At a meeting on Saturday, the Government of Ukraine decided to attract additional financing from the World Bank in the amount of $530 million as part of a joint project with the Bank and the International Development Association (IDA) “Supporting Public Expenditure to Ensure Sustainable Public Administration in Ukraine.”
“The loan will be provided on concessional terms under the guarantees of the UK and Denmark: the loan repayment period is 19 years with a five-year grace period,” the Finance Ministry said.
According to its release, the interest rate is 0.25% per annum (charged on the unused part of the loan).
The Ministry of Finance clarified that the funds will be used to pay for the work of public sector employees, provide pension payments and certain state social assistance programs, such as payment for housing and communal services, support for low-income families, disabled children and disabled since childhood, IDPs, as well as for paying medical services under the program of medical guarantees, etc.
As reported, the project “Support to public spending to ensure sustainable public administration in Ukraine” has been implemented since June 2022. The total amount of funds raised is $7.3 billion. The goal of this project is to maintain the sustainable ability of the government of Ukraine to carry out administrative activities and provide services for the performance of core government functions at the national and regional levels.
The World Bank Group on Monday, August 8, announced an additional $4.5 billion in grant funding to Ukraine from the United States under the PEACE project, which aims to help the government meet urgent needs caused by the ongoing war.
The United States, through the United States Agency for International Development (USAID), in coordination with the U.S. Treasury Department, is providing an additional $4.5 billion in direct budgetary support to the government of Ukraine to help mitigate the severe budget deficit caused by Putin’s brutal military aggression. USAID release.
According to him, the government of Ukraine will receive funding in tranches, starting with a payment of $3 billion in August.
The World Bank indicates that the additional funding will help maintain the government’s ability to perform core functions at the national and regional levels.
In particular, the funds will help the government of Ukraine cover social benefits, medical services and pensions that are necessary for the well-being of the country’s citizens and mitigating the social and economic consequences of the war.
“Ukraine needs the continuation of public services, including health care, education and social protection, to prevent further deterioration of living conditions and poverty,” World Bank Group President David Malpass said in the release.
He thanked the United States for its continued support through the World Bank’s rapid support mechanisms and for a generous grant that will greatly support the Ukrainian people.
The bank clarified that the additional funding is in addition to the $1.49 billion Investment Project Financing (IPF) approved in June 2022. To date, the World Bank has mobilized almost $13 billion in emergency funding, including commitments and pledges from donors, to support the continuation of essential public services in Ukraine and mitigate the effects of the war. As of the end of July 2022, more than $6.3 billion has been disbursed from this funding.
The World Bank may allocate $200 million to Ukrzaliznytsia (UZ) for the development of grain export capacity, Alexander Kamyshin, the head of the board of UZ, announced such a preliminary agreement. “We have tentatively agreed with the World Bank on $200 million in funding for our projects to develop grain export capacity,” he wrote in a telegram on Tuesday following the results of the Ukraine Recovery Conference in Lugano (Switzerland).
Earlier, on the sidelines of the conference, Kamyshin clarified to the Interfax-Ukraine agency that Ukrzaliznytsia failed to increase grain exports in June due to existing logistical restrictions.
As reported, Ukraine exported 1.41 million tons of grain crops in June 2022 compared to 1.2 million tons in May. At the same time, exports through the ports before the war of grain crops amounted to 4-5 million tons.
The World Bank has downgraded its inflation forecast for Ukraine to 20% by the end of 2022 from its April forecast of 15% inflation, Arup Banerji, World Bank Regional Country Director for Eastern Europe (Belarus, Moldova and Ukraine), has told Interfax-Ukraine.
“Inflationary pressures are rising. Consequently, at this stage, inflation is expected to continue rising and could reach 20% in December against 15% in our April forecasts,” Banerji said in an exclusive interview with Interfax-Ukraine.
Banerji said that the rise in inflationary pressure is particularly because of the need to cover budgetary requirements in March-May.
“International partners have acknowledged the financial challenges, thus they have committed around $20 billion in financial assistance to Ukraine. Despite these significant commitments, the timing of repayments will continue to be critical in order to meet Ukraine’s current needs,” the World Bank regional director said.
The World Bank has also maintained its forecast for a sharp contraction of 44% in Ukraine’s GDP in 2022.
“However, owing to the length of the war, when hostilities continue in several regions of Ukraine, we cannot be sure of our preliminary forecasts for a recovery in the medium term relatively,” Banerji said.
The World Bank will soon provide Ukraine with a $100 million loan to help internally displaced persons (IDPs), World Bank Regional Country Director for Eastern Europe Arup Banerji has said.
He said in an interview with Interfax-Ukraine that given the acute need for central budget financing, the World Bank is currently focusing on providing quick and immediate assistance, which, in turn, can help the population, especially the most vulnerable groups of the population. First, very soon we will allocate another $100 million to help internally displaced persons, he said.
Banerji added that the World Bank continues to provide assistance in the healthcare, infrastructure and energy sectors under existing projects.
We are also exploring opportunities for cooperation with other bilateral development partners (for example, Italy, Japan and the United States) who are very interested in attracting PEACE (Project Support to Public Expenditure to Sustainable Public Administration in Ukraine) loan and funding others types of confirmed budget expenditures, the World Bank regional director noted.
Specific items have not yet been agreed, but will certainly include additional payments to internally displaced persons and other vulnerable groups in Ukraine, Arup Banerji added.
HELP, IDPS, LOAN, WORLD BANK
The World Bank’s Board of Executive Directors has approved additional funding for Ukraine in the amount of $1.49 billion as part of the Public Expenditure Support for Sustainable Governance in Ukraine project, the bank said on its website on Wednesday night.
“The funds from this project will be used to pay the salaries of civil servants and teachers,” the release notes.
According to him, the project received financial guarantees from the UK, the Netherlands, Lithuania and Latvia; parallel funding from Italy and expected future guarantees including Denmark.
The project is also co-financed by contributions to a new multi-donor trust fund (MDTF) from several countries, including Switzerland.
“The World Bank Group continues to take swift action to support Ukraine and its people during the war that is destroying the country,” World Bank Group President David Malpass was quoted as saying.
According to him, the World Bank is working with donor partners to mobilize the necessary financial support and using the flexibility of various existing financial instruments to help provide Ukrainians with continuous access to medical services, education and social protection.
“Sustaining these essential services and the government’s ability to provide them is important to prevent further deterioration of living conditions and poverty in Ukraine, given the suffering already caused by the war,” said Arup Banerjee, WB Regional Director for Eastern Europe. He added that maintaining effective government capacity will be the foundation of any recovery and reconstruction in the future.
The bank recalled that this new financing is part of a support package of more than $4 billion that the WB is mobilizing, and about $2 billion of these funds have already been disbursed.
Since Ukraine joined the World Bank in 1992, the bank’s commitments to the country have reached almost $16 billion in about 90 projects and programs, including the project adopted today.
