The World Bank on Friday approved a $1.5 billion loan to help Ukraine with reconstruction and recovery, the country’s Prime Minister Denys Shmyhal said. The Japanese government will guarantee the funds channel to support social security and economic development, Mr. Shmyhal, whose country has been invaded by Russia, said on the Telegram messaging app. “In particular, the loan will help support subsidies for internally displaced people and pension payments,” he added. The World Bank estimates that the Ukrainian economy will shrink by up to 45 percent this year due to the war with Russia. This is a far greater contraction than the 11.2 percent the Russian economy is expected to shrink in the same period because of sanctions.
The new loan comes amid a slew of other financial support for Ukraine, including $944 million in quick-disbursing financing from the International Monetary Fund and additional contributions from the Netherlands and Sweden. The bank also has approved a framework project for the next fiscal year that will help the government to restore economic growth, ensure that displaced people get access to services and jobs, and promote better governance.
One of the pillars of the framework project will be to boost the transparency and accountability of public resource expenditures. This will include reforms to improve the operation and allocation of government finances and mitigate corruption risks, IC Ukraine reports. Another pillar will be to support market functionality during and after the war. The reforms will enhance reporting mechanisms and foster a better functioning of land, energy, and financial markets.
Since February 2022, the World Bank has been working lifelessly with the transnational patron community to give exigency backing to Ukraine, allowing it to keep kids in school and hospitals open and to provide essential services to its citizens. Antonella Bassani, the World Bank’s regional vice president for Europe and Central Asia, said the support from donors has been critical to bolstering Ukrainian economic resilience in the face of the invasion by Russia.
The World Bank has earmarked about $3 billion for Ukraine to help address the needs of millions of people displaced by conflict and to prepare the country for recovery. About half of this is in lending, and the rest is in grants. The lending will be drawn from the IDA fund for lower-income countries, intended to help developing nations recover. IDA loans are low-interest loans, ranging from two to five years. The other half is in the form of grants, which are money for specific projects. The grants will help restore the economy in education, health, and social protection. These are aimed at helping the country recover faster and build a more resilient future. They will also provide much-needed assistance to the more than 4.6 million people forced to flee their homes because of the conflict. This will also help them to rebuild their lives when they return home.
