrainian President Volodymyr Zelenskiy told the delegates to the World Bank and International Monetary Fund (IMF) annual general meeting on October 12.
Addressing the fourth ministerial discussion at the annual meeting of the IMF and the World Bank, Zelenskiy urged the implementation of “robust and comprehensive sanctions against Russia's military-political leadership.” He also advocated the confiscation of Russian assets to compensate for the damages inflicted.
"We need real guarantees of long-term financial support to protect life. The resilience of defence is always based on the resilience of society. And when there is such support, aggressors and terrorists will not have the illusion that they can outlast and win something for themselves," he said, Interfax Ukraine reports.
Additionally, the Ukrainian President called for the IMF to establish a robust mechanism for incentivising private investment, especially one that addresses military risks and leverages donor capital with private resources.
"Especially a mechanism for ensuring military risks and multiplying donor capital with private capital. This is something that will always be of help," he said.
Zelenskiy also highlighted the necessity of activating export credit agencies and project financing to facilitate investment and infrastructure projects.
"And when we talk about all this, it is important to hear not only Ukraine. That is what makes Ukraine resilient and in the fight for independence, and brings our nation's victory closer, being a model of assistance for any other free nation. Together we can create a working model of how to make the world secure from evil elements of human nature," Zelenskiy concluded.
During the Ukraine Recovery conference held in London in June the collective Western leadership appealed to Western captains of industry to invest in Ukraine, as private capital is seen as the main source of funding Ukraine’s rebuild.
IMF says funding challenges ahead
Ukraine will run out of money if the international community reduces its funding next year. The external financing requirements for 2024 are expected to be $3bn higher than previous estimates, according to Kristalina Georgieva, the managing director of the IMF. Ukraine’s 2024 budget released last week has a $39bn deficit and anticipates $43bn of foreign funding to close the gap.
Georgieva stressed that their investment in Ukraine is an essential commitment, not charity, asserting that it benefits the Ukrainian people and the regional economy.
She reiterated the IMF's unwavering support for Ukraine, and pointed out that the country's economic recovery is progressing faster than initially projected. Economic growth is back in the black in the first nine months of the year, accelerating to 5.3% in 9M23 compared to the same period a year earlier. Growth for the current year is anticipated to reach the upper end of the Fund's forecast, standing at 3%, according to the IMF’s World Economic Outlook (WEO).
The IMF chief also noted Ukraine's continued implementation of structural reforms, a challenging feat even during peacetime. Georgieva commended the policies safeguarding macroeconomic and financial stability, resulting in a recent return to single-digit inflation which fell to 7.1% in September.
Attacking private investment will be key
Ajay Banga, the World Bank Governor, highlighted the potential for Ukraine to attract more private investment and foster future growth if it sticks to its reform programme.
"If the right conditions are created, we estimate that as much as one-third of Ukraine's future needs could be met through private sector financing," Banga said.
Ukraine is developing a multi-year post-war recovery plan, including reforms aimed at reducing corruption, promoting competition and aligning the business environment with EU standards. Banga underlined the role of digital technologies, calling for harmonised procedures and the expansion of digital infrastructure as key drivers for attracting private investment.
The World Bank recently joined Ukraine’s online procurement system e-Zoro that was designed to improve transparency in state procurement.
The World Bank, through its subsidiaries the IFC and the Multilateral Investment Guarantee Agency (MIGA), is already supporting private businesses in Ukraine by facilitating trade, providing working capital and financing essential infrastructure services.
"We see potential in green energy, supported by tariff reforms, and in agriculture to the continuing land reform that they have already begun," the head of the World Bank added.
Banga called for a comprehensive approach involving donor countries, civil society, international financial institutions, UN partners and private businesses to support Ukraine's social and economic needs.
"Lessons include ensuring sufficient resources for the government to function, prioritising delivery of essential goods and services and working capital for businesses, and harnessing digital systems to transfer resources efficiently and accountably," the head of the World Bank explained.
A day earlier during a trip to Brussels, Zelenskiy called on the West to find a way to use the Central Bank of Russia’s (CBR) frozen $300bn of reserves to fund Ukraine’s reconstruction.
"We discussed exactly how the frozen assets of the Russian Federation can be used now, without wasting time, in order to compensate for damage from aggression and missile attacks from the Russian Federation," he said on October 11 in Brussels after negotiations with Belgian Prime Minister Alexander De Croo.
De Croo announced at the same press conference that Belgium was setting up a €1.7bn fund that will be funded by taxes on the profits being earned from the CBR’s frozen money investments.
"It is important that Belgium became the first country to initiate this practice of using frozen Russian assets in support of the defence against Russian terror. The funds will be used for security," he said, as cited by Interfax Ukraine. According to Zelenskiy, "we would really like to be able to use this money right now. Well, the first of these funds, a total of 1.7bn, will be used next year."
Zelenskiy also expressed concerns that the level of support for Ukraine could fall as the world becomes distracted by the conflict in Israel that broke out on October 7. However, Zelenskiy stressed that the conflict was a concern for everyone.
"I think that what is happening in the world is not accidental. Today they are interested in seeing that assistance to Ukraine decreases and they do different things, even tragic ones, even on other continents, in other parts of the world, so that attention to Ukraine and assistance for Ukraine are reduced," Zelenskiy said.
"The world is in a situation where a world war could break out on any continent. And therefore my assessment of the current situation is that leaders can, thanks not to weapons but to politics, stop a possible global war."
"The cheapest option for everyone is to stop Russia here, end the war here, get them out of our territory. Then, I am sure, there will be no big war both in Europe and throughout the world," Zelenskiy stated.