IFC Launches $2 Billion Response Package to Support Ukrainian Private Sector
Washington, D.C., December 15, 2022—IFC today announced a new $2 billion package to help build the resilience of the Ukrainian private sector and support livelihoods in response to Russia's invasion of the country.
The Economic Resilience Action Program will provide for the immediate needs of Ukraine's private sector, which has been devastated by the war, and help prepare for reconstruction. The $2 billion response package includes finance from IFC's own account working alongside guarantees from donor governments.
The Russian invasion has exacted a heavy toll on Ukraine's economy, inflicting extensive damage to infrastructure, limiting market access, and disrupting the private sector, which previously contributed up to 70 percent of gross domestic product. The National Bank of Ukraine estimates that 11 percent of businesses have shuttered as of September 2022, while more than half operate below capacity. At least 5 million jobs have been lost, according to the Ministry of Economy. Many firms are continuing to provide jobs and essential goods and services but need finance to continue operations.
During the war and initial reconstruction stage, the Program will focus on ensuring access to critical goods and services with emergency liquidity support for agribusiness and trade finance, including for fuel imports.
Other priority areas for the Program during this stage include sustaining economic activity; supporting crucial economic infrastructure such as agricultural trade routes and logistics; and providing for the needs of displaced people and affected municipalities. IFC's financing will be provided directly to existing and new clients in the real sector, as well as through financial intermediaries to on-lend to micro, small and medium enterprises and agribusinesses, and through trade finance guarantees. Together with the World Bank and the Government of Ukraine, IFC will also begin to lay the ground for private investment in reconstruction.
IFC has also refocused its advisory program to support clients that had to adapt operations to war conditions and prepare for reconstruction. This includes support in enabling alternative routes for the export of grains, finding alternative suppliers and buyers for agribusiness companies, developing bankable projects for private investment in infrastructure, and supporting reforms critical for private investment.
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The Ukrainian private sector has demonstrated unprecedented resilience in the face of this war," said IFC Managing Director Makhtar Diop. "Supporting that resilience and continuing to build private sector capacity is a priority for us. Deploying capital during this extraordinary time is essential to keep businesses and vital services running, and, when the time is right, prepare for the massive reconstruction efforts to come."
The Program announced today will complement IFC's ongoing support of Ukraine. Since February 24, the organization has helped the country maintain its trade flows and retain access to fuel, food, and other essential products. In September, IFC invested $30 million in Horizon, a private equity fund, to inject capital into Ukraine's and Moldova's information technology sectors and bolster economic resilience. In addition, IFC is working with the European Union to restore residential buildings in the country damaged by the war.
Earlier this week, IFC also signed an agreement to serve as a strategic advisor to the Government of Ukraine in identifying and prioritizing reconstruction projects that can be implemented with private participation, developing public-private partnerships, and supporting reforms in the banking and corporate sectors.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.