A senior European Union official has called for increased efforts to encourage private sector investment in Ukraine’s reconstruction, citing a substantial funding gap between pledged public resources and the country’s estimated needs.
Pierre-Arnaud Proux, deputy head of the European Commission’s inter-institutional unit coordinating Ukraine’s relief and reconstruction, emphasized the necessity of private sector involvement during an online event organized by the European Policy Centre, EURACTIV reports.
“What is important is to […] try to leverage and make sure that we can get the private sector on board because public resources alone will never make it,” Proux said, highlighting the scale of Ukraine’s reconstruction needs.
According to Proux, the €50 billion pledged by the EU under its Ukraine Facility falls significantly short of Ukraine’s estimated investment requirements, which are approaching $500 billion. He noted that the €7 billion offered under the Ukraine Investment Framework could potentially generate an additional €40 billion in private funds, while a further €1.4 billion pledged at the recent Ukraine Recovery Conference in Berlin could leverage an extra €6 billion in private capital.
Despite these efforts, Proux acknowledged, “We are very far from [meeting Kyiv’s investment needs] with our Ukraine Facility and with our Ukraine Investment Framework in particular.”
A joint report from the United Nations, World Bank, Ukrainian government, and European Commission underscores the urgency of private investment. In February, it estimated the total cost of rebuilding Ukraine at $486 billion. This figure is likely to have increased due to Russia’s recent intensification of attacks on Ukraine’s energy infrastructure.
Anna Derevyanko, executive director of the European Business Association, outlined several challenges facing companies considering investment in Ukraine. These obstacles include regular power outages, limited access to capital, severe labor shortages, and ongoing security concerns.
The Ukrainian government is currently in negotiations to avoid defaulting on $20 billion in debt owed to private creditors, including major financial institutions such as BlackRock. Experts warn that a default could severely impair Ukraine’s ability to leverage funds on Western capital markets once the war ends.
