Ukraine can become a magnet for world capital, but only if it does not betray the course of reforms. About this stated ECB president Christine Lagarde, emphasizing that the country is on the verge of a breakthrough or losing a historic chance.
Lagarde warned: without clear guarantees of transparency, investments may turn out not to be development, but failure. But there is a chance and it is already working. Thanks to the Agreement with the EU and the implementation of European standards, the Ukrainian banking sector in a few years did a jump that until recently seemed fantastic: more than 75% of EU regulations are in force, even despite the war. Banks are alive, profitable and capitalized. Exchanges are being consolidated, the capital market is being updated.
This is not just financial stability, but a test of political will. If Ukraine does not turn back, does not break under the pressure of old schemes, does not sell itself for short-term interest, it become a point of growth for the entire continent. Otherwise, the chance will be lost.
Ukraine-2050: energy, defense, IT and agriculture — why investors are no longer waiting for the end of the war
Let’s imagine solar panels, wind turbines near the Sea of Azov, hydroelectric power stations – there are plenty willing to invest. Ukraine already presented strategy until 2050 with an investment potential of $383 billion in this area — and this is just the beginning. EBRD invests — €1 billion is planned this year, and in general, more than €3 billion by the end of the year.
An example can be DTEK, which during the war is actively launching the Tyligulska wind farm — already 114MW, 500MW are planned. The system is stable and renewable, even when the lines are bombed — this is what attracts the attention of investors.
Ukraine is the breadbasket of the world. Foreign investors are looking at logistics, irrigation and processing. Large holdings — in particular, Astarta and MHP — already attracted tens of millions of capital from the EBRD and private funds are listed on the London Stock Exchange.
Reconstruction of bridges, roads, hospitals are truly “saving” projects. Partnership programs of the EU and the World Bank are exactly the money that drives reconstruction and creates jobs.
Ukrainian IT companies have been exporting software and services for a long time, and now there is a chance to create technoparks at home and attract venture capital. It is long-term capital with high added value, joining the existing track.
The sphere in which investments are not just commerce, but a contribution to security, is the defense industry. ZBROYARI project already attracted more than $1.5 billion from nine countries and the EU for the production of ammunition, drones, and robots. So, Denmark is implementing the “Danish model” of purchasing Ukrainian ammunition — €597 million and more.
Investors use both direct investments: they build factories, farms, factories from drones, and portfolio investments: investments in OVDP, shares. Grants or subsidies from the EU and G7 also appear in the industry, which do not need to be returned, but must be openly reported.
Finally, partnership funds combine capital and reform conditions.
So, if you are an investor in wind power plants and you see that the war simply crushed the energy system, but Ukraine is building “smart mini-grids”, you are looking not only at income, but also at durability.
It is beneficial for the European government or the manufacturer of ammunition to have them manufactured in Ukraine, because it is cheaper, closer, and strategic.
It is beneficial for the venture fund to find startups with strong IT skills: more precisely, these companies already exist, now they are ready to scale.
What has already been done in banks – and why it is important
In the financial sphere, Ukraine is actively moving towards European standards: domestic banks have introduced a new three-tier capital model (Tier 1, etc.), with a capitalization of more than 17%, which allowed them to withstand the crisis of 2022-23. According to the NBU: net assets have grown last year by 16%, +7.6% only in the IV quarter, and banks are actively investing in OVDP.
It works well: the population is proven that banks are strong, and businesses have a place to take loans.
There was a “cleaning of the market” before the NBU: unprofitable banks were closed, “PrivatBank” was nationalized. As a result, we have transparent and controlled institutions without shadow schemes.
Digital transformation and risk control continues: implemented instant payments, XBRL reporting, European supervision model. The main thing: processes have become faster, and banking life has become predictable.
Regarding other important transformations. Accepted laws on the creation of new Supreme/anti-corruption courts according to EU standards. At the same time, about 56% of the positions in the appeal are vacant, and only 20% of the decisions are actually implemented. If the courts do not work, investors are afraid to go further.
There is now progress in the protection of property rights: there are reforms of the ECtHR, open re-certification of judges, Anticorsud. But it is still necessary to complete the land registers and guarantee the quick protection of the owner. Investors are confused by tax stability. Businessmen are nervous about the increased military allowance from 1.5% to 5%, because they want to know if the tax will be the same tomorrow.
How do international agencies assess the situation in the country? IMF notes “high stability” of banks, but calls for the modernization of capricious areas – courts, capital, market – in order to bill investors.
In May, Moody’s affirmed the “Ca” rating with a stable outlook due to reduced risks and banking reforms.
At the same time, Fitch assigned Ukraine an “RD” rating due to the war, but the local currency received a “CCC+” due to restructuring. At the same time, the first recommendation is: “public trust depends on reforms.”
Money under a contract, not on faith: how the West is building a system of investment guarantees for Ukraine
The EBRD is like an older brother who gives money but sits at the table nearby. Yes, he guarantees the risks for Raiffeisen Bank in Ukraine: €100 million for the energy sector, so that the bank can lend without fear of a crisis from non-returns. The same schemes for Ukrsibbank (€30 million) and OTP Bank (€200 million) — through special risk-sharing mechanisms.
The World Bank broadcasts the narrative: “We will not only give, but also teach.” $750 million as part of the SURGE package goes to the reform of local finances. Another $2 billion highlight together with the Americans to maintain the state budget, pensions, energy.
Former USAID narrative: “This is our cache – we see it.” From 2022, $20+ billion will enter the country. And not “on faith”: everything through analytics, control, and even with an external audit. The agency worked with the Ministry of Finance, Prozorro, local projects.
The EU is promoting the Ukraine Facility mega-program. This is €50 billion until 2027 — part in grants, part in loans. The principle is simple: if you fulfill the conditions, you will receive a tranche. Broke the promise – cooperation on pause.
IMF: “We don’t just lend — we shape the rules of the game.” The key program is the $15.6 billion EFF. A clear reform plan has been developed, control of every step, quarterly reports. Now is being prepared the new tranche is $500 million.
Are there guarantees for investors that their money will not be lost? Yes. There are loan guarantees: when Raiffeisen or OTP lends to a business, they do not risk their money entirely – because up to half of the losses will be covered by the EBRD. This is called unfunded risk-sharing.
There are guarantees from the World Bank for large projects, in particular, energy, transport, health care. Guarantees from the EU and EIB (European Investment Bank) — for large infrastructure investment projects, through separate trusts.
So, the investor is given “insurance”. If something goes wrong, part of the money will be compensated by an international institution.
How is everything coordinated? The main players: the World Bank, the EU, the IMF, the EBRD, the G7, the UN, and until recently USAID, coordinate everything through special platforms such as the Multi-Agency Donor Coordination Platform.
Mutual fund, : the same, URTF — where donors give money and the World Bank administers. It is like a common “wallet” that is spent transparently.
USAID, the EU and the IMF require the engagement of an independent audit (for example, PricewaterhouseCoopers). If there is no clear reporting, the next tranche will not come.
No structure now gives money “just like that”. Each payment is tied to the fulfillment of KPIs: opening of registers, reform of courts, changes in public procurement, etc.
So, the West invests billions into a fairly tightly controlled system. Banks have protection. Donors can see where their money is going. Businesses are given access to loans with minimal risk. And all this is not based on “trust”, but on contractual guarantees.
That is, it is no longer “let’s help poor Ukrainians”, but: “Ukraine is a strategic player, and if it plays by the rules, we will be with it for a long time.”
Tetyana Viktorova
