EU lending arm aims to raise €100bn to help rebuild Ukraine

A grain silo containing seeds is seen after it was repeatedly shelled during Russia's invasion in Ukraine. It was located in Donetsk, Ukraine, 31 May, 2022.

The EU-Ukraine Gateway Trust Fund, (E-U GTF), would initially seek to receive €20bn in contributions from EU countries. This amount will be supplemented by the EU budget as grants, loans, and guarantees.

These guarantees would be multiplier effects, resulting in infrastructure projects worth around €100bn. This is about half of Ukraine’s immediate needs, according to the document.

Monday will see the unveiling of the EIB's proposal at the international Ukraine Recovery Conference in Switzerland. This conference aims to provide resources for Ukraine and assist in a post-war recovery.

The EIB proposes a fund to guarantee funding for small and medium-sized businesses, similar to the COVID-19 Pandemic. The fund could be mobilised up to 200 billion euro, with a maximum of 25 billion euros.

The E-U GTF could help rebuild bridges and renovate water or waste water services. This is especially important for cities that have seen an increase in population since the February 24th invasion by Russia.

The projects could be focused on Ukraine's exports, or its digital and energy infrastructures. EIB, KfW and DFC could draw on the fund to guarantee investments or use its guarantees.

Private businesses may not consider investment financing in Ukraine too risky, so the fund was created to encourage them.

An instrument that is similar to the one before can be implemented faster, so initial investments may be approved by the year's end. It could be easily scaled up and allow others to contribute.

The European Commission must give its consent first, and then a majority of EU members will have to approve the plan. The fund would then be decided by the EU states.

($1 = €0.9590)