EU spends hundreds of millions of euros to finance Ukraine

The war in Ukraine

Published 13 June 2024
- By Editorial Staff
Volodymyr Zelenskyj and the EBRD's headquarters in London.

Ukraine will receive hundreds of millions of euros more from European banks to strengthen its economy and eventually rebuild the country’s infrastructure, under a series of agreements signed in Berlin on Tuesday.

Among other things, the EU will provide €517 million in funding through programs run by the European Bank for Reconstruction and Development (EBRD). Of this, €143 million will go directly to support new EBRD projects with Ukrainian cities, while the remaining support will go to areas such as infrastructure and the energy sector.

Ukraine also received a €100 million loan from the Council of Europe Development Bank as part of a project to provide compensation for housing destroyed during the war. Ukraine expects about 2,000 families to receive new homes with the help of the Council’s funds, according to the country’s infrastructure ministry.

The EBRD has significantly increased its funding to Kyiv during the war, contributing more than €4 billion since February 2022. However, estimates put the cost of reconstruction at around $486 billion over 10 years – roughly three times Ukraine’s annual economic output.

Under the agreements signed in Berlin, the EU will provide financial guarantees for EBRD programs in Ukraine. This includes €140 million for the Financial Inclusion Program and €37 million for the Competitiveness and SME Inclusion Program.

Hundreds of billions of dollars

Another €150 million in financial guarantees and €7.5 million in technical assistance for the Hi-Bar Guarantee Program to support the energy sector. The rest of the money will go to the EBRD’s Municipal, Infrastructure and Industrial Resilience Program.

Several Ukrainian cities have already signed individual agreements with the EBRD, which also signed a pre-financing agreement during the conference with the cities of Kharkiv, Kryvyi Rih and Kyiv for a total of €87 million.

“All the loans Ukrainian cities will get are supposed to ensure uninterrupted access to vital infrastructure services and mitigate the impact of war, including recent attacks on municipal heating and energy infrastructure”, the bank said in a statement.

It is unclear how much of the sum will be funded directly by European taxpayers. Since the start of the war, the US and the West in particular have provided and pledged more than $380 billion in military and humanitarian aid, with the US by far the largest donor.

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