New World Bank Support Package Aims to Strengthen Ukraine’s Economy and Improve Financial Stability

WASHINGTON, December 18, 2024-The World Bank's Board of Executive Directors approved a Development Policy Operation (DPO) for Ukraine to strengthen the economic policy framework for sustainable growth and improve financial stability. This operation provides financing of $1.05 billion using IBRD resources credit-enhanced through the Advancing Needed Credit Enhancement (ADVANCE) Ukraine Trust Fund, supported by Japan and the United Kingdom. The operation is also co-financed by a $1 billion grant from the Facilitation of Resources to Invest in Strengthening Ukraine Financial Intermediary Fund (F.O.R.T.I.S. Ukraine FIF).

The DPO, the second in a programmatic series of two, aims to support the Government of Ukraine in implementing reforms that will strengthen the country's economic potential and improve macro-financial stability. This initiative supports the authorities' efforts to increase Ukraine's Gross Domestic Product (GDP) per capita to converge with EU levels and strengthen the country's economic self-reliance. The first operation in the programmatic series was approved in March 2024.

"Despite significant challenges, the Government of Ukraine has stabilized the economy and remains focused on its development goals, particularly its ambition to join the European Union," said Bob Saum, World Bank Regional Country Director for Eastern Europe. "There have been significant achievements, and Ukraine continues to advance in its efforts to implement reforms to establish a vibrant market economy. The World Bank Group and our international partners will continue to support the Ukrainian people in realizing their EU aspirations."

The operation is organized into two main pillars. The first pillar supports efforts to increase Ukraine's growth potential and focuses on policy measures to enhance competitive entry opportunities in the railway sector and improve its governance. It also seeks to streamline the state's involvement in the banking sector, promote renewable energy generation and production, increase agricultural sector credit flow, and enhance Ukrainian custom's staff competency.

The second pillar supports policy measures aimed at creating a growth-conducive macro-financial policy framework. This includes efforts to strengthen domestic revenue generation, including by aligning excise tax rates on motor fuels with EU standards and conducting a comprehensive valuation of agricultural land. Additionally, it aims to improve procurement integrity by updating procurement legislation.

The Second Growth Foundations DPO is an integral part of the international support package for Ukraine to meet its financing needs. Other ongoing projects include emergency operations for health, education, transport, energy, housing, agriculture, government programs for the private sector, and public administration, which have mobilized partner resources through a flexible design and can be scaled as necessary when additional financing becomes available.