Ukraine: EBRD is worried about slowness of European aid

Solving the equation is difficult. How can you finance an economy where the gross domestic product (GDP) will collapse by 35% this year, the unemployment rate is 30% of the working age population, tax revenues are sluggish and 20% of GDP is directed to this sector alone? military effort.

“It’s a complex puzzle,” Beata Javorcik, chief economist at the European Bank for Reconstruction and Development (EBRD), said in a video conference on Ukraine’s reconstruction on Wednesday.

The only certainty so far is that Ukrainian authorities are reluctant to finance war and reconstruction efforts by printing money, given their past conflicts. “The only alternative is help from international donors,” said Torbjorn Becker, professor of economics at the Stockholm Institute for Transitional Economics.

Ours @MatteoPatrone3 held a briefing @SallyBundockBBC @BBCBusiness About our €3 billion commitment #Ukraine?? in 2022-23.

“We will focus on providing liquidity to both private and public companies in a number of areas, from trade finance to energy security.” pic.twitter.com/MJfSxIBgoM

— EBRD (@EBRD) December 7, 2022

And at this level, “European aid is not at the level of US aid, which Ukraine will need 50 billion dollars next year.” As they mobilize 500 billion state subsidies for their energy, it is time for Europe’s political leaders to wake up,” he added. “It is very important to provide support to Ukraine at the moment. However, it is difficult to get a clear commitment from the European Union in this regard,” added Odile Renaud-Basso, president of EBRD.

European slowness

The latter assured that his institution will allocate 3 billion euros of assistance to Ukraine in the form of loans or donations between 2022 and 2023. “We are the only institution that takes risk on our balance sheet. By the end of the year, we will mobilize 1.5 billion euros for Ukraine. We will continue to help the country no matter what. Speed ​​is our obsession,” added Alain Pilloux, the bank’s vice-president of banking operations.

In this regard, the president of the EBRD hopes that the European leaders will succeed in removing Hungary’s veto on the project presented by the Commission on granting a loan of 18 billion euros to Ukraine.

The issue of predictability

Timofiv Mylovanov, president of the Kyiv School of Economics, emphasized: “For now, it is not the amount of aid, but its predictability that is important. It is important to provide the flows in the right time to solve the most pressing issue, i.e. to restore the infrastructure destroyed by the Russian attacks.

General manager of “Ukrenergo” Volodymyr Kudrytskyi expressed concern that the company could not provide all the electricity the country needs in winter. “We are in discussions with hundreds of companies around the world to acquire equipment. We hope to finalize the financing with the banks soon. Likewise, we hope to finalize the interconnection of the European Union’s electricity grid with ours. But it remains to finance the difference in the price of electricity from both sides.”

There is no victory without help

General manager Alexiy Chernyshov said that Ukraine must import gas for the winter, especially since the country plans to generate electricity with gas, which is the same concern on Naftogaz’s side. In short, the urgency is felt on the Ukrainian side.

During this video conference, the speakers emphasized the importance of facing the immediate challenges before thinking about the long-term reconstruction of the country. On the Ukrainian side, putting aside the fear of corruption of some Westerners, the purposeful use of aid is ensured. “If the Ukrainians waste aid, they will lose the war,” Torbjörn Becker predicts.

Of course, but in the long term, “investors will not rush to Ukraine, because the country’s soldiers will be heroes. It would be a mistake to believe that,” said Alain Pilloux.