World Bank approves US$1.5 billion loan for Ukraine under guarantees from Japan and UK

The World Bank's Board of Directors has approved a US$1.5 billion Growth Foundations Development Policy Loan (DPL) for Ukraine.

Source: Government portal

Quote: "The funds will be provided under the guarantee of the Government of Japan through the World Bank Trust Fund (ADVANCE Ukraine) in the amount of US$984 million and under the guarantee of the United Kingdom in the amount of US$516 million."

Quote from Serhii Marchenko, Ukraine’s Finance Minister: "The World Bank, Japan and the United Kingdom are key partners of Ukraine, providing unprecedented support since the first days of the full-scale invasion.

Given the challenges posed by Russia's large-scale armed aggression, meeting the needs of our citizens is a priority for the Ukrainian Government. The funds raised will be used to support the State Budget of Ukraine and economic recovery, as well as to finance priority social and humanitarian expenditures of the state budget."

Details: The publication adds that, at the same time, in order to reduce the cost of servicing Ukraine's credit obligations under the DPL2024 loan for the coming years, the DPL Loan Agreement provides for the capitalisation of interest in the amount of US$99.54 million from the Japanese funds.

The funds are expected to be transferred to the State Budget of Ukraine by the end of March this year.

For reference: The DPL project is a systemic project aimed at supporting reforms in Ukraine, and the funds will be credited to the general fund of the state budget in a single tranche based on the results of the tasks completed before the agreement was signed.

The main areas of reforms included improving corporate governance, stimulating renewable energy generation, introducing agricultural bonds as a new tool for farmers to obtain financing, and strengthening the financial sector by improving business access to finance (under the Affordable Loans 5-7-9 programme).

It also includes the implementation of EU customs and tax practices into Ukrainian legislation, improvement of fiscal policy and regulation of capital markets, and the ensuring of transparency and accountability of procuring entities in the e-procurement system.

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