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Newsletter #20 Reconstruction Ukraine - January 2025

Dear readers,

The year 2025 is set to be a transformative period for Ukraine, both militarily and geopolitically. As a new U.S. administration takes the global stage, its policies are expected to significantly influence the course of the ongoing war. While hopes for a swift resolution remain high, the situation on the front lines remains complex and challenging due to Russia’s intensified offensive. Amid these challenges, Ukraine stands strong, bolstered by steadfast international support.

The year kicked off with the annual World Economic Forum in Davos, where global leaders convened to discuss pressing economic challenges and emerging trends. Among the outcomes were landmark agreements underscoring the global community’s unwavering commitment to Ukraine’s recovery, resilience, and future growth.

In this 20th edition of our newsletter, we reflect on Ukraine’s progress in 2024, highlighting key macroeconomic indicators and significant achievements in demining. Looking forward, we explore:

• How France is driving Ukraine’s recovery efforts.
• The Ministry for Communities and Territories Development’s role in rebuilding critical infrastructure.
• New initiative to accelerate Ukraine’s European integration.
• The EBRD’s latest program to support private sector growth.
• Promising developments in renewable energy and private sector innovations.

We hope you find this edition insightful and engaging!

Ukraine Reconstruction: Key Figures

Macro 2024 summary  

The year 2024 was marked by significant economic developments for Ukraine as the country continued to face challenges stemming from the ongoing war. Key obstacles to economic growth included persistent attacks on critical infrastructure, energy outages, labour shortages, and lower crop yields due to unfavorable weather conditions. Nevertheless, Ukraine managed to sustain economic progress thanks to the efforts of the Ukrainian government and the steadfast support of international partners. Detailed information on Ukraine’s macroeconomic indicators in 2024 is provided below:

• $43.8 billion Ukraine's international reserves as of January 1, 2025. Overall, Ukraine's international reserves increased by 8% in 2024.
• $41.7 billion total external financing received in Ukraine's state budget in 2024, of which approximately $12.6 billion (30% of total financing) came from grants. 
• The largest donors of budget support in 2024 are:

- European Union,

- United States of America,

- International Monetary Fund,

- Japan,

- World Bank,

- Canada,

- United Kingdom.

• approximately 4% year-on-year GDP growth. However, GDP remains over 20% lower than in 2021. 
• inflation was below the 5% target at the beginning of 2024, but it rose steadily to 12% year-on-year by December. 

Source: National Bank of Ukraine, Ministry of Finance of Ukraine, Centre for Economic Strategy

Macroeconomic forecast for 2025

At the beginning of 2025, inflation is expected to continue rising, driven by both temporary factors, such as the impact of last year’s lower harvests, and underlying pressures, including rising production costs for businesses. Nevertheless, economic recovery is anticipated to gain momentum, supported by investments in energy and industrial capacities, sustained accommodative fiscal policies, and increasing private consumption fueled by rising household incomes. 

• 8.4% the forecasted inflation rate for 2025, with expectations that inflation will gradually slow to the 5% target by 2026, supported by the fading impact of temporary price pressures and the National Bank of Ukraine's interest rate and exchange rate policies.
• 3.6% the projected growth in real GDP for 2025.
• $38.4 billion the expected amount of international financial support in 2025.

The key pillars of Ukraine's development remain its robust international support and the remarkable adaptability of businesses and the population to the challenges of wartime conditions.

Source: National Bank of Ukraine

Demining results - 2024 

Clearing landmines remains one of Ukraine's top priorities, as mine contamination poses a direct threat to human lives and significantly hinders economic activity. Currently, 139,000 square kilometers of Ukrainian territory remain contaminated with mines and unexploded ordnance. Despite this challenge, Ukraine is making remarkable progress in mitigating the threat and restoring land to productive use.

• US$1.1 billion total partner contribution to humanitarian mine action since 2022.
• 35,000 km² of Ukrainian land have been returned to use since the start of the full-scale invasion. 
• 17,000 km² of this land were returned to use in 2024. 
• Over 285,000 hectares (2,850 km²) of agricultural land were made usable by Ukrainian sappers in 2024. 
• 318,000 hectares (3,180 km²) of such land were inspected in 2024. 
• Ukraine now has over 200 mechanical demining machines, some of which are manufactured or assembled domestically. 
• 73 operators of mine action activities have been certified. 
• Almost 5,500 specialists are already working in this area

Source: Ministry of Economy of Ukraine, Ministry of Defence of Ukraine

French involvement in Ukraine’s reconstruction

• Ukrainian Railways receives the first batch of French Rails for infrastructure development in 2025

To achieve its ambitious infrastructure development plans for 2025, Ukrzaliznytsia (Ukrainian Railways) has received the first shipment of rails from the French company Saarstahl Rail SAS. This initial delivery includes 1,083 tons of rails and forms part of a significant intergovernmental agreement between Ukraine and France, under which Ukraine’s railway network will receive a total of 19,000 tons of French-manufactured rails.

The project is financed through a €37.6 million concessional loan from the French Treasury, as outlined in an intergovernmental agreement signed in December 2022.

Symbol of support and economic recovery

These rails are of strategic importance for stabilizing both passenger and freight transportation, which are vital to the Ukrainian economy. The rails will allow Ukrzaliznytsia to construct and repair approximately 145 kilometers of railway tracks. Priority projects include the reconstruction of key routes essential for high-speed train travel:

• Lviv – Uzhhorod
• Kyiv – Lviv – EU border
• Kyiv – Odesa
• Kyiv – Dnipro
• Kyiv – Kharkiv

French innovation and environmental responsibility

The project showcases the industrial expertise of France, which is internationally recognized in the railway sector. The rails are manufactured using innovative processes that incorporate recycled scrap metal, resulting in up to 90% lower CO₂ emissions compared to traditional production methods.

The delivery of French rails marks an important step toward strengthening Ukraine’s railway system, which plays a pivotal role in economic development, improving population mobility, and integrating Ukraine into the broader European transport network.

Source: Direction générale du Trésor, Ukrzaliznytsia

Key developments for Ukraine’s Reconstruction

• New stage of the "Ukraine Recovery Program": €100 million for community development

The Ministry for Development of Communities and Territories of Ukraine has announced the launch of a new phase of the "Ukraine Recovery Program", supported by the European Investment Bank (EIB). A total of €100 million has been allocated to restore critical infrastructure and support the development of local communities.

The projects will be implemented using the innovative DREAM platform, which automates the project selection and monitoring processes. The platform will ensure:

• Transparency and efficiency in financial management.
• Monitoring of project implementation progress.
• Strict control over the allocation and use of funds.

Priority areas for funding

The program focuses on the following key areas:

1. Energy sustainability of communities.

• Special attention will be given to diversifying heat supply and developing distributed generation to ensure energy efficiency.

2. Housing construction.

• The programme will create a housing stock in communal ownership to accommodate internally displaced persons, community workers and other categories of citizens in need of housing.

3. Modernisation of water supply and sewage infrastructure.

• Given the technical deterioration of the networks, projects will be implemented in the communities to upgrade them.

4. Reconstruction of medical facilities.

• Particular attention will be paid to cluster hospitals and perinatal centres.

Significance of the program

The "Ukraine Recovery Program" is an integral part of a broader public investment reform designed to rebuild essential infrastructure and enhance the quality of life in war-affected communities.

Notably, in the previous two phases of the program, 225 projects were implemented with a total investment exceeding €500 million. This new phase builds on those successes, aiming to continue the crucial work of revitalizing Ukraine's communities.

Source: Ministry for Communities and Territories Development of Ukraine

International Benchmark

• EU, Denmark and Lithuania launch EUR 14 million programme to support Ukraine’s EU accession path

On January 22, the European Union (EU), Denmark, and Lithuania reaffirmed their commitment to supporting Ukraine’s accession to the EU by signing the “Ukraine2EU - EU Integration Support Programme for Ukraine”. This initiative, co-funded by the EU, Denmark, and Lithuania, has a total budget of €14 million and aims to assist Ukraine in navigating its path to EU membership and implementing the necessary reforms.

Targeted support for key Ukrainian institutions

The “Ukraine2EU” program is designed to provide focused support to critical Ukrainian governmental bodies responsible for the country’s EU integration, including:

• The Office of the Deputy Prime Minister for European and Euro-Atlantic Integration.
• The Government Office for Coordination of European and Euro-Atlantic Integration.
• The Secretariat of the Verkhovna Rada.
• Committee of the Verkhovna Rada on issues of European integration.
• The Ministry of Justice.

These institutions are collaborating to manage Ukraine’s complex EU accession process, which requires close coordination across all sectors of Ukrainian governance and society.

Objectives of the program

The program aims to strengthen Ukraine’s ability to achieve EU membership by focusing on the following goals:

1. Strengthening the capacity of Ukraine's key actors in managing EU accession negotiations
2. Increasing the availability of expertise in the field of EU law
3. Raising awareness and understanding of EU accession among Ukrainian society and stakeholders
4. Supporting civil society organisations contributing to EU accession.

Implementation of the program

The program will run from 2025 to 2027 and will be implemented by the Lithuanian Central Programme Management Agency (CPVA).

The “Ukraine2EU” program underscores the unwavering commitment of the EU, Denmark, and Lithuania to Ukraine’s European aspirations. This initiative represents not just a step forward for Ukraine, but a vital investment in the future of a united and prosperous Europe.

Source: Ministry of Foreign Affairs of Denmark, Delegation of the European Union to Ukraine

• EBRD Launches €200 million risk-sharing facility to boost Ukraine’s private sector

The European Bank for Reconstruction and Development (EBRD) is extending a new, unfunded portfolio risk-sharing facility to Ukraine’s JSC OTP Bank (OTPU) to enable €200 million of new financing to Ukraine’s private sector in the midst of the ongoing war.

How the facility works

The EBRD’s facility will cover up to 50 per cent of OTP Bank’s credit risk on €200 million of newly issued sub-loans to private businesses operating in Ukraine. The credit enhancement mechanism will enable OTPU to finance critical industries such as:

• agriculture
• energy
• manufacturing
• transport

This support is designed to ensure the operation of businesses and access to essential goods. The EBRD facility will be supported by first-loss risk cover funded by donors, including the European Union (EU), under the Ukraine Investment Framework (UIF).

Focus on MSMEs and green technologies

A key feature of the facility is its targeted support for private micro, small, and medium-sized enterprises (MSMEs). Up to 20% of the risk-shared loans will be allocated to long-term investments in EU-compliant and green technologies. To incentivize these investments, eligible sub-borrowers will receive grants and technical assistance under the EU’s EU4Business initiative. 

Additional incentives for war-affected businesses

In addition to such risk-sharing agreements, sub-borrowers that have suffered asset destruction, loss or relocation due to the war, or those engaged in reintegrating veterans into the workforce, are eligible for additional investment incentives.

The size of the compensation depends on the type of acquired assets, the complexity of the project, the sensitivity of the borrower’s category, and can range from 10% to 30% of the total loan amount.

This initiative is a testament to the EBRD’s commitment to sustaining Ukraine’s private sector amidst adversity. By supporting critical industries, empowering MSMEs, and fostering sustainable practices, the EBRD is helping Ukraine build a resilient and competitive economy in the face of ongoing challenges.

Source: EBRD, OTP Bank Ukraine

Focus on the private sector

• DTEK and Danish Vestas announce construction of the second phase of the largest wind farm in Eastern Europe

Ukrainian energy company DTEK, in partnership with Danish wind turbine manufacturer Vestas, has signed an agreement to construct the second stage of the Tyligulska Wind Power Plant in the Mykolaiv region. The announcement was made at the World Economic Forum in Davos, in the presence of high-ranking European Union officials, including European Commission President Ursula von der Leyen, Ukraine’s First Deputy Prime Minister Yuliia Svyrydenko, and Danish representatives.

Investing in Ukraine’s energy future

Valued at €450 million, the project will become the largest wind farm built in Eastern Europe in the last decade. According to the agreement, international banks will provide €370 million in loans, guaranteed by the state-owned Export and Investment Fund of Denmark (EIFO). A significant portion of this financing will be allocated for purchasing Vestas EnVentus V162-6.0 MW turbines.

The remaining project costs will be covered by DTEK’s own resources, reflecting the company’s commitment to advancing renewable energy in Ukraine.

Building resilience

• The first phase of the Tiligulska Wind Power Plant, launched in May 2023, consists of 19 turbines with a total capacity of 114 MW.
• The second phase will add 64 turbines, increasing the plant’s capacity by an additional 384 MW. 

Upon reaching full operational capacity, the Tiligulska Wind Farm will generate 1.7 TWh of electricity annually, providing enough electricity to power 900,000 Ukrainian homes and significantly contributing to the country’s renewable energy production.

The project is expected to reduce CO2 emissions by 1.7 million tonnes annually.

Construction timeline

The second phase of construction is set to begin in the first quarter of 2025 and will be completed by the fourth quarter of 2026.

Once fully operational, the Tiligulska Wind Farm will stand as a significant source of green energy for Ukraine, helping to lower greenhouse gas emissions while promoting energy security and sustainability.

Source: DTEK, Embassy of Denmark in Ukraine, Forbes.ua

• McGill and Partners, ARX, and FortuneGuard launch war risk reinsurance facility for commercial property assets in Ukraine

Global insurance broker McGill and Partners and Ukrainian insurer ARX, with support from the Ukrainian company FortuneGuard, have introduced an innovative war risk insurance programme designed specifically for companies operating in Ukraine. This first-of-its-kind offering combines advanced AI-powered technology with the expertise of international and local insurance markets to provide vital coverage for commercial property and investment projects in the region.

Comprehensive coverage for businesses

The new insurance product offers coverage for commercial properties and investment projects located more than 100 kilometers from active combat zones. With a per-project coverage limit of up to $50 million, the programme provides protection against damage caused by:

• Drone attacks
• Missile strikes
• Debris from air defence systems

However, certain risks are excluded from coverage, including damages caused by:

• Cyberattacks
• Biological, nuclear, or chemical weapons
• Looting and theft

This targeted coverage ensures businesses can protect key assets while adhering to international underwriting standards.

Source: McGill and Partners, Forbes.ua

• Ukrainian Startup LetsData secures $1.6M funding to combat information operations and synthetic identities

LetsData, a Ukrainian startup specializing in tracking, analyzing, and forecasting trends in the media space, has successfully closed a $1.6 million funding round. The funding round saw participation from prominent investors, including SMOK Ventures, Wayra, Tilia Impact Ventures, 1991 Ventures, Google’s Ukraine Support Fund, and Startup Wise Guys. Additionally, several angel investors, such as Pavla Bobosikova and Marty Krátký-Katz, contributed to the round.

This marks a significant milestone for the company as it seeks to expand its presence in the United States and Europe and enhance their technology to meet the surging demand for advanced InfoOps detection solutions.

Advanced AI-Powered Detection Technology

LetsData is revolutionizing InfoOps detection with its state-of-the-art semantic AI models, which process open-source data from over 100 million websites and social media platforms in more than 50 languages and regions. According to the company, LetsData’s solutions detect 80% more threats at their inception compared to traditional tools, enabling organizations to act quickly and decisively.

In two years of self-financing, the startup reached $1 million in ARR. The startup's technology is used by the Foreign, Commonwealth & Development Office (FCDO), British embassies, the NATO Armed Forces, as well as companies in the US, UK, and Europe.

Source: LetsData, Forbes.ua

• Switzerland and Ukraine strengthen partnership for reconstruction efforts

On 23 January, at the World Economic Forum Annual Meeting in Davos, Switzerland and Ukraine signed a Memorandum of Understanding (MoU) aimed at expanding the role of Swiss businesses operating in Ukraine in the country's recovery.

Swiss support for reconstruction projects

As part of the MoU, the Swiss State Secretariat for Economic Affairs (SECO) will allocate CHF 50 million to fund projects led by Swiss companies already operating in Ukraine. The funding will target key sectors of Ukraine's economy where Swiss expertise is most impactful, ensuring alignment with the Ukrainian government’s strategic reconstruction priorities.

Call for proposals and implementation timeline

SECO is set to begin the selection process for project proposals at the end of January 2025. The proposals will be jointly evaluated by the Government of Ukraine, SECO, and the Embassy of Switzerland in Ukraine, based on predefined criteria to ensure strategic alignment and maximum impact. Selected projects are scheduled to launch in July 2025.

This initiative forms part of Switzerland's 2025-28 country programme for Ukraine, which is currently in its final stages of development. The programme represents a total investment of CHF 1.5 billion, deploying various international cooperation instruments to support Ukraine.

Source: Ministry of Economy of Ukraine, State Secretariat for Economic Affairs of Switzerland

CCI France Ukraine special events

• Business delegation to Ukraine: focus on tech and innovation

We’re excited to invite you to join a delegation of French companies exploring Ukraine’s dynamic economic and tech ecosystem. Organized by French Tech Kyiv, CCI France Ukraine, Business France Ukraine, Ukraine Committee of the French Foreign Trade Advisors, and the Economic Section of the French Embassy in Ukraine with financial support from the French Tech Community Fund, this event offers a unique opportunity to uncover Ukraine’s business potential!

Why Ukraine?

1. Resilient IT sector

🚀Despite challenges, IT exports grew by almost 6% in 2022, underscoring the resilience and growth potential of this sector.

🖥 38% of Ukraine’s total services are computer services, making IT the largest exporter of services.

📈 The IT sector represents 11.6% of total exports of goods and services ranking second after food exports.

2. French tech companies leading the way

🚗 BlaBlaCar, with an R&D center and bus marketplace solution, has been in Ukraine since 2014.

🎮 Ubisoft, employing 800+ professionals in Kyiv, is at the forefront of gaming innovation.

📡 NJJ Capital (personal holding company of Xavier Niel, the founder of Free in France) recently acquired Lifecell and DataGroup-Volia, strengthening its presence in telecommunications and digital services.

What to expect:

• A deep dive into Ukraine’s tech ecosystem.
• Networking with top Ukrainian startups, tech leaders, and investors.
• Insightful sessions from the industry experts.
• B2B meetings and access to cutting-edge tech hubs.
• Exclusive contacts with Ukrainian governmental authorities and international financing providers.
• Personalized support from a team of experts to maximize your experience

Details

🗓 Dates: May 19–20, 2025

💶 Price: €1,850 (excl. VAT) from Warsaw for one participant per company, with the option to add an additional participant for €800.

Includes: travel (bus and train), accommodation, and meals.

📋Provisional programme for the visit: View here

Don’t miss this chance! Express your interest by March 15 via the link.

• BG2V law firm organizes business conference on Ukraine’s reconstruction

For the fourth time, the Ukrainian Department of the law firm BG2V, co-led by Oksana Zoppini and Roland Guény, is organizing a business conference on public financing and implementation of reconstruction projects in Ukraine.

The conference will also provide an opportunity to discuss the 200 million Ukraine Fund, which aims to finance several projects to rebuild Ukraine's critical infrastructure in the coming months.

Speakers and institutional support

The conference is supported by the Embassy of Ukraine in France and will feature speakers from key French and international institutions:

• French Treasury
• Agence Française de Développement (AFD)
• International Finance Corporation (IFC), a member of the World Bank Group

Additionally, Pierre Heilbronn, the Special Envoy of the French President for Ukraine’s relief and reconstruction, and his team will also be present.

Event details

Date & time: March 6, 2025, at 19:00 CET

Venue: BG2V, 40, rue La Boétie, Paris 75008

The conference will be followed by a cocktail reception.

To confirm your attendance, please contact Oksana Zoppini by email (zoppini@bg2v.com) or by phone on +33 (0) 6 30 13 99 43, indicating if you will be accompanied.