2023-06-21 10:34:21
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These buildings in Bakhmut are among the thousands destroyed in Ukraine as a result of the war with Russia
Article informationAuthor, Jonathan Joseph Role, BBC Business Editor
2 hours ago
A senior World Bank official announced, during an interview with the BBC, that the Ukrainian economy will need foreign help for many years to come.
Ukraine, which has been devastated by war, “also has enormous potential to turn many of its assets into economic opportunities and recovery,” added Anna Berdy, Managing Director of Operations at the World Bank.
Birdy’s speech came before a major international conference to be held in the British capital, London, on rebuilding the Ukrainian economy.
Last year, the Ukrainian economy contracted by 29 percent, registering just over $140 billion.
The World Bank and other multilateral development agencies play a key role in the Recovery Ukraine Conference, which focuses on the role the private sector can play in the country’s reconstruction.
The total reconstruction bill was estimated at regarding $411 billion last March, but the continuation of the war with Russia means that the value of the bill has now increased.
The conference will begin with the speeches of the co-hosts, the British Prime Minister, Rishi Sunak, and the Ukrainian President, Volodymyr Zelensky.
Sunak is set to announce the provision of $3 billion in World Bank loan guarantees. “As we saw in Bakhmut and Mariupol, what Russia cannot seize it seeks to destroy. They want to do the same to Ukraine’s economy,” he said in a speech to delegates.
He added, “President Zelensky’s government is determined to advance reforms to become more open, transparent and investment-ready.”
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Rishi Sunak and Volodymyr Zelensky will speak at the Recovery Conference in Ukraine to support the Kiev economy
In the near future, Ukraine needs $14 billion from international donor countries to succeed this year.
Birdie said the funding would go toward “essential social expenditures” such as pension payments, health care and salaries for doctors and teachers, and help fund urgently needed repairs to infrastructure such as roads and the power system that are crucial to the country’s battered economy.
Despite the difficulties many economies of the world are experiencing due to the war in Ukraine, Berdy hopes that funding is imminent. “I think great levels of commitment have been shown to Ukraine, and I think that will continue. Ukraine is very important,” she said.
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Anna Berdy, a World Bank official, said Ukraine would need economic support for many years
She added that the billions of dollars injected so far had “helped limit what might have been more humanitarian and devastating for the country” and said Ukraine would also need to help itself.
This may be difficult, given that agriculture is Ukraine’s primary source of income, as well as a global exporter of crops, including wheat, sunflower and corn, and despite the conclusion of an agreement to facilitate some exports, which is scheduled to expire next month, it is expected Production will decline to regarding 45 million tons from 53 million in 2022.
This is due to the difficulty in getting goods out of Ukraine, given the damage to the infrastructure.
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Ukraine’s economy has faltered due to Russian attacks on infrastructure such as the railways in Kharkiv
A survey conducted by the American Chamber of Commerce in Ukraine has highlighted these challenges, showing that 49 percent of companies had suffered damage to their buildings, and concluded that 32 percent of companies had their employees killed, and another 27 percent were injured during 15 months of fighting.
Despite this, the survey monitored that 63 percent of companies intend to invest in new projects, factories or facilities, and 74 percent of them want to provide job opportunities for Ukrainians in existing projects.
Andy Honder, president of the American Chamber of Commerce in Ukraine, pointed to some of the issues that will be discussed at the London conference.
“Most companies in Ukraine do not intend to file claims for war damage until appropriate and clear compensation mechanisms are developed and eventually implemented,” he told the BBC.
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The Coca-Cola factory in Kyiv was damaged at the start of the war
The two-day meeting of business and political leaders will also discuss the possibility of developing a war insurance scheme aimed at encouraging some of the private sector investment that the World Bank says is vital to rebuilding the economy.
And an independent study had concluded that companies witnessed a decline in their sales by 53 percent on average, compared to the situation before the war in 2021, and added that larger companies were more affected than small companies.
And while major companies, including Coca-Cola, Mondelez and Unilever, have suffered from the destruction of their buildings, some companies have already begun financing reconstruction operations in Ukraine.
“Comprehensive war risk insurance for investors has a key role to play in securing investments during Ukraine’s reconstruction and recovery,” says Hunder, for the sake of continuity.
Companies such as “BlackRock” and “JP Morgan” are helping the Ukrainian government in securing private sector investment for reconstruction, and Birdy says that this will be an entry point for job creation and innovation that drives Ukraine’s recovery.
She added, “Even if the war ends today, there will be a period of reform, following the economy has changed a lot. The poverty rate has increased in Ukraine, and the mechanisms of movement and demographics have changed, for that support must be provided for the coming period.”
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