KfW increases support for business, energy system and municipal infrastructure development in Ukraine

Deputy Minister of Finance of Ukraine Olga Zykova, Deputy Minister of Finance for European Integration Yuriy Draganchuk and KfW Director Ukraine and Moldova Lorenz Gessner discussed the implementation of existing projects and plans for further cooperation.

"The German government and KfW are making a significant contribution to the development and recovery of the energy sector, infrastructure, and small and medium-sized businesses in Ukraine. Currently, the portfolio consists of eight investment projects, which is the largest for the entire period of cooperation and reaches EUR 265.1 million," the Deputy Minister of Finance said.

In addition, Olga Zykova noted that most of the support from KfW is provided in the form of grants, which is extremely important in the context of a full-scale war and limited resources. The parties discussed the preparation of new grant agreements to support the energy system and municipal infrastructure under the Ukraine Facility. 

KfW's financial assistance is aimed at developing small and medium-sized businesses, supporting the energy sector, reconstruction and energy saving, restoring social and critical infrastructure, water supply and sewage. 

"A prime illustration of support for small and medium-sized enterprises is the state program "Affordable Loans 5-7-9%" supported by KfW which provides concessional lending to businesses and promotes their development even in the conditions of a full-scale war. The program is being implemented by the Business Development Fund which is currently in the process of institutionalization based on the model of the KfW", said Deputy Minister of Finance of Ukraine for European Integration Yuriy Draganchuk. 

Yuriy Draganchuk emphasized that in the context of electricity shortages due to the systematic shelling of Ukraine's critical energy infrastructure by russia, the Business Development Fund (BDF) is increasing its focus on supporting the energy independence of citizens and businesses in accordance with the priorities set by the President of Ukraine.

Since 2022, KfW has played a crucial role in supporting the stability of Ukraine's energy sector. Since February 2022, agreements have been concluded with KfW to support the energy sector for EUR 261.1 million, of which EUR 174.1 million was provided in the form of grants.

The parties also discussed the results of the Ukraine Recovery Conference held in Berlin in June 2024. At the conference, KfW and Ukrainian side signed agreements on further cooperation with KfW:

• Minister of Finance Sergii Marchenko signed a Guarantee Agreement envisaging a EUR 30.4 million loan from KfW to NPC Ukrenergo to improve the reliability of Ukraine's energy infrastructure.

• Minister of Finance of Ukraine and Federal Minister of Germany signed a Joint Declaration of Intent to strengthen cooperation for the development of institutional capacity, coordinated by the KfW. The Joint Declaration envisages support to the Ministry of Finance of Ukraine for the supervision and coordination of national institutions for the development and strengthening of the institutional capacity of the Ministry of Finance of Ukraine. 

In addition, during the Conference this was agreed on several significant initiatives that form a comprehensive package of assistance for the development of a modern and sustainable infrastructure to support small and medium-sized enterprises (SMEs) in Ukraine. In particular, these include the institutional development of the Business Development Fund (Vision: Business Development Fund 2.0) and the establishment of the SME Resilience Alliance.

Following the meeting, the parties agreed to continue active work within the existing KfW project portfolio and to expand it, including by structuring projects with new beneficiaries.