War-torn Ukraine is seeking $40 billion in initial funding to rebuild its economy

The World Bank estimates that Ukraine’s reconstruction will cost $411 billion.

London:

War-torn Ukraine is seeking up to $40 billion in financing for the first part of a „green Marshall Plan” to rebuild its economy, a senior Ukrainian government official told Reuters ahead of the summit this week.

A two-day meeting co-hosted by Ukraine and Britain, starting in London on Wednesday, will see politicians and financiers discuss the country’s short-term financial problems and long-term restructuring efforts.

The World Bank estimates that Ukraine’s reconstruction will cost $411 billion, more than three times the country’s GDP. Since Russia’s invasion in February 2022, external donors have poured $59 billion into Ukraine to finance its needs.

Rostislav Shurma, deputy head of President Volodymyr Zelensky’s office, said the first focus would be on the iron and steel industry, giving an estimate of $40 billion for the initial phase of reconstruction.

The sector contributed 10% of Ukrainian GDP in 2021, a third of export earnings and employed around 600,000 people. It accounts for 15% of the country’s carbon emissions and now has an opportunity to create an industry powered by renewable energy, said Shurma.

„If you have to rebuild, it’s logical to rebuild green in line with new technologies… Our vision is to build a 50-million-ton green steel industry in Ukraine,” he told Reuters.

Doing so would allow the country to become the world’s cheapest green steel supplier to Europe’s efforts to decarbonize, fueled by an investment drive in new wind, solar, nuclear and hydropower.

Many of the country’s damaged legacy steel mills were built in locations that relied on coal as a power source, but are now free to build closer to iron ore deposits and away from the Donbass region, Shurma said.

Ukraine plans to form a coalition of industry, public and private sector stakeholders to help raise $20-$40 billion in initial funding.

Preparatory work may take 1-1/2 years, though „to be realistic, the actual construction will start only after the war is over,” Shurma said.

British Prime Minister Rishi Sunak will tell global investors and British businessmen at the conference to strengthen their support for Ukraine, his office said on Saturday.

„Ukraine’s prowess on the battlefield must be matched by the vision of the private sector to help rebuild and recover the country,” Sunak said.

Funding mix

Shurma said the reconstruction fund would be a combination of funds from export credit institutions in other countries; The concessional fund managed by the Ukrainian Development Fund is set up by asset manager BlackRock; Role of Operating Companies; EU Transition Fund; and private sector loans.

Matteo Patrone, Managing Director of the European Bank for Reconstruction and Development (EBRD), said at the London conference that it was crucial to emphasize the need for private sector involvement, which cannot be done by the public sector alone.

US lawmakers from both the Republican and Democratic parties introduced a bill on Thursday that would make it easier for Ukraine to finance its fight against Russia using seized and frozen Russian assets.

Even if the war-torn economy is more resilient than expected, it will need „(a) NATO security guarantee to rebuild with private sector involvement,” said JP Morgan economists led by economist Ayomite Mejabi.

(Other than the headline, this story was not edited by NDTV staff and was published from a syndicated feed.)