EU bank unveils new fund worth 400 million euros to help rebuild Ukraine

The European Union’s lending arm on Thursday unveiled a new fund worth 400 million euros ($447 million) to spend on rebuilding Ukraine before the bloc’s longer-term reconstruction plan kicks in.

Sixteen of the EU’s 27 countries said they would chip in to the European Investment Bank’s (EIB) Ukraine Trust Fund, which will provide grants and loans, as well as offering guarantees to Ukrainian banks and businesses.

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France and Italy led with contributions worth 100 million euros each to the fund, which a deputy head of the EIB said could go towards repairing large infrastructure, providing financing to small and medium enterprises or public services.

“As the EU, we are financing the resilience of Ukraine,” said EIB Vice-President Teresa Czerwinska. “We provide financing to build the resilience of the society and the economy.”

Czerwinska, who is in the running to next head the EIB, said the bank last year disbursed 1.7 billion euros in Ukraine including on schools, hospitals, social housing and kindergartens, as well as urban transport.

She added the bank would top up the new fund with an additional 100 million euros for technical assistance to help Ukraine use the money effectively – something more developed and richer EU countries struggle with in peacetime.

The EU is supporting Ukraine’s budget with 18 billion euros this year and pledged 50 billion euros in 2024-27 to help rebuild the country from the war unleashed on it by Russia in February 2022.

Before that new financing kicks in, Czerwinska said the EIB’s new fund would act as a bridge, with a cut-off date at the end of 2025.

Germany, the EU’s largest economy, was not among the backers of the EIB fund, with a diplomat saying Berlin preferred spending via the central EU budget, which all member states chip in to.

The World Bank estimated Ukraine’s reconstruction needs after the first year of the war at more than $400 billion over a decade.

International donors pledged billions in assistance to Ukraine at a conference in London this month. Kyiv had asked for nearly $7 billion for the first wave of recovery focused on restoring the energy sector before the winter.

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