28 Oct 2022 22:08

WB structuring first projects to finance Ukraine's recovery via Ukrainian Recovery Trust Fund - alternate director

MOSCOW. Oct 28 (Interfax) - The World Bank has established a new trust fund to finance Ukraine's primary recovery needs, the Ukrainian Recovery Trust Fund (URTF), and has begun structuring the first three projects of financing through this fund, Roman Kachur, World Bank alternate executive director for Ukraine, told Ukrainian journalists.

"The URTF is actually a platform through which donors can invest. The World Bank is structuring projects from the primary recovery package. The first three projects being prepared now concern housing, infrastructure, and healthcare institutions," Kachur said on the sidelines of an international expert conference on Ukraine's recovery in Berlin.

"They'll be prepared and structured roughly in early December, and their financing will begin immediately as long as there are donations. The Netherlands, Norway, and Spain have stated already they'll contribute grants to those donor funds, and the World Bank will also donate its funds and will finance those projects," Kachur said.

These structured projects envision more substantial funding that is available now, and they will be open to other donors as soon as new donors come forward and join financing, he said.

Until present, the WB has worked with Ukraine under the Public Expenditures for Administrative Capacity Endurance (PEACE) project to finance current expenditures, mostly wages, and similar infrastructure is currently being set up for recovery projects, he said.

PEACE has in fact been the principal project to finance wages since June, as absolutely all wages in the Ukrainian public sector, including those paid to healthcare professionals, teachers, and public officials, have been financed via PEACE, Kachur said.

"And this will continue up to the end of the year, and I hope this project will be continued and will work next year, as well. It has showed itself well this year: there have been no wage arrears even for one month, they've been fully financed till the end of the year with the obligations that donors have already undertaken," he said.

Speaking of the most prioritized recovery expenditures within the $17 billion package, of which the WB and the Ukrainian government have said, and about influence of the latest major damage caused to Ukraine's power infrastructure, Kachur said prioritization of this $17-billion package might be reviewed.

"Some said earlier that the purchase of gas is the top priority, and our calculations were based on the [gas] price of $2,000-$3,000 per 1,000 cubic meters for three months, but now the composite price is $900, and some traders are offering it at $700 per 1,000 cubic meters. And so the need there has lessened, but it's increased in the power sector. It's necessary to react quickly and use funds where they are most needed," he said.

He refrained from predicting what part of this $17-billion sum would be available through the URTF. "This depends on resources that donors have. If it's grants, then this is the trust fund, and if it's loans, this won't be the trust fund, but projects to be financed by these funds are most likely to be structured by the bank," he said.

As reported earlier, the World Bank had transferred another $500 million to Ukraine this week under the PEACE project using guarantees provided by the United Kingdom. The new tranche has brought the funding Ukraine has received through the WB to $11.4 billion, which makes up nearly half of all foreign financing. The U.S. alone has allocated $8.5 billion, making it the principal grant donor for Ukraine.