The European Bank for Reconstruction is working on a plan to boost its capital to be able to invest about €1.5 billion ($1.6 billion) in Ukraine annually, its president said.
(Bloomberg) — The European Bank for Reconstruction is working on a plan to boost its capital to be able to invest about €1.5 billion ($1.6 billion) in Ukraine annually, its president said.
The EBRD has emerged as an important financial backer of Ukraine’s war-hit economy. The London-based development bank said in May it planned to ask shareholders for as much as €5 billion in capital increase by the end of this year.
“We’re now moving toward a conclusion to convince them that it’ll be better to have a capital increase,” EBRD President Odile Renaud-Basso, said in an interview in Kyiv. “Financially, it makes more sense because for one euro of capital we can extend five euros of financing.”
The prospects for increased investment to keep the economy going will be welcome news for Ukraine as concern grows that support for the war effort is starting to waver. US lawmakers decided on Saturday to scrap a $6 billion aid package for Kyiv to help avoid a government shutdown. A former prime minister who’s pledged to end military aid to Ukraine won elections in Slovakia on Saturday.
The World Bank in March increased its estimate of how much Ukraine will need for its recovery and reconstruction to at least $411 billion — a figure that’s 2.6 times the country’s projected 2022 gross domestic product.
The investment target of €1.5 billion a year compares to a pre-war figure of around €1 billion, Renaud-Basso said.
The war is shifting Ukraine away from its traditional reliance on heavy manufacturing, which has been targeted by Russia, into technology and digital solutions its used in the war industry, she said. Energy will move toward renewable sources, and agriculture will remain a key industry.
“We are really doing everything that we can in order to facilitate this investment and to see how we can support any project of development,” Renaud-Basso said. The EBRD has already seen some limited interest from private investors in Ukraine.
For the time being the money is invested to recreate logistics capabilities, to relocate activity and to rebuild what has been destroyed, she added.
(Updates with additional comments begining in fifth paragraph)
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