Washington, DC, April 14, 2023—A $2 billion IFC program designed to ramp up support for Ukraine's private sector and boost economic resilience amid Russia's invasion of Ukraine is receiving new financial support from the Netherlands and Switzerland.
The Netherlands and Switzerland will be providing $53 million for IFC's Economic Resilience Action (ERA) program, which was announced in December to provide a lifeline to Ukraine's private sector. IFC expects to be able to leverage these donor funds between 3-4 times, meaning these contributions can potentially support over $200 million of financing.
The Netherlands will be providing $43 million to support Ukraine's agricultural sector and ensure emergency liquidity for private companies in critical agri-related industries. Switzerland will provide $10 million to support Ukraine's small-scale farmers, who have been vital in feeding the population and safeguarding food security.
Ukraine's private sector generated up to 70 percent of gross domestic product before Russia's invasion and provided crucial jobs, goods, and services. In spite of one in five micro and smaller business closing (as of mid-April 2022), the sector continues maintaining strategic exports and providing taxes.
The private sector will also have a crucial role to play in the country's reconstruction efforts, estimated at $411 billion as of February 2023 - far more than government and donors can muster alone
"A strong private sector is essential to help Ukraine's economy recover and support reconstruction efforts," said Makhtar Diop, IFC's Managing Director. "We welcome the contributions made by the Netherlands and Switzerland and their strong support for Ukraine. Ukraine's economy remains on life support, and we will continue working with other development partners to provide the guarantees and grants the private sector needs."
IFC's $2 billion ERA response package includes finance from IFC's own account working alongside guarantees and concessional finance (or grants) from donor governments. It complements efforts IFC has made with its own capital to support the private sector in Ukraine without donor support. As of April 2023, IFC's outstanding portfolio was nearly $300 million to private companies and financial institutions in Ukraine.
"Since Russia's invasion of Ukraine, the Dutch government has remained committed to helping the Ukrainian people and municipalities stay resilient. This new financing represents a critical lifeline for agricultural firms in Ukraine ultimately supporting sustainable production and delivery of food stocks to countries affected by food instability," said Liesje Schreinemacher, Minister for Foreign Trade and Development Cooperation.
"Ukraine is a priority country for Switzerland's international cooperation, and we continue supporting the country on its path towards peace and sustainable development during these hard times. Adding to our existing partnership with Ukraine and IFC in the area of financial inclusion and access to finance for agricultural SMEs, we herewith aim to enable additional financing for the Ukrainian farmers, which are key for agribusiness's resilience and growth," said Dominique Paravicini, Head of Economic Cooperation and Development of the Swiss State Secretariat for Economic Affairs SECO.
The World Bank's 2nd Rapid Damage and Needs Assessment estimates Ukraine will need $14 billion for critical and priority reconstruction and recovery investments in 2023. Meeting these needs will require $11 billion in financing beyond what the government has already addressed in its 2023 budget, including $6 billion in unfunded budget needs and another $5 billion in financing to support state-owned enterprises and catalyze the private sector.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
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About SECO
The State Secretariat for Economic Affairs (SECO) is the Swiss Confederation's centre of expertise for all core economic policy issues, including economic cooperation and development. It implements Switzerland's economic and trade policy measures for the benefit of developing countries. SECO's mandate is to facilitate economic growth and sustainable prosperity in its partner countries. For more information: www.seco-cooperation.admin.ch
For more information about the Netherlands, visit:
www.government.nl/
