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Ukraine: Finding the Right Financial Solution Under Fragility and Conflict

The World Bank Treasury helped customize a USD eq. 1.49 billion IDA-IBRD blended financing package for the PEACE for Ukraine Project, allowing the government to optimize its fiscal space and maintain health, education and social protection services during the war.

The war in Ukraine is devastating the country economically and socially. According to the UN, as of the end of 2022, the human toll showed 18,000 casualties, with an estimated one-third of Ukrainians being forced from their homes and 8 million fleeing to neighboring countries. Public finances have also been a casualty of the war. Despite cuts in non-priority areas, large social and wage bill spending is needed to keep the government of Ukraine operating.

To alleviate part of the challenge, the World Bank approved a USD eq. 1.49 billion Investment Project Financing to support Ukraine. The financing package blended a USD eq. 1 billion IDA non-concessional credit with a USD eq. 492 million IBRD loan. It also utilized four bilateral guarantees1, from the United Kingdom, the Netherlands, Lithuania, and Latvia, to partially cover IBRD’s exposure to Ukraine.

The financing of the project had several repayment constraints.

The IDA credit repayment schedule was tight, limited by eight years of ARM2 and a 10-year final maturity. The government chose a repayment schedule with bi-annual installments of USD eq. 84 million, over six years (from 2026 to 2032), after a four-year grace period. […]