The European Bank for Reconstruction and Development (EBRD) deployed a record amount of €2.1 billion in Ukraine in 2023, following a €1.7 billion total in 2022. The EBRD, Ukraine’s biggest institutional investor, which substantially raised investment in Ukraine after the Russian invasion in February 2022, ended the year by exceeding its target of €3 billion for the country for 2022-23, having hit the target in October.
2023 also saw the EBRD’s governors approve a resolution to increase the Bank’s paid-in capital by €4 billion, bringing its capital base to €34 billion, to sustain support for Ukraine. Investment in wartime Ukraine is expected to continue at around €1.5 billion a year, with the capital increase giving scope for a doubling of activity when the time comes for reconstruction.
Through 2022 and 2023, the EBRD has succeeded in mobilising nearly €1.6 billion for Ukraine in donor funds, including unfunded guarantees. Over €409 million of this was signed in 2023 alone. In addition to significant contributions from individual donors including Canada, Norway, Spain and the Netherlands, the European Union provided nearly half of the donor resources.
In 2023, the EBRD deployed €1 billion to the private sector alone, including €600 million in lending through partner financial institutions in Ukraine and €400 million of turnover through its Trade Facilitation Programme.
“As Ukraine nears its third year of war, the EBRD is there to support its economy and people through these difficult times. Keeping private businesses and critical infrastructure operational is vital to sustaining the war and preparing for reconstruction. With the support of its shareholders, the EBRD will remain an active and supportive investor in Ukraine,” said EBRD President Odile Renaud-Basso.
In Ukraine - where EBRD investment is pursued under the five themes of energy security, vital infrastructure, food security, trade and support for the private sector – the year-end highlight was energy security. Deals included a loan of €200 million, supported by Norway and the Netherlands, to help Ukrainian gas entity Naftogaz build strategic gas reserves in the second winter heating season since the Russian invasion, and a €150 million sovereign-backed loan to Ukraine’s electricity transmission company, Ukrenergo, supported by Norway and Italy, as part of a major package to support energy security.
These deals followed earlier provision, with the support of donors, of €520 million for Ukrenergo and €300 million for Naftogaz, as part of a €500 million package with donor support. The EBRD also signed a Memorandum of Understanding in 2023 to provide €200 million of new financing for Ukrhydroenergo, the country’s hydropower entity.
In other fields, the Bank led initiatives to develop Ukraine’s capital markets, bolster its agribusiness sector and increase interconnectivity by supporting the country’s infrastructure investments, conducting 49 projects – of which 90 per cent were in the private sector – and 201 transactions under its Trade Facilitation Programme.
On vital infrastructure, the EBRD signed loans totalling €250 million to Ukrainian Railways (Ukrzaliznytsya or UZ) to support its operations and upgrade the country’s railway links with the European Union to its west.
The EBRD is also improving road and rail supply routes in and out of Ukraine, to counter uncertainty over the main shipping routes through Black Sea ports such as Odesa, which have been affected by the war. The EBRD is providing €182 million to upgrade a section of road between Lviv in the western part of Ukraine and Rava-Ruska on the Polish border, in line with the European Solidarity Lanes initiative to boost road and rail access, in which the EBRD is also investing €300 million.
On food security, EBRD work has focussed on improving Ukraine’s grain export facilities, as well as making finance available throughout the food chain and maintaining livelihoods. For example, in July the EBRD provided €9.6 million to expand a rail terminal near the Polish border and build a grain transhipments complex for the agribusiness company Agrosem.
Beyond financing, the EBRD continues to support Ukraine’s reform drive – a crucial step not only to unlock further investments from the private sector, but crucially, to progress on Ukraine’s aspiration to become an EU member.
Through the Ukraine Reform Architecture and the Business Ombudsman, the Bank has been working with government and public bodies on issues related to EU integration and alignment with EU regulation, while the digital procurement platform ProZorro has improved the transparency and efficiency of public procurement.
The EBRD is also helping Ukraine prepare to effectively absorb the vast financing that reconstruction is expected to bring. Together with the European Investment Bank (EIB) and the World Bank, it is helping ministries and agencies build institutional capacity, and providing technical assistance in the State Agency for Restoration and Infrastructure Development of Ukraine to establish an effective Project Delivery Unit.
