World Bank's private arm launches $2 billion program to help Ukrainian businesses

© Reuters. FILE PHOTO: International Monetary Fund - World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia, October 12, 2018. REUTERS/Johannes P. Christo/File Photo

By Andrea Shalal

WASHINGTON (Reuters) - The World Bank's private investment arm on Thursday said it had launched a $2 billion support package for Ukraine to help build the resilience of the Ukrainian private sector devastated by Russia's war and to prepare for reconstruction.

The International Finance Corp said the new Economic Resilience Action Program for Ukraine includes up to $1 billion from IFC’s own account, with additional financing contingent on guarantees from donor governments.

Lisa Kaestner, IFC's regional manager for Ukraine, last month told a conference in London that the support would be extended over the next 18-24 months.

Ukraine's central bank estimates that 11% of businesses have shut down due to the war as of September 2022, while more than half are operating below capacity.

“The Ukrainian private sector has demonstrated unprecedented resilience in the face of this war,” said IFC Managing Director Makhtar Diop.

“Supporting that resilience and continuing to build private sector capacity is a priority for us. Deploying capital during this extraordinary time is essential to keep businesses and vital services running, and, when the time is right, prepare for the massive reconstruction efforts to come,” Diop said.

Russia's war has caused extensive damage to Ukraine's infrastructure, limited market access and disrupted the private sector, which previously contributed up to 70 percent of gross domestic product.

IFC said at least 5 million jobs have been lost.

The program will provide emergency liquidity support for agribusiness and trade finance, including for fuel imports, IFC said. It will support agricultural trade routes and logistics and aid displaced people and affected municipalities.

Another priority will be supporting companies that had to adapt operations to war conditions by helping them find alternative routes for the export of grains, identifying alternative suppliers and buyers for agribusiness companies, developing infrastructure projects with private investment, and supporting reforms critical for private investment.

In September, IFC invested $30 million in the Horizon private equity fund to inject capital into Ukraine’s and Moldova’s information technology sectors. It is working with the European Union to restore damaged residential buildings.

The World Bank estimated in October that it would cost $349 billion to rebuild Ukraine, but expects the costs to rise sharply after massive damage to electricity plants and other civilian infrastructure.