European banks to provide over €600M in recovery funds for Ukraine

Ukraine is to receive hundreds of millions of euros from European banks to buttress its economy and eventually rebuild its infrastructure, according to a series of agreements signed in Berlin on Tuesday.

The EU will provide €517 million of funding through programs run by the European Bank for Reconstruction and Development, the EBRD said. Of this, €143 million will directly support new EBRD projects with Ukrainian cities, with the remainder going to critical areas such as infrastructure and the energy sector.

Ukraine also received a €100 million loan from the Council of Europe Development Bank under a project designed to provide compensation for housing destroyed by hostilities.

The money is intended primarily to support the most vulnerable, such as people who lost their homes as well as those with disabilities and large families. Ukraine projects that some 2,000 families will receive new housing with the Council funds, the country’s infrastructure ministry said in a statement.  

In its war against Ukraine, Russia has used energy as a weapon, Ukrainian President Volodymyr Zelenskyy told the Ukrainian Recovery Conference in Berlin on Tuesday. "We have already lost 80 percent of heat generation in Ukraine and a third of hydro energy generation," he said.

Alongside the energy grid, the housing sector is massively suffering under Russia’s war, according to Ukraine’s infrastructure ministry.

The EBRD has significantly increased its financing for Kyiv during the war, providing more than €4 billion since Russia’s full-scale invasion in February 2022.

Ukraine’s recovery, however, will require far more, with rebuilding costs estimated at $486 billion over the next decade, or 2.8 times the country’s economic output in 2023, the Ukrainian government said in a report.

Under the agreements signed in Berlin, the EU will provide financial guarantees for EBRD programs in Ukraine: €140 million for financial inclusion, and €37 million for the SME Competitiveness and Inclusion Programme. Some €150 million in financial guarantees and €7.5 million in technical assistance will go to the Hi-Bar guarantee program, which supports the energy sector. The rest of the money will go to the EBRD’s Municipal, Infrastructure, and Industrial Resilience Programme.

Support for Ukraine’s battered regions was one of the top themes of the Berlin conference. The governors of key Ukrainian industrial centers and the mayors of frontline cities Mykolaiv, Kharkiv and Dnipro participated in conference panels June 11-12, many already having struck individual deals with the EBRD.  

The EBRD also signed a pre-financing agreement with Kharkiv as well as similar agreements with Kryvyi Rih and Kyiv, totaling €87 million for the three cities.

"All the loans Ukrainian cities will get are supposed to ensure uninterrupted access to vital infrastructure services and mitigate the impact of war, including recent attacks on municipal heating and energy infrastructure," the bank said.