EU lending arm aims to raise 100 billion euros to help rebuild Ukraine

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BRUSSELS – The European Investment Bank, the lending arm of the European Union, is offering a financing structure previously used during the COVID-19 pandemic to help rebuild Ukraine with up to 100 billion euros (104 $.3 billion) of investment, according to a document seen by Reuters.

The EU-Ukraine Gateway Trust Fund (EU GTF) would seek an initial €20 billion in contributions from EU countries and the EU budget in the form of grants, loans and guarantees.

Guarantees in particular would have a multiplier effect, leading to infrastructure projects totaling some 100 billion euros, according to the document, or around half of Ukraine’s most immediate needs.

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The EIB proposal is expected to be unveiled on Monday, the first day of the International Ukraine Recovery Conference in Switzerland, which aims to provide resources to Ukraine and foster a post-war recovery.

The EIB is proposing a fund that would operate like the one used during the COVID-19 pandemic to guarantee financing for small and medium-sized enterprises. It provided for 25 billion euros leading to the mobilization of up to 200 billion euros.

The EU GTF could help rebuild bridges or renovate water or sewage services, especially for cities whose population has increased due to migration from other parts of Ukraine from the invasion of the country by Russia on February 24.

Projects could also focus on facilitating Ukraine’s exports or its energy and digital infrastructure. The EIB or development banks such as KfW or DFC could tap into the fund or its guarantees for the investments they oversee.

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The fund is also designed to encourage private companies that would likely consider financing investments in Ukraine too risky.

The use of an instrument similar to the one used before enables faster implementation, so that initial investments could be approved by the end of the year. This would allow others to contribute and could easily be extended.

The European Commission must first give its assent, with the majority of EU countries then having to approve the plan. EU states would then decide whether or not to contribute to the fund. ($1 = 0.9590 euros) (Report by Philip Blenkinsop Editing by Alexandra Hudson)

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