Ukraine is attempting to raise up to $40 billion to fund the first phase of its “Green Marshall Plan” to rebuild its economy which has been devastated by years of conflict with Russia.
The funds will be utilised to address a wide range of economic challenges, including infrastructure development, job creation, and investment in key industries.
At the two-day meeting, which begins in London on Wednesday and is co-hosted by Ukraine and Britain, politicians and financiers will discuss the country’s short-term funding issues as well as long-term reconstruction efforts, according to Rostyslav Shurma, a deputy head of President Volodymyr Zelenskiy’s office.
Shurma stated that the iron and steel sector will be the top priority in the initial phase of restoration, which would cost $40 billion.
In 2021, the sector will provide around 10% of Ukrainian GDP, a third of export income, and employ over 600,000 people. It also accounted for 15% of the country’s carbon emissions, according to Shurma, and he believes there is now a potential to establish an economy based on renewable energy.
Doing so would allow the country to become the world’s cheapest supplier of green steel and a major support to Europe’s efforts to decarbonise, driven by an investment push in new wind, solar, nuclear and hydro power.
Many of the country’s damaged legacy steel plants were built in locations that suited their reliance on coal as a power source, but they were now free to build closer to the iron ore deposits and away from the Donbas region, Shurma said.
To help raise $20-$40 billion in initial funding, Ukraine plans a coalition of industry, public and private sector stakeholders to develop the plan, including doing initial scoping work on projects.
Shurma noted that preparatory work would likely take 1-1/2 years although to be realistic, actual construction will start only after the war is over.
He added that rebuilding funding would be a combination of finance from other countries’ export credit agencies, concessional funding handled through the Ukrainian Development Fund it is establishing with asset manager BlackRock, operating company equity, EU transition funding, and private sector loans.
According to the World Bank, Ukraine’s rehabilitation will cost $411 billion, or three times the country’s GDP. External supporters have contributed $59 billion into Ukraine for funding needs since Russia’s invasion in February 2022.