Arvid Tuerkner, EBRD Managing Director for Ukraine and Moldova and Valdis Dombrovskis, Vice-President of the European Commission, met at the Ukraine Recovery Conference in Berlin to sign agreements totalling €517 million of EU funding to support Ukraine’s economy and recovery.
The EU funding will in turn support a further €143 million of new EBRD projects with Ukrainian cities, and the rest of the funding will be deployed swiftly in several critical areas.
The EBRD and EU have stood resolutely by Ukraine in wartime, significantly boosting financial support in key areas to help people and businesses facing the most adverse situations.
Under the agreements signed today, the European Union will provide additional support for four EBRD programmes. The EU will provide a financial guarantee of €140 million for the EBRD’s Financial Inclusion Recovery Programme. It will also offer blending grants of €30 million and technical assistance of €7 million for the SME Competitiveness and Inclusion Programme in Ukraine. Both will boost much-needed access to finance for small and medium-sized enterprises in the wartime environment.
A further €150 million financial guarantee and €7.5 million of technical assistance go to the Hi-Bar guarantee programme, which supports both new and existing climate mitigation technologies, in particular in the energy sector.
The EU will also make available a financial guarantee of €150 million, along with blending grants of €25 million and technical assistance of €7.5 million, for the EBRD’s Municipal, Infrastructure and Industrial Resilience Programme, which addresses the needs for emergency support and future reconstruction efforts across various sectors, including industry, transport and municipal infrastructure.
This additional EU funding is expected to be rapidly deployed, and the URC has already seen the signing of several EBRD agreements with Ukrainian beneficiaries.
Ukraine is preparing to start EU accession negotiations, with a detailed blueprint of reforms needed to progress the negotiations set out in the EU’s Ukraine Plan. The European Union’s financial guarantees are provided under the Ukraine Investment Framework.
Among the agreements signed in Berlin were municipal loans to Mykolaiv and Lutsk, supported by EU investment grants and bringing a total of €40 million to the two cities, and a pre-financing agreement on municipal lending to Kharkiv.
The EBRD, which works holistically with municipalities to provide both finance for vital services and also capacity-building support and promoting the recovery of human capital through jobs and training, signed financing or pre-financing agreements with a total of six municipalities at the URC, making a total of €143 million available to Ukraine’s cities.
Support for regions and municipalities is one of the themes of the 2024 conference.
Mykolaiv’s loan package of up to €25 million will rehabilitate the port and ship-building city’s water supply and treatment infrastructure. These are in poor condition as a result of war damage. The EBRD loan is covered by a guarantee from Spain and to be co-financed by investment grants from Denmark and from the multi-donor Eastern Europe Energy Efficiency and Environment Partnership (E5P) Fund, to which the European Union is an important donor, alongside Denmark, Estonia, Germany, Iceland, Ireland, Latvia, Lithuania, Norway, Poland, Slovakia, Sweden, Switzerland, Ukraine and the United States.
Up to €15 million will support the city of Lutsk in modernising its municipal district heating system, potentially also supported by an investment grant from the European Union. It will be the first new district heating project financed by the Bank in wartime Ukraine, as well as the EBRD’s first project in Ukraine to include the financing of heat pumps. The EBRD loan is covered by a guarantee from Spain.
Alongside a pre-financing agreement with Kharkiv, the EBRD signed similar agreements with Kryvyi Rih and Kyiv, for a total of up to €87 million for the three cities. These set out plans to provide emergency liquidity support to ensure uninterrupted access to vital infrastructure services and mitigate the impact of war, including recent attacks on municipal heating and energy infrastructure. A fourth pre-financing agreement with Zhytomyr, of up to €16 million, is to support public transport improvements.
The EBRD also joined the Coalition for Sustainable Municipalities, led by conference host country Germany, which dovetail neatly with its own approach. Signatories commit to contribute either financial or technical support to enhance access to finance for municipalities, to facilitate municipal capital development for recovery or to leverage municipal partnerships for recovery.
As well as financing for municipalities, the EBRD is offering support for regional infrastructure.
At the URC, Memoranda of Understanding were signed both 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.
These signings build on a long-standing commitment to both regional and municipal development in Ukraine. The EBRD’s engagement with cities, which before the war saw seven Ukrainian cities join the Bank’s flagship urban sustainability programme, has continued in the wake of Russia’s invasion of Ukraine two years ago.
Since the start of the full-scale war in 2022, the EBRD has provided financing of nearly €160 million to Ukrainian municipalities, including around €100 million of disbursements for existing projects. Key new finance includes €40 million of liquidity for the cities of Lviv and Dnipro, and €15 million for the Khmelnytskyi public transport operator.
Overall, the Bank’s portfolio of municipal projects in Ukraine consists of 44 projects providing €955 million of financing for district heating, water and wastewater treatment, solid waste management, public buildings and urban transport.
The EBRD, Ukraine’s largest institutional investor, has significantly increased its finance to Ukraine since Russia launched its full-scale war there. The Bank has made over €4.2 billion available to Ukraine since 2022. EBRD shareholders have recently agreed to provide a €4 billion paid-in capital increase to enable the Bank to continue investing at current levels in wartime, with the potential for more investments when reconstruction starts.
