A senior World Bank official told sources that Ukraine's economy will need external assistance for many years to come.
According to Anna Bjerde, the war-torn nation "also has great potential to convert many of its assets into economic opportunity and recovery." Before a significant international conference in London on reviving Ukraine's economy, the managing director for operations gave a speech. The country's economy decreased to just over $140 billion (£109 billion) last year.
The World Bank and other multilateral development organizations play a crucial role in the Ukraine Recovery Conference, which focuses on the role the private sector can play in the country's reconstruction. In March, it was estimated that the total cost of reconstruction would be $411 billion, but ongoing hostilities with Russia have pushed that estimate higher.
The conference will begin with remarks from the co-hosts, Prime Minister of the United Kingdom Rishi Sunak and President of Ukraine Volodymyr Zelensky. Mr. Sunak is scheduled to announce $3 billion in World Bank loan guarantees and will tell the delegates: "As we have seen in Bakhmut and Mariupol, Russia will attempt to destroy what it cannot take. They intend to do the same to the economy of Ukraine."
The government of President Zelensky is determined to implement reforms to make the country more open, transparent, and investment-ready. Ukraine requires $14 billion from international donors to make it through this year. This, according to Ms. Bjerde, will be allocated to "essential social expenditures" such as pension payments, healthcare, and remuneration for physicians and teachers. It will also help fund urgent repairs to infrastructure such as roads and the electricity grid, which are essential to the functioning of the shattered economy.
Ms. Bjerde is optimistic that funding will be forthcoming despite the difficulties that many economies around the globe are experiencing as a result of the Ukraine war. "I believe there has been an enormous level of commitment to Ukraine, and I believe this will continue. Ukraine is just too essential."
The billions of dollars that have been contributed thus far have "helped arrest what would have otherwise been even more devastating humanitarian effects on the country," she says, adding that Ukraine will also need to assist itself.
Given the importance of agriculture to Ukraine's economy, this may prove to be challenging. It is a significant global supplier of cereals, sunflowers, and corn. In spite of an agreement to facilitate some exports that is scheduled to expire next month, production is projected to decline to approximately 45 million tonnes in 2023 from 53 million tonnes in 2022.
Damaged infrastructure makes it more challenging to export products from Ukraine. Andy Hunder, the president of AmCham Ukraine, highlighted several of the topics that will be discussed at the London conference. He told sources that "the majority of Ukrainian businesses do not intend to file claims for war damages until clear and effective compensation mechanisms are developed and implemented."
The two-day meeting of business executives and politicians will also examine whether a war insurance scheme can be implemented to entice some of the private sector investment that the World Bank deems crucial for the economic recovery. While large corporations such as Coca-Cola, Mondelez, and Unilever have suffered damage to their buildings in Ukraine, some have already begun spending money on reconstruction.