Teresa Czerwińska, EIB Vice-President
EU candidate status and resistance to Russia’s invasion will increase Ukraine's investment attractiveness
15.10.2022 08:20

The European Investment Bank has disbursed an additional EUR 550 million to Ukraine this week, which, according to Prime Minister Denys Shmyhal, will help restore the energy infrastructure. The funds were provided under the EIB’s second EUR 1.59 billion package of the Solidarity Urgent Response. Ukrinform asked Vice-President of the Bank Teresa Czerwińska, who led the EIB mission that visited Kyiv in late September, to comment on this decision, as well as to tell about other projects implemented in Ukraine and about plans to participate in post-war reconstruction.


- Mrs. Czerwińska, tell us about the results of your recent visit to Kyiv and your participation in the second ministerial roundtable on support for Ukraine in Washington. What was discussed with representatives of the Ukrainian authorities and with international partners? Were there any certain agreements regarding Ukraine?

- Two weeks ago, together with colleagues from the EIB, I visited Ukraine to learn about the needs of our partners from the Ukrainian government and to determine how the European Investment Bank can help. We learned a lot, and already on October 12, the EIB transferred EUR 550 million to cover urgent needs of Ukraine, as we had agreed during the visit with Prime Minister Denys Shmyhal. I am very proud how quickly we acted in coordination with our partners from the EU and Ukraine. Now we continue to determine ways to cover urgent needs of the population of your country, prepare for the coming winter and ensure the recovery of the economy.

Ukraine can be proud of its leaders. My colleagues and I were impressed by the level of preparedness of the ministers and their teams during the meetings in Kyiv, almost as much as we daily admire the courage and resilience of Ukrainians who defend their country.

After my visit to Kyiv, I together with EIB President Werner Hoyer in Washington attended the second ministerial roundtable discussion for support of your country. There, we told international partners about what the EIB is doing for Ukraine as part of Team Europe (a European initiative consisting of the European Union, the EU Member States, including their implementing agencies and public development banks, as well as the European Investment Bank  and the European Bank for Reconstruction and Development – ed.). We noted that our solidarity with Ukraine is unshakable, and our determination to support it is growing every day.

A few days after my visit, Ukraine's military success in liberating own territories was overshadowed by a barbaric missile attack on Kyiv, civilians, and infrastructure across the country. We join the people of Ukraine in mourning, remembering those killed, and condemning these barbaric strikes by the Russian army.

- Were there any changes in the work of the European Investment Bank in Ukraine after the Russian aggression began? How did the EIB business portfolio change in our country after February 24?

- We had to revise our priorities and adapt to the new reality. We managed to do this thanks to deep knowledge of Ukraine, excellent cooperation and coordination with your Government, as well as thanks to close cooperation and support from the European Commission and Team Europe.

EIB is not a newcomer to Ukraine; we have been working here for 15 years. During this time, the Bank became one of the top three investors in the country, having signed projects worth more than EUR 7.3 billion. Over time, we have noted constant improvements in our work in Ukraine and the constant growth of the country's potential to manage these comprehensive projects. This is great news in the context of Ukraine's accession to the European Union, because it demonstrates an ability to better use EU funds.

Russian aggression forced us to abandon previous plans, and think together with Ukrainian ministries and municipalities about how to change or repurpose projects, prioritizing the repairs of schools, hospitals, houses for internally displaced persons, the restoration of roads, railways, etc.

As a result, we see that cities across the country are now submitting proposals for reconstruction projects within our Ukraine Recovery Program, which we continue to implement together with the Ministry for Communities and Territories Development of Ukraine and the UN Development Program. I am extremely grateful to Minister Oleksiy Chernyshov for his support and leadership. We have over 1,000 applications and the number is growing. Again, our plan is to do more.

The Russian invasion strengthened our resolve to support Ukraine and stand side by side with it. Moving forward, our priority is to think for long-term perspective and help Ukraine in post-war reconstruction. The Ukrainian government has proposed a very high-quality Ukraine’s Recovery Plan, which, among other things, promotes cooperation. The key need, of course, is additional financial resources.

To achieve Ukraine's goals, we need a coordinated approach both with other EU governments and institutions, and with supporters of your country around the world, led by Ukraine itself. We at the EIB are committed to work closely with Team Europe and with international partners to find the best ways to continue supporting Ukraine now, including financing repairs to critical infrastructure that will pave the way for full-scale post-war reconstruction.

- What are the peculiarities of financing Ukraine's urgent needs in wartime conditions? If I'm not mistaken, this year we have already received three tranches from the bank.

 - We work together with the European Commission as Team Europe on the one hand and the Ukrainian government on the other. Due to joint work, since February 24, over EUR 1.7 billion has been paid to Ukraine. And we want to do more.

Our first urgent support package of EUR 668 million of the EIB Solidarity Urgent Response was fully disbursed in March, within a month after the start of Russia's full-scale and unprovoked war against Ukraine. We sought to help the Ukrainian government to cover most pressing and urgent financial needs.

Then in July, we approved the second package of EUR 1.59 billion of the EIB Solidarity Urgent Response. It consists of two blocks - (I) EUR 540 million, which will be used to resume the implementation of existing EIB-financed projects in Ukraine, which depend on the progress of their implementation; and (II) EUR 1.05 billion of immediate assistance to cover Ukraine's urgent needs. This block of EUR 1.05 billion of immediate assistance to Ukraine was fully disbursed between September and October (the first tranches of EUR 500 million were transferred to Ukraine on September 14, the remaining EUR 550 million -  on October 12).

Our support will help your Government to cover the most urgent financing needs and ensure the uninterrupted performance of the most important functions of the Ukrainian state. It will have a real impact at the local level, helping Ukraine to cover its immediate financial needs: repairing damaged critical infrastructure and making sure that the Ukrainian people continue to receive basic services, in particular transport and critical infrastructure networks. The remaining EUR 540 million will be used to resume the EIB-financed projects in Ukraine.

The EIB wants to continue supporting Ukraine's urgent needs and - in the long term - its reconstruction. We also want to be available if the Ukrainian government needs help in maintaining macroeconomic stability. Ultimately, we want to help pave the way for Ukraine's accession to the European Union.

This was our message to Ukrainian friends and international partners in Washington during the second ministerial roundtable on support for Ukraine. I look forward to discussing these issues with Prime Minister Shmyhal and his colleagues.


- Was it possible to resume projects' financing, suspended at the beginning of the war,  - in particular, as part of the July decision of the European Commission and the EIB Council?

 - EUR 540 million within the "July package" will be used for resuming implementation of existing EIB-financed projects in Ukraine. These projects were selected in cooperation with Ukrainian partners to provide an economic stimulus or to cover the most urgent needs of the country. The projects involve investments in energy sector, energy efficiency, roads, transport, education, infrastructure, reconstruction and recovery programs. The exact timing of these disbursements will depend on the progress of the underlying projects.

- At the Ukraine Recovery Conference in Lugano, you announced a new instrument of support for our country from the EIB — EU-Ukraine Gateway Trust Fund. At what stage is the formation of the Fund now? What about the sources of its filling? What will be the priorities for using the accumulated resource?

 - The EIB is currently working with the European Commission, other Team Europe partners and partners internationally to create this new financial instrument. Its goal is to stimulate the recovery of Ukraine and at the same time accelerate its accession to the European Union.

The fund should support Ukraine in rebuilding and creating a smart and sustainable infrastructure, restoring the economy and investing in human capital through the provision of loans, guarantees, own capital and technical assistance.

We believe that this is a long-term sustainable solution. In addition, we are working to find a short- to medium-term solution to help Ukraine cover most urgent investment needs until the mentioned long-term instrument is implemented.

- Under what conditions will the support be provided through the new trust fund? Will it be centralized financing, the so-called “common pot", with further distribution of funds by the Ukrainian side, or will it be allocated to municipalities or to certain projects?

 - We are still working on determining the best model for the fund to make it an effective long-term solution for Ukraine’s recovery. Different types of projects may require different solutions. I will be happy to share more detailed information as soon as we agree on all the details with the partners.

- How else can the EIB support us in the process of post-war recovery, which will require huge funds, because, according to Prime Minister Denys Shmyhal, Ukraine's direct losses from Russian aggression already exceed the national GDP by 1.6 times?

 - One of the reasons why our visit to Kyiv and participation in the second ministerial roundtable in Washington were important is that such events allow us to hear about problems, exchange ideas and work with partners on effective solutions. We are already working together with the European Commission to identify the most effective short-term solution to cover Ukraine's most urgent investment needs before creating a long-term platform and fund for recovery.

The EIB also proposes that a lending program be created at its own risk — without external guarantees. This program will support projects aimed at covering Ukraine’s priority needs. The program will also have a special technical assistance package so that your country can develop more high-quality and sustainable projects. This will complement the macro-financial assistance that the EU plans to provide to Kyiv.

Ukraine has clearly shown that it wants to build its future in the family of European nations united in the European Union. Now we, as the EU, must accompany Ukrainian friends not only on the path of recovery during and after the war, but also until it acquires full membership in the European Union.

- Earlier, two-thirds of the EIB allocations for Ukraine were directed to the public sector (primarily, to infrastructure and energy), a third - to the private sector. Will this ratio change after the war?

- Yes, the focus of EIB financing in Ukraine is focusing on projects in the public sector that meet EU investment priorities. Currently, this is 80% of the entire EIB portfolio in the country. However, we support the private sector as well. This happens in two ways: mostly through financial intermediaries - local banks, or through direct loans to large companies. In recent years, the EIB has invested more than EUR 1 billion in support of the Ukrainian private sector. It is notable that the EIB was the first international financial organization to provide long-term financing in local currency available to a local bank to support Ukrainian small and medium-sized enterprises (SMEs).

SMEs are the key to the rapid and sustainable economic recovery of Ukraine. During my visit to Kyiv, I met with Serhii Nikolaychuk, Deputy Governor of the National Bank of Ukraine. We consider the National Bank as a strategic partner in ensuring the functioning of the Ukrainian economy during the war and faster recovery afterwards.

- As priorities are expected to change, do you plan to review certain projects, the implementation of which has never begun due to the war? For example, Kharkiv counted on the EIB support in extending the third metro line. However, the city, which comes under rashist shelling almost every day, will obviously first need the restoration of the existing and destroyed infrastructure?

- We are constantly in touch with partners in Ukraine and regularly review the situation regarding current projects. Unfortunately, some of the facilities financed with our assistance were destroyed or damaged, and others temporarily came under Russian control. However, we are also happy to see that some projects have already resumed or will be resumed soon. We hope to support Ukraine especially through our two recovery programs aimed at financing a large number of small priority projects aimed at supporting internally displaced persons and modernize social infrastructure.

I cannot but emphasize how valuable our contacts with the Ukrainian government are. This allows us to understand local needs and direct aid to their solution. Two weeks ago in Kyiv, Jean-Erik de Zagon, Head of EIB Representation to Ukraine, met with Kharkiv Mayor Ihor Terekhov and discussed the Bank's support for the reconstruction of the city. Our team also had a meeting with Ivan Fedorov, the mayor of currently occupied Melitopol, where we have 15 successful joint projects.

Talks with local officials help us understand the needs of local authorities and people and adapt quickly to those needs. This would not be possible without the excellent coordination of the European Commission and the Ukrainian government. Our priority is to guarantee flexibility in support. And we will continue to work with Team Europe partners and your Government to ensure this flexibility.


- About the EIB indirect support for Ukraine through financing municipalities of European cities hosting Ukrainian refugees. Earlier, the EIB announced the allocation of EUR 4 billion for relevant programs for 2022-2023. At what stage is this initiative now?

- Yes, EU Member States have been severely impacted by the influx of displaced people fleeing the Russian invasion of Ukraine. EU countries had to quickly ensure that refugees received shelter and assistance. Therefore, our reaction was also immediate. On 18 May, the EIB Board of Directors approved a EUR 4 billion credit line to help national authorities, cities, regions and local communities in all EU Member States address urgent investment needs and help welcome and integrate people fleeing the war against Ukraine.

This credit line provides financing for the development of key infrastructure and services for refugees and their host communities, such as housing, schools, hospitals and access to jobs.

The EIB financing can also cover eligible operational expenditures related to the supply of equipment, facilities and services for the integration of war refugees.

The credit line will be complemented by EIB advisory support thanks to the EMBRACE Advisory Platform, a new initiative by the EIB and the European Commission. Through EMBRACE, EU Member States can receive targeted advisory assistance to rapidly deploy investments, projects and instruments that support their communities.

The first country to use this funding was Poland. After all, it supports Ukrainian refugees the most — it accepts a significant number of Ukrainians fleeing the war. In cooperation with the national promotional bank BGK, Polish state authorities received EUR 2 billion to support investments for Ukrainian refugees. The funds contribute to the rapid financing of health care, educational, social infrastructure and other expenses related to the reception and integration of refugees.

Thanks to this support local governments can cover the expenses related to sheltering of 2.5 million refugees permanently staying in Poland.

- What other sources of financing do you see for the post-war reconstruction of Ukraine? After all, given the scale of destruction, grant and credit support from the IMF, World Bank, EIB, EBRD and partner states alone will not be enough for us. Do you see opportunities to attract private investment? Can you give some advice to our authorities?

 - Ukraine is not alone and has many allies and opportunities arising from this cooperation to make itself a more investment-attractive country. One of the greatest allies of a prosperous future is the hardworking and courageous Ukrainian people. The European Union is another ally, and in the EU family - you can also count on the EIB. EU candidate status and demonstrated resilience against Russian invasion will increase Ukraine's investment attractiveness. The government is also aware of the need to improve the investment climate and, most importantly, is ready to act in this direction.

Another factor that plays in Ukraine's favor is its geographical location. It is known that your country is one of the most important transit corridors for trade. Ukraine is the leading country in terms of export volumes. We saw what happened to food security and markets when Russia blocked Ukrainian trade routes. Therefore, private investments in the development of agriculture can be considered the most attractive. As part of the EIB mission to Kyiv, we discussed this issue with the Ukrainian authorities and the National Bank: an increase in exports means an increase in economic stability and the attraction of private investors, especially in the construction sector.

To take full advantage of these benefits, Ukraine must also continue its path to reforms, including the rule of law, the fight against corruption, and improving in the judiciary, state and public administration. I am very inspired by the fact that our partners and Ukrainian leaders, such as Minister of Finance Serhii Marchenko, are fully aware of this and are ready to act.

- Finally, about your "unofficial" impressions about the trip to Ukraine and your wishes to our compatriots continuing to resist the powerful and treacherous enemy.

 - I emphasize once again: Ukraine is not alone. It has many allies interested in its victory and development as a free and democratic state. The EIB is one of these allies. My team and I were proud to visit invincible Kyiv and shake hands with your leaders. I liked Independence Square as a symbolic place where people showed their desire to live in a democratic society free from oppression. A wish we strongly support.

I am deeply moved by the courage, strength and resilience of the people of Ukraine, and extremely moved by the courage and determination I saw in Kyiv. A few days after our visit to Kyiv, we witnessed one of the countless horrific attacks launched by Russia on civilian targets in the capital and throughout Ukraine.

It is also impressive how powerfully and courageously Ukrainians defend themselves and quickly restore their country in these extremely difficult conditions. I saw how Ukrainian workers repaired an intersection in Kyiv the next day after it was struck by the Russians. This confirms my impression that everyone in Ukraine is doing a great job: from utility workers to railway workers on the train we traveled to Kyiv, from your defenders at the front to national and local authorities and administration. All of Ukraine seems determined to defeat this insanity and barbarism that you are currently facing.

This was my first visit to Ukraine as EIB Vice-President. It is sad that this happened when the country and its people are suffering from the pressure of the cruel military machine of the Russian Federation. However, this visit made me even more determined to do everything possible so that the EU support could lead to significant improvements in the life of the Ukrainian people and prospects for peace in the region.

I told Prime Minister Shmyhal that we would return soon to bring even more good news for Ukraine. I look forward to fulfilling that promise.

Vladyslav Obukh

Photo credit: European Investment Bank

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