EBRD plans to invest EUR 1 bln in Ukraine in 2016

The European Bank of Reconstruction and Development (EBRD) intends to invest nearly EUR 1 bln into the Ukrainian economy in 2016 if it’s accompanied by reforms, EBRD President Sir Suma Chakrabarti in an interview with Voice of America, as reported by the delo.ua news site on April 17. The EBRD loaned to Ukraine EUR 1 bln in 2015 and EUR 1.2 bln in 2014, he said. However, the government has failed to undertake systemic changes. In response to the question of whether the reduced investment in 2015 was a sign of slowing reforms in Ukraine, he said that many companies were affected by recession in 2014.

Recall that the EBRD is the largest financial investor in Ukraine. As of Jan. 1, 2016, the bank pledged to allocate about EUR 12 bln in the framework of the 355 projects across the country. In 2015, the bank financed in Ukraine about 30 projects worth EUR 1 bln.

Alexander Paraschiy: Ukraine’s Western partners keep sending signals to Ukrainian authorities about the availability of abundant funding if reforms run smoothly. Last week’s election of a new Cabinet will cause donors to reconsider their position with respect to Ukraine. However, most likely all of them, including the IMF, will be waiting for some clear moves from the new government prior to any loan advances. 

Recall that in 2016, Ukraine was expected to receive up to USD 10 bln in Western funding (including USD 5.8 bln from the IMF, EUR 1.2 bln from the EU, USD 1.0 bln through U.S. guaranteed Eurobonds and about USD 1.5 bln from other Western donors. However, only one minor loan (USD 334 mln from the Japan International Cooperation Agency) has arrived so far this year. There is still a good chance that Ukraine can make up for lost time and resume cooperation, but substantial progress in reforms must first be demonstrated.