As Prepared for Delivery
Presidents Cassis and Zelensky.
Prime Ministers Shmyhal and Fiala, President von der Leyen, distinguished panelists. Ladies and gentlemen.
Last year in Vilnius, at the Ukraine Reform Conference, we welcomed the important milestones Ukraine was reaching along its reform path and encouraged continued progress.
I specifically talked about the impressive strengthening of the financial sector; the improved targeting and poverty impact of the social protection system, and how reforms in the health sector were helping Ukraine’s COVID response.
We welcomed the monumental passage of the agricultural land reform, a measure promising to transform Ukraine’s economy, after having been stalled for two decades.
On July 1—just days before we gathered—the government opened the land market, and the year ended with Ukraine on track for a record harvest.
Indeed, when I addressed this forum one year ago, I said that, thanks to the persistence with which the authorities had pursued reforms, Ukraine in 2021—despite the pandemic—was a stronger and more resilient country than at any time since its independence thirty years earlier.
What we did not know then—and what we have seen day in and day out since February 24—was just how resilient.
After more than four months of devastating attacks, Ukrainians are hard at work.
The Government, under the most extreme conditions, has continued to perform crucial administrative functions, including collecting revenues, making social and pension payments, delivering key social services, and teaching children.
World Bank Response: FREE/PEACE/MRII
The international community has responded strongly, including the World Bank Group.
In the four months since the outbreak of war, the Bank has mobilized $6.75 billion, including commitments and pledges from donors, to support the continuation of essential government services and to help blunt the widespread human and economic impacts of the war.
We are also supporting neighboring Romania and Moldova to mitigate the impacts of the war on forcibly displaced Ukrainians and households, as well as build resilience and enhance competitiveness to reduce vulnerabilities to future shocks.
As all of you know, Ukraine’s current budgetary financing needs remain high – at $5 billion a month.
This means another $30 billion will be needed between now and December, if the war lasts that long.
The Bank has prepared two fast disbursing operations to support the Government during this difficult time. We have also, through our sister organization, IFC, mobilized support to the private sector.
The expressions of interest to support Ukraine remain strong, and we believe we are well positioned to build on the role we have played in mobilizing partner engagement also in the recovery and reconstruction phases.
In this context, I am pleased to announce today the establishment of the Multi-Donor Resources for Institutions and Infrastructure for Ukraine facility.
We see this as an agile facility that can channel grants from partners to co-finance projects and support critical analytical and advisory work through a Ukraine Relief, Recovery and Reconstruction Trust Fund (URTF); while also coordinating additional sources of support—guarantees, co-and-parallel financing, and other financial instruments to help Ukraine. Our hosts, Switzerland, have kindly volunteered the first contribution that will start this fund for Ukraine – and we warmly welcome others to join.
In April, we produced a paper setting out a strategic approach to support Ukraine during and after the war, setting out three phases:
Relief Phase—which entails keeping the government functioning. I think we’ve all been astonished at how firmly the authorities have led on this front.
Recovery Phase—this phase begins when the conflict ends or abates and focuses on addressing the immediate physical and economic needs. I do wish to acknowledge that this is already happening where it can, with Ukraine repairing damage to restore services to its citizens daily.
Resilient Reconstruction Phase—this is the longer-term rebuilding of the country, including leaving behind the weight of policies which inhibited Ukraine’s growth and development before the war.
Estimating the Damages
Since April, we have been involved - together with support from the EU and other partners - in supporting Ukraine in the development of a detailed Damage, Loss and Needs Assessment (or DNA).
A first rapid version, called the Rapid DNA is ongoing, with damage, losses and needs assessments being completed in July and the report ready in August. There will be more detailed versions over the next months and years. But we hope this will be an important input to the recovery and reconstruction efforts.
At this point, I would like to share some preliminary findings from the Rapid DNA:
Estimates until early in June and covering the following key sectors: housing, transport, and commerce and industry, indicate about $100 billion in direct physical damages.
I would like to highlight that there is a very large need for de-mining and clearance of explosives as a pre-condition to safe rebuilding and resumption of service provision.
These needs have to be sequenced carefully for recovery and reconstruction but are also needed right away as people are victims of extensive mines.
Indeed, we believe the Facility and Trust Fund I spoke of, and other financing mechanisms being developed by Ukraine’s partners, will be crucial components of this rebuilding, and we would propose a dedicated discussion on demining and clearance of explosives to see where expertise and funding can be mobilized from.
Reforms More Important than Ever
But going back to where I began, in supporting the authorities in rebuilding, we need to also support the government’s continued efforts to strengthen economic management and institutions, which have sustained the country under such difficult conditions – and are central to paving the way for Ukraine’s future prosperity.
This will include:
Ensuring the adequacy of fiduciary mechanisms to demonstrate to donors and investors that the flow of resources that will be critical for Ukraine’s rebuilding will be deployed effectively and efficiently.
The immediate challenge for Ukraine’s agriculture sector is finding a way to store and export the significant levels of production its farmers are still managing to harvest under these extreme circumstances. Looking forward, the job remains to complete the land market opening to support small farmers and help transition the sector to higher value-added European standards.
A strong recovery will require a vibrant private sector. Determined measures will need to be taken as early as possible to ensure that the banking system, which has been heavily exposed to Ukraine’s wartime needs, will be positioned to provide sufficient credit to businesses when recovery can begin.
Finally, depending on how long the war lasts, we estimate that poverty—the percentage of people living below the subsistence level—could rise from 18 percent in 2020 to more than 70 percent by the end of this year. The support we are providing to the authorities to sustain hospitals and ensure teachers continue to teach their students—even virtually—is and will remain critical. The government will need to continue to protect Ukraine’s human capital.
I would like to thank all the partners with whom we work and with whom we have worked, and with such purpose, over the past four months to support Ukraine.
And, of course, I want to express my admiration for the Ukrainian people whose resilience and courage ensured that this day – today - would come.
Thank you very much.
Watch the video recording (YouTube)
Anna Bjerde is World Bank Vice President for Europe and Central Asia.