• EBRD lending up to €10 million to the city of Lviv to tackle the impact of war
• Emergency liquidity to help ensure that essential public services continue functioning
• The bank is also providing technical support to the Lviv Veterans Centre

UKRAINE: The European Bank for Reconstruction and Development (EBRD) is providing a senior loan of up to €10 million to the city of Lviv in western Ukraine to help ensure the provision of vital municipal services and mitigate the effects of the ongoing war.

The European Union (EU) is supporting the EBRD’s loan by providing 25 per cent first loss risk cover under its Municipal, Infrastructure and Industrial Resilience Programme (which was established as part of its Ukraine Investment Framework) to address war-related risks. That programme focuses on emergency support and future reconstruction efforts across various sectors (including industry, energy, and municipal infrastructure) and will see the EU provide a total of €150 million in guarantees, €25 million in investment grants, and €7.5 million in technical assistance via the EBRD.

Lviv is the seventh largest city in Ukraine and the largest in the west of the country. A total of 758,000 people live in the city itself, with around 1 million living in the wider Lviv agglomeration. This number has increased recently, since Lviv is a natural destination for internally displaced people on account of its location and its role as a major educational and economic centre.

Due to the ongoing war and its impact on the local economy, forced displacement, and labour market instability, there is a significant risk of disruption to infrastructure services. This could affect the provision of infrastructure necessary for Lviv’s economic stability and the city’s private-sector operations.

The EBRD’s loan will provide liquidity to key municipal operators such as transport company Lvivelectrotrans, waste management operator Zelene Misto, and water operator Lvivvodokanal. The emergency funds will support those municipal operators by helping to address their critical liquidity needs, helping to ensure the uninterrupted provision of essential public services.

The EBRD will also provide technical support through its ongoing Human Capital Response for Ukraine programme in order to address the capacity-building needs of the Lviv Veterans Centre, which provides legal, educational, and administrative services in cooperation with local partners. The Bank will help the city to enhance the services and support that it provides to its veterans and their families.

The EBRD is Ukraine’s largest institutional lender. It has significantly increased its lending to the country in recent years, making more than €7 billion available since February 2022. It has also secured agreement from its shareholders for a capital increase of €4 billion to continue lending at this level in wartime and increase its financing further when the time comes for reconstruction.

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• New EBRD funding and support for Ukraine announced at the Ukraine Recovery Conference in Berlin
• The bank also mobilizes more than €600 million of de-risking, risk-sharing tools
• Commitments bring the total EBRD financing deployed in wartime Ukraine to €4.5 billion

BERLIN: The European Bank for Reconstruction and Development (EBRD) is extending its support for Ukraine with new funding commitments. At the Ukraine Recovery Conference (URC) in Berlin on 11-12 June, the Bank signed multiple financing and pre-financing agreements, which brought the total EBRD financing deployed in wartime Ukraine to €4.5 billion.

The Bank has also mobilized new de-risking and risk-sharing tools from the European Union and other development organizations for over €600 million.

The EBRD, Ukraine’s largest institutional investor, has significantly increased its finance to Ukraine since Russia launched its full-scale war there, and aims to continue investing between €1.5 to 2 billion in the country annually.  

EBRD shareholders have recently agreed to provide a €4 billion paid-in capital increase to enable the Bank to continue investing at these levels in wartime, with the potential for more investments when reconstruction starts.

Ukraine is now a candidate for European Union accession. But the Berlin conference comes amid weeks of Russian air attacks on the country’s energy facilities. These have damaged or destroyed more than half of the national energy generation capacity and raised questions about how Ukraine will provide many of its citizens with light and heating this winter.

While visiting Kyiv last week, EBRD President Odile Renaud-Basso and Ukrainian Prime Minister Denys Shmyhal signed a Memorandum of Understanding (MoU) setting out €300 million of new EBRD emergency support for the energy sector. The EBRD will continue to explore with its partners further ways to support the country’s energy security.

In Berlin, the EBRD was active in all four of the conference’s thematic areas: EU accession; business development; local, municipal and regional development; and human capital development.

In the area of EU accession, the European Union agreed to provide €517 million to Ukraine through EBRD programs to support its economy and recovery. The agreements were signed on Tuesday by Managing Director for Ukraine and Moldova, Arvid Tuerkner, and European Commission Vice President Valdis Dombrovskis.

In the business category, the EBRD signed multiple transactions.

• An EBRD equity investment in a renewable energy joint venture led by a German investor to build and operate new solar power generation facilities in Ukraine. The EBRD is also lending €60 million to finance the construction of a privately owned Ukrainian greenfield biofuels project.
• Two transactions with local banks: a €20 million local-currency loan to Bank Lviv and a €50 million unfunded portfolio risk-sharing facility to Raiffeisen Bank Ukraine. These instruments will strengthen the banks’ lending capacity and boost access to finance for Ukrainian small and medium-sized enterprises (SMEs).
• A pre-financing agreement with PrivatBank for an unfunded portfolio guarantee, which, once signed, will cover up to 50 percent of PrivatBank’s credit risk on newly issued sub-loans worth up to €400 million to private businesses. This will help Ukrainian companies continue their operations, safeguard livelihoods, and invest in projects that contribute to the country’s food production, energy efficiency, and energy generation.
• To support Ukraine’s cross-border trade, the US International Development Finance Corporation and the French development agency Proparco declared their intent to share the risk of the EBRD’s trade finance exposure in Ukraine in the coming year. The two institutions intend to provide up to US$ 50 million each in risk-sharing guarantees, to support the export and import of critical goods. The arrangement builds on a plan drawn up last year by development finance institutions to collaborate on co-investments in Ukraine’s private sector.
• The EBRD and IFC agreed to continue advancing their joint appraisal to support the creation of a leading integrated telecoms operator in Ukraine through the merger of Datagroup-Volia, a national fixed telecoms leader, and Lifecell, the country’s fastest-growing mobile operator. The landmark deal for Ukraine would entail potential joint financing of up to US$ 435 million to support the expansion and improvement of telecommunications infrastructure.
• The Bank joined the SME Resilience Alliance, an initiative launched by the conference’s German organizers.
• Lastly, the EBRD is partnering with Endeavor Global to launch Endeavor Ukraine. The organization’s Ukrainian chapter will support high-impact entrepreneurs through mentoring, networking, and investment opportunities, promoting an entrepreneurial ecosystem, which is crucial for a vibrant private sector and long-term economic growth.

To support Ukraine’s cities and regions as they grapple with the fallout from the war, the EBRD signed two municipal transactions and four pre-financing agreements worth a total of €143 million, under the conference’s local and regional heading, as well as MoUs for regional transport and water infrastructure projects.

• The EBRD is lending a financial package of €25 million to the port city of Mykolaiv to repair its water infrastructure. The package includes a €10 million grant component provided by Denmark and a €5 million grant from the Eastern Europe Energy Efficiency and Environment Partnership (E5P).
• The Bank is lending €15 million, which includes an EU component, to Lutsk to upgrade its district heating system.
• Kharkiv, Ukraine’s second city, which has come under heavy Russian attack in recent months, was one of three municipalities along with Kyiv and Kryvyi Rih to sign pre-financing agreements for the provision of emergency liquidity to maintain vital services. The Kharkiv project will also include an EU component. A fourth pre-financing agreement was signed with the city of Zhytomyr for a public transport project.
• MoUs were also signed with Ukrainian Railways and the Ministry of Infrastructure for a potential €300 million project in which the EBRD would provide co-financing for the purchase of electric locomotives, and with the Ministry to support the regional water sector.
• The Bank joined the Coalition for Sustainable Municipalities.
  

Under the umbrella of human capital, the EBRD, Ministry of Economy of Ukraine and Sweden’s Folke Bernadotte Academy (FBA) launched a new Human Capital Resilience Charter to help employers in Ukraine support returnee workers and veterans in meeting the challenges they face in the wartime labour market. The EBRD also joined the Skills Alliance for Ukraine as well as the Alliance on Gender-Responsive and Inclusive Recovery.

Lastly, the Bank reconfirmed its deepening partnership with USAID by signing an MoU with shared objectives regarding Ukraine’s resilience and recovery. It establishes a basis for ongoing cooperation between the partners in energy, infrastructure and finance.

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The decision is in line with the governors’ recognition that support for Ukraine should be the bank’s highest priority, now and in the future, following Russia’s full-scale invasion of the country. The capital increase would take effect from the end of 2024, with the first payments to come in early 2025.

The additional capital would enable the EBRD to continue providing sustained investment during wartime and increase its annual investment in Ukraine to three times the pre-war average. This would preclude the need to systematically share risk with shareholders and donors through guarantees and grants.

The EBRD is a committed and steadfast partner of Ukraine, having been the largest institutional investor in the country over the last 30 years, with a cumulative investment of more than EUR18 billion in more than 500 projects. The bank’s investments are aimed at making the economies in its regions competitive, inclusive, well-governed, green, resilient, and integrated.

If the governors approve the proposal, this will be the third capital increase in the EBRD’s history, following similar decisions in 1996 and 2010. The increase in capital of this size will strengthen the EBRD’s balance sheet and ensure that the bank can undertake increased investment in Ukraine and continue fully supporting the other economies where it invests in tackling their transition challenges.

The EBRD is a multilateral bank that promotes the development of the private sector and entrepreneurial initiatives in 36 economies across three continents. The bank is owned by 71 countries as well as the EU and the EIB.

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Anuttama Dasa, the Global Director of Communications for the International Society for Krishna Consciousness, urged world leaders to take responsibility to bring about change. He said, “I would encourage everyone to take advantage of the spirit of this world parliament to look into our hearts and our lifestyles and see how we can minimize the violence in our lives, how we can minimize the tension and the misunderstanding between communities, how we can actually make the kind of personal endeavor, personal sacrifices to benefit others and benefit the planet.“

The sessions featured 120-minute programs such as panel discussions, films, performances, workshops, art exhibits, plenaries, and community service on topics about protecting human rights, climate change, women’s rights, and other social issues.

Subala Dasa, one of the directors of ISKCON Chicago, talked about the contribution of the Parliament of World’s Religions and said that it is providing a spiritual alternative to society’s ailments. He said, “It’s an important work because of the ailments of society, not only here in the United States but the entire world, there is so much conflict.” “In this country, we have issues with equality, with social justice, with women’s rights, violence’. All these ailments can be addressed by spiritual knowledge. Our process is to provide that spiritual education and support to bring about a whole revolution in the consciousness of the people of the day.”

The Sikh community offered a special langar feast to all the attendees, and the program ended with special prayers for the refugees of war and the people of Ukraine.

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EBRD fully committed to London’s Ukraine Recovery Conference

·       New investment commitments expected in several areas, along with support for reform

·       EBRD is Ukraine’s largest institutional investor

LONDON: The United Kingdom hosts the 2023 Ukraine Recovery Conference on Wednesday and Thursday, with the EBRD – Ukraine’s largest institutional investor – bringing its deep knowledge of the country to bear on discussions about what reconstruction could look like and how best to plan and finance it.

This London conference on the future, organized jointly by the UK and Ukraine, takes place at the same time as Ukraine’s launch of a counteroffensive to retake Russian-occupied territory.

The country is also dealing with the effects of damage two weeks ago to the Nova Kakhovka dam in the Kherson region. This has flooded low-lying areas on both sides of the Dnipro River and forced the evacuation of thousands of people.

Delegates gathered in London, however, will focus more on the cost and modalities of rebuilding the country once hostilities subside. According to the World Bank’s latest needs assessment, Russia’s war on Ukraine caused US$ 135 billion of damage in its first year, and reconstruction over 10 years could cost US$ 411 billion.

Last year’s Ukraine Recovery Conference in Lugano laid the foundations for the reconstruction process. This year’s London conference is looking for a broader mobilization of public and private sectors to meet the scale of Ukraine’s stabilization and recovery needs.

Ukraine, now a candidate for the EU, has committed to building back better, pursuing an active reform stance despite the war.

The EBRD, which has a relationship with Ukraine dating back more than three decades, working both on projects and on support for the Ukrainian authority’s reforms, has already significantly increased its support there since the Russian invasion last February, committing to invest €3 billion in 2022-23. It stands ready to back reconstruction with further funding and know-how, and in May secured the permission of its Board of Governors to work on a potential capital increase by year-end to extend maximum support for Ukraine.

EBRD President Odile Renaud-Basso will be participating in a plenary session entitled Framework for Lasting Recovery at the main conference, whose themes are Unity, Diversity, and Delivery and whose main topics will be attracting the private sector to help finance reconstruction, rebuilding infrastructure, and improving reform and governance.

“The EBRD’s aim from the start has been a very practical one: to support the resilience of Ukraine’s real economy in the here and now, working primarily on energy security, vital infrastructure, food security, trade, and support for the private sector. Together with a continuation of the reform agenda, reconstruction will be an intensification of this, building on our support for these key sectors of the economy,” said Ms. Renaud-Basso.

Ms. Renaud-Basso will be joined at the URC by the EBRD’s Vice President, Policy and Partnerships, Mark Bowman; Managing Director, of Eastern Europe and the Caucasus, Matteo Patrone; Managing Director, Impact and Partnerships, Ines Rocha; Managing Director, of Policy Strategy Delivery, Christoph Denk; and Mark Magaletsky and Irina Kravchenko, Deputy Heads of EBRD in Ukraine.

At or on the margins of the conference, the EBRD expects to sign two transactions, one in agribusiness under its Food Security Pillar, and the other in the financial institutions sector under the Resilience of the Private Sector pillar.

The Bank also expects to sign three Memoranda of Understanding (MoUs) with Ukrainian Prime Minister Denys Shmyhal on further work to boost Ukraine’s energy security, one covering hydropower in the wake of Nova Kakhovka, one electricity, and one gas.

On 21 June, Ms. Renaud-Basso will sign on behalf of the EBRD a Memorandum of Understanding (MOU) with 17 development finance institutions on collaboration when making co-investments in Ukraine, mainly in the private sector. This builds on an initial commitment in May by the EBRD and the development finance institutions from the G7 group of advanced economies to establish the EBRD-led EBRD-G7 DFI-EDFI Ukraine Investment Platform.

Finally, the EBRD will sign a statement of intent on relaunching the insurance market in Ukraine.

The Bank will also host several side events at its London HQ, starting with a gender event on 20 June, titled A Vision for Gender Responsive Recovery in Ukraine. Partners include UN Women, the UK Foreign, Commonwealth and Development Office (FCDO), the National Democratic Institute (NDI), the Ukrainian Women’s Fund, the Women’s Ukraine Congress, and the government of Ukraine.

The event will explore the challenges stemming from displacement, conscription, disability, and psychological harm – as well as the intersectionality with gender–related to wartime conditions.

On 22 June, the EBRD will host an event on “Investments in Energy for Green Recovery”, moderated by the Ukrainian energy think tank DiXi Group.

The Ukrainian government has announced a “build back better” approach to energy sector recovery, with an emphasis on renewable energy sources and energy-efficient technologies. Before the war, the country, an exporter of electricity, was already developing renewable energy alongside its nuclear energy resources. Ukraine’s electricity sector has undergone severe bombardment by Russian forces through the winter.

Discussion will focus on the prospects of investors coming to Ukraine’s energy sector, and which companies are ready to invest, as well as on the steps needed to improve the business climate.

On 23 June, the EBRD will co-host a final morning event, Financial Integrity, and Transparency, along with the German Marshall Fund of the United States, USAID Support to Anti-Corruption Champion Institutions, RISE Ukraine Coalition, Transparency International Ukraine, and Transparency International UK.

This event will be supported by the EBRD’s Ukraine Stabilisation and Sustainable Growth Multi-Donor Account, grouping Austria, Denmark, Finland, France, Germany, Italy, Japan, the Netherlands, Norway, Poland, Sweden, Switzerland, the United Kingdom, the United States, and the European Union.

It will bring together officials from governments and donor agencies, as well as civil society, to publicly explain all the work underway to ensure that Ukraine’s recovery and reconstruction process is transparent, accountable, digital, and efficient. It will also explore questions related to the management of state property and corporate governance of state-owned enterprises (SOEs).

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• EBRD deploys €1.7 billion in 2022 Ukraine investments, plus €200 million from partner banks
• This represents more than 10 percent of the total annual business of the Bank
• Almost €1.4 billion of EBRD donor funding was collected to support Ukraine

UKRAINE: The European Bank for Reconstruction and Development (EBRD) has deployed €1.7 billion in Ukraine in 2022 and mobilized a further €200 million from partner banks. This represents more than 10 percent of the Bank’s annual business volume.

This means the EBRD is on track to deliver on its commitment to invest €3 billion in Ukraine over the period 2022-23, with the exceptional support of shareholders and donors who share part of the risk of the investments that the EBRD has taken on its own books.

The results were achieved despite the extremely challenging global economic environment in the wake of Russia’s war on Ukraine and confirm the EBRD’s countercyclical role in supporting its countries of operations and clients.

“The Bank and its shareholders moved swiftly, following the beginning of the war, to provide adequate support,” said EBRD President Odile Renaud-Basso. “This impressive operational performance is testimony to our resilience and determination to support our countries of operations and clients.”

To support the real economy in Ukraine through investments in vital infrastructure, energy, and food security, trade, and support for the private sector, the EBRD deployed €1.7 billion. A further €200 million were mobilized from partner banks.

The Bank raised €1.4 billion of donor funds in 2022, including unfunded guarantees, which are dedicated to Ukraine and other countries most affected by the war in 2022 and 2023. The Bank bore 60 percent of the risk related to the investments deployed in Ukraine in 2022.

Highlights of EBRD work in Ukraine in 2022 – which has successfully attracted further foreign grants – include providing Ukrzaliznytsia (Ukraine’s railway company) and Ukrenergo (the national power grid operator) with €150 million each of emergency liquidity last summer, to keep the country’s trains running and the lights on.

The Ukrzaliznytsia financing was supported by partial risk coverage from France and the European Union, and the financing for Ukrenergo by the European Union, United Kingdom, United States of America, and The Netherlands.

A later financing package of €370 million to Ukrenergo in the autumn consisted of a €300 million EBRD loan and a €70 million grant from The Netherlands, for emergency repairs to the national power grid necessitated by Russia’s strikes on civilian infrastructure.

Likewise, the EBRD provided the gas company Naftogaz with a financing package of just under €500 million to compensate for the loss of natural gas production following the Russian invasion. Norway will provide a €190 million grant, which complements the €300 million financing line from the EBRD, which is supported by partial risk coverage by the USA, Canada, Germany, and France.

The EBRD provided Ukraine with a total trade finance turnover of €459 million in 2022.

Together with partner financial institutions, it also supported food security by providing more than €280 million to the agribusiness value chain, and bolstered the resilience of other private-sector companies, including small and medium-sized enterprises, with €170 million.

Policy activity remains intense, via the Ukraine Reforms Architecture program (a comprehensive technical assistance program jointly managed by the EBRD and the European Union since 2016, following requests by the government of Ukraine for support with the implementation of key reforms), the promotion of good governance in state-owned enterprises with which the EBRD works, and support for human capital in partnership with Ukraine’s Ministry of Education.

The EBRD’s focus in 2022 has been on providing emergency liquidity to keep the lights and heating on and the trains running, supporting communities and sustaining companies. This is now shifting to providing finance for emergency repairs and the rebuilding of infrastructure that is coming under Russian attack.

“In the future, we also intend to expand our work with municipalities, including in de-occupied zones. For this, we foresee that we and our partners will need new financial instruments – a higher proportion of grants rather than loans. We have been requesting further support from shareholders or donors, either in the form of donor funds or guarantees, to continue sharing the risks of investing in Ukraine with us this year,” said President Renaud-Basso.

The EBRD President added: “We will remain agile in 2023, responding to changing circumstances and making adjustments according to the needs on the ground as we did last year.”

“When circumstances allow, we will help launch a reconstruction program for Ukraine to rebuild livelihoods, jobs and businesses, vital infrastructure, good governance, and access to services. As the largest institutional investor in the country, one with an unrivaled presence on the ground, the EBRD is ready and willing to play a central role in reconstruction.“

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UKRAINE: The European Bank for Reconstruction and Development (EBRD) is paving the way for the future rebirth of Mariupol, by supporting efforts to quantify the destruction that the city has suffered in Russia’s war on Ukraine and to assess the cost of Mariupol’s revival.

The EBRD has signed a memorandum of understanding with the city’s authorities on commissioning a ‘Damage, Loss and Needs Assessment Report’, which will examine the war’s impact on its infrastructure and estimate the financial cost of restoring it.

The report will form the basis of the city’s Mariupol Revival Strategy, which will include key cost estimates and attract potential investors and donors to rebuild the city after its full liberation.

Under the agreement, signed in Warsaw today by the Mayor of Mariupol Vadym Boichenko and EBRD Deputy Head of Ukraine Mark Magaletsky, the EBRD will lead the preparation of a report that examines the damage inflicted on public transport, water and sanitation, solid waste management and public lighting in the city.

These sectors are vital to safeguard livelihoods and have benefited from extensive support from donors and international financial institutions in the past.

The EBRD is working closely with the World Bank Group to ensure that the report complements the latter’s countrywide Rapid Damage and Needs Assessment for Ukraine.

The report will incorporate lessons learned from previous similar assignments undertaken by the World Bank. This highlights the importance of adopting a coherent and coordinated approach among international stakeholders when it comes to damage assessment and to planning for city revival.

The port city, part of the Donetsk region, has been severely damaged in Russia’s invasion and a two-month battle for control over Mariupol. It is currently occupied by Russian forces.

The city’s authorities, who now operate from Ukrainian-controlled territory, do not have the resources to finance or the capacity to implement a project of such complexity and have sought support from the EBRD.

“The EBRD is a reliable partner of Mariupol and right now the support from an old friend brings us closer to our common goal on the path of rapid revival for the city after de-occupation,” said Mayor Boichenko.

“Mariupol was once a thriving, green, port city and an important EBRD client. We are proud to stand together with the city’s authorities and play a crucial role in building the foundation for its future revival once Mariupol is free again. The EBRD is absolutely committed to supporting Ukraine with its post-war recovery,” said Mark Magaletsky, EBRD Deputy Head of Ukraine.

The city is a longstanding client of the EBRD. It joined the EBRD Green Cities program in 2020 and, before the war, worked with the Bank to implement a number of important green projects in municipal infrastructure sectors, including public transport, energy efficiency in public buildings, and municipal management of solid waste.

The EBRD is the largest institutional investor in Ukraine and has committed to investing €3 billion in 2022 and 2023 to address the Ukrainian economy’s challenges following Russia’s invasion. The EBRD is prioritizing trade finance, energy security, vital infrastructure, and food security and providing liquidity to pharmaceutical companies. Investments in all areas will involve risk-sharing with partners such as the European Union, the United States of America, and the United Kingdom. 

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