The World Bank revised upward its forecast for Ukraine’s gross domestic product (GDP) growth in 2021 to 3%, while early October it estimated the prospects for recovery to be twice as modest – at 1.5%.
According to the January 2021 World Bank’s Global Economic Prospects, estimates of the fall of the Ukrainian economy this year at 5.5% and its growth by 3.1% in 2021 remained at the same level.
As reported, the Ministry for Development of Economy, Trade and Agriculture of Ukraine maintains an estimate of the fall in Ukraine’s GDP in 2020 by 4.8% at the end of the year and expects its growth by 4.6% in 2021.
The National Bank of Ukraine (NBU) had previously expected the economy to decline by 6% last year, but towards the end of the year it improved its estimates, to about 5%, predicting a recovery in 2021 by 4.2%. The updated macroeconomic forecast of the NBU will be announced on January 21.
By the end of 2020, Ukraine plans to attract a $170 million loan from the World Bank out of the $300 million provided, the Finance Ministry said on Monday.
“Today, on December 14, Ukraine and the International Bank for Reconstruction and Development signed an agreement on the second additional financing in response to the COVID-19 pandemic for the Social Safety Nets Modernization Project,” the Ministry of Finance said in a message on the website.
“The main goal is social assistance and social services for low-income families, as well as assistance to those affected by the adverse economic impact of the pandemic,” the press service said, quoting Minister Serhiy Marchenko.
As the Ministry of Finance recalled, this is the second additional financing of the specified project, the total amount of the loan for it should be $750 million.
The World Bank’s Board of Executive Directors on Saturday night decided to provide Ukraine with a $300 million loan for the Second additional financing aimed at overcoming the consequences of the coronavirus disease (COVID-19) pandemic for the project “Modernization of social support system for the population of Ukraine.”
“Social protection measures, for the implementation of which a new loan is provided, will help the government of Ukraine finance social assistance programs in order to save about one million Ukrainians from falling below the poverty line,” the bank’s release quoted the words of its regional director for Eastern Europe (Belarus, Moldova and Ukraine) Arup Banerji.
The World Bank’s support for Ukraine to protect low-income citizens who have been severely affected by the COVID-19 outbreak is a powerful anti-poverty response, he said.
The World Bank reminds that the decision on the first additional financing for the above project in the amount of $150 million was made on April 30 this year.
According to the bank’s forecasts, due to the consequences of the pandemic, the poverty level in Ukraine could grow by 4 percentage points, reaching about 23% by the end of 2020.
Its experts report that the crisis due to the COVID-19 pandemic requires the introduction of prompt emergency response measures in the country and the provision of emergency cash assistance to citizens. It also highlighted the need to strengthen social protection infrastructure and develop systems capable of delivering payments to people in times of crisis.
“The allocated funds will help Ukraine finance urgent measures in the field of social protection to overcome the consequences of the COVID-19 pandemic, which provide for emergency cash payments to those citizens and households who have lost their jobs or sources of income as a result of the pandemic,” the message says.
The second additional funding will support the introduction of an online social assistance system and the expansion of social benefits and pensions through direct money transfers to bank accounts. Payments to families with low income will be carried out under the current program of state social assistance to low-income families, the World Bank said.
The World Bank estimates that 60% of Ukrainian citizens who are on the brink of poverty due to the economic consequences of the COVID-19 outbreak are not yet recipients of social assistance under one of the existing social protection programs.
Ukraine’s economy will shrink by 3.5% in 2020 due to the coronavirus-related crisis, while the global economy will lose 5.2% overall, the World Bank announced this in the updated Global Economic Prospects on Tuesday. “The depth of the contraction will depend on the duration of the health crisis, progress on major pending reforms, and the ability to mobilize adequate financing to meet sizable repayment needs,” the World Bank said.
According to the bank, next year the growth of the Ukrainian economy will resume at a rate of 3%, which is lower than the expected recovery of the global economy at 4.2%.
The World Bank said that compared with the previous forecast in January of this year, it worsened expectations of the dynamics of Ukraine’s GDP this year by 7.2 percentage points (pp), and in the next – by 1.2 pp.
The World Bank’s Board of Executive Directors has approved in the early hours of Tuesday $135 million in Additional Financing for the Serving People, Improving Health Project, to scale-up Ukraine’s health sector response to the coronavirus (COVID-19) pandemic, the bank said in a statement.
“This additional financing will help Ukraine upgrade up to 40 hospital emergency departments and stroke units, enabling hospitals to perform complicated medical procedures using hi-tech equipment and appropriate treatment protocols,” World Bank Acting Country Director for Belarus, Moldova, and Ukraine Alex Kremer said, adding that patients will have an opportunity to choose any hospital in Ukraine, and their costs for surgical operations will be covered by the state budget.
The World Bank recalled that the ongoing Serving People, Improving Health Project, with the initial $215 million investment, provides assistance for renovation of urban hospitals and rural health posts, purchasing of modern equipment, and improvement in the quality of health services. The funds were focused on supporting health reforms, improving services delivery (including primary and secondary prevention, early detection, and treatment of cardiovascular diseases and cancer), as well as enhancing the efficiency of the health care system.
The additional $135 million will help Ukraine with important hospital upgrades and reforms, and also help train thousands of Ukrainian doctors in the provision of modern medical services, the bank said.
The project will also help fund people’s medical needs, from the state budget, and provide $35 million for COVID-19 emergency response activities. These funds will be used to buy essential materials and equipment for the country’s COVID-19 response, provide much-needed training for medical personnel, and support communication of essential public information. It will also cover reimbursement of financing to Ukrainian providers of health care for COVID-19 patients.
President of Ukraine Volodymyr Zelensky has emphasized that the International Monetary Fund (IMF), the World Bank, the European Bank for Reconstruction and Development (EBRD) and other financial organizations were ready to help Ukraine amid the coronavirus pandemic. “Yesterday I had a conversation with IMF Managing Director Kristalina Georgieva. Our international financial partners, including the IMF, the World Bank, the EBRD assured us of their readiness to support and help Ukraine,” he said in an appeal to Ukrainians on Monday, March 23.
