On October 4, the Ministry of Finance of Ukraine, together with the Secretariat of the Cabinet of Ministers of Ukraine and the KfW Ukraine, reviewed the portfolio of joint projects for the first time since 2021. The event was held online.
The review was chaired by Deputy Minister of Finance of Ukraine Olga Zykova, Director of the Department for the Coordination of International Technical Assistance of the Secretariat of the Cabinet of Ministers of Ukraine Rostyslav Tomenchuk, Head of the KfW Representative Office in Ukraine Lorenz Gessner and Deputy Head of Cooperation at the Embassy of the Federal Republic of Germany in Kyiv Martin Breitmaier.
The meeting was attended by representatives of government agencies and beneficiaries: The Secretariat of the Cabinet of Ministers of Ukraine, the Ministry of Energy of Ukraine, The Ministry for Communities, Territories and Infrastructure Development of Ukraine, The Ministry of Social Policy of Ukraine, the Ministry of Environmental Protection and Natural Resources, NPC Ukrenergo, the State Fund for Support of Youth Housing Construction, city councils and others.
The parties discussed economic indicators in Ukraine, the state of preparation and implementation of joint projects and further development of cooperation.
Olga Zykova thanked the representatives of KfW and the German Government for their significant contribution to the development and restoration of the energy sector, infrastructure and small and medium-sized businesses in Ukraine, as well as for the budget support provided:
“The full-scale armed aggression of the russian federation against Ukraine has caused serious challenges to the country’s financial system. However, thanks to the support of our international partners, in particular the German Government and KfW, Ukraine remains stable and continues to finance priority budget expenditures in a timely manner and in full.”
KfW representatives noted the active and coordinated work of all stakeholders and thanked the team of the Ministry of Finance for its contribution and result-oriented approach.
Olga Zykova also noted the effective and efficient cooperation with the KfW within the existing project portfolio, as well as the support and contribution of the KfW to the recovery of Ukraine.
“KfW provides unprecedented financial assistance and actively cooperates with the Government of Ukraine. Currently, the portfolio of six existing investment projects is the largest in all the years of cooperation and amounts to EUR 273 million, and the rate of disbursement of loan funds in 2023 is the highest in recent years,” the Deputy Minister of Finance of Ukraine said.
In addition, KfW provides significant support for the implementation of projects in the form of grants, which is especially important given the current debt burden on the state budget. Thus, 13 international technical assistance projects are currently being implemented for a total amount of EUR 158.8 million.
The funds received are used to develop small and medium-sized businesses, support the energy sector, construction and energy saving, restore social and critical infrastructure, events, water supply and sewage, and support protected areas. At the same time, a significant portion of the funds is allocated to support and restore municipal infrastructure at the regional level.
In 2022-2023, KfW provided significant support to the energy sector of Ukraine, which contributed to the smooth passage of the heating season in the context of the Russian energy terror:
– In the framework of cooperation with KfW, NPC Ukrenergo is implementing projects totalling EUR 223 million and is preparing a EUR 24.0 million project “Improvement of the Efficiency of Electricity Transmission (Substations Modernization) III”;
– Germany has provided NPC Ukrenergo with grant support in the amount of EUR 37.7 million to finance the IBRD project “Second Electricity Transmission Project: Installation of STATCOM reactive power control devices”;
– The German government provided a EUR 50-million guarantee for a loan to the European Bank for Reconstruction and Development under the project “Revolving Loan for Emergency Gas Purchases for Naftogaz”.
The Government of Ukraine and KfW also actively cooperate in supporting small and medium-sized enterprises through the Business Development Fund (BDF). Thanks to joint efforts, the SPF has successfully implemented projects to support SMEs totalling EUR 17 million, which provide local currency loans to SMEs through the financial sector.
Representatives of the Reconstruction Credit Institution, for their part, noted the effective joint work of the Ministry of Finance and the BDF.
The parties also discussed the prospects for further cooperation and major projects, agreements on which are planned to be concluded until the end of 2023 – early 2024, in particular, to attract grant funds for the development of social infrastructure, modernization of vocational education infrastructure and the continuation of the project “Housing for internally displaced persons”.
Olga Zykova expressed her hope that the development and conclusion of a new intergovernmental framework agreement, which would regulate cooperation with KfW and cover all financing instruments, would significantly simplify the procedure for attracting loans and grants.
The participants also discussed strengthening supervision and control over the implementation of joint projects to speed up their implementation and maximize their effectiveness.
In conclusion, the parties agreed to continue discussing the strengthening of cooperation during the Annual Meetings of the IMF and the World Bank to be held on October 9-15 in Morocco. (Government portal/Business World Magazine)
