World Bank approves US$1.5 billion loan for Ukraine under guarantees from Japan and UK

World Bank approves US$1.5 billion loan for Ukraine under guarantees from Japan and UK

The World Bank’s Board of Directors approved a USD 1.5 billion Growth Foundations Development Policy Loan (DPL)

The funds will be provided under a USD 984 million guarantee from the Government of Japan through the World Bank’s ADVANCE Ukraine Trust Fund and a USD 516 million guarantee from the United Kingdom.

“The World Bank, Japan and the United Kingdom are key partners of Ukraine, providing unprecedented support since the first days of the full-scale invasion. Given the challenges posed by full-scale russian armed aggression, meeting the needs of our citizens is a priority for the Ukrainian Government. The funds raised will be used to support the State Budget of Ukraine and economic recovery, as well as to finance priority social and humanitarian expenditures of the State Budget,” said Minister of Finance of Ukraine Sergii Marchenko.

At the same time, in order to reduce the cost of servicing Ukraine’s loan obligations under the DPL2024 loan in the coming years, the DPL Loan Agreement provides for the capitalisation of interest in the amount of USD 99.54 million from Japanese funds.

The DPL project is a systemic project aimed at supporting reforms in Ukraine, and the funds are credited to the general fund of the State Budget in a single tranche based on the results of the conditions completed prior to the signing of the agreement.

The main areas of reforms included improving corporate governance, promoting renewable energy generation, introducing agricultural notes as a new instrument for farmers to obtain financing, strengthening the financial sector by improving access to finance for businesses (under the Affordable Loans 5-7-9 programme). It also includes the implementation of EU customs and tax experience into Ukrainian legislation, improvement of fiscal policy and regulation of capital markets, and ensuring transparency and accountability of procuring entities in the e-procurement system.

“The DPL project is not only about supporting the State Budget, but also about increasing the potential for economic development by boosting productivity, capital accumulation and access to export markets, as well as creating a macro-financial policy favourable to economic development. Ukraine has taken all these measures to implement the necessary reforms that will allow Ukraine to accelerate its European integration path and promote economic growth,” Deputy Minister of Finance Olga Zykova added.

Following the approval of the loan by the World Bank’s Board of Directors, Minister of Finance of Ukraine Sergii Marchenko and World Bank Regional Director for Ukraine, belarus and Moldova Arup Banerji signed the Loan Agreement.

The funds are expected to be disbursed to the State Budget of Ukraine by the end of March this year.

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