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Newsletter #23 Reconstruction Ukraine - April 2025

April 2025 was a difficult month for Ukraine, marked by intensified attacks on cities that resulted in civilian casualties and destruction of infrastructure. With prospects for a peace agreement still uncertain, international support remains essential to sustaining Ukraine’s defense and advancing its reconstruction efforts

In this edition, we focus primarily on Ukraine’s economic situation in the fourth year of the full-scale war and the state of its human capital, with a particular emphasis on recent research concerning Ukrainian refugees and their potential return.

You’ll also find:

• a review of the latest steps taken by Ukraine to deregulate business;

• key highlights from the U.S.-Ukraine Economic Partnership Agreement to establish the Reconstruction Investment Fund;

• a new financial instrument from IFC and UKRSIBBANK to support Ukrainian mid-sized businesses;

• fresh funding from the EIB to develop Ukraine’s rail infrastructure;

• recent initiatives aimed at strengthening the country’s energy sector;

• a new Dutch venture capital initiative investing in Ukrainian defense technologies;

• a strategic partnership between Ukrainian and South Korean companies to boost domestic float glass production.

Enjoy the read!

Ukraine Reconstruction: Key Figures

• Macro

In the fourth year of the war, Ukraine’s economy is still struggling with the serious impact of the full-scale invasion. The beginning of 2025 was particularly challenging, marked by intensified missile strikes on gas production facilities and a temporary slowdown in export activity in February.

However, the situation is gradually stabilizing. Looking ahead, several factors are expected to support economic recovery: an anticipated increase in agricultural yields, a reduction in electricity shortages, robust defense procurement, investment in reconstruction, and resilient consumer demand. Below is a more detailed overview of Ukraine’s key macroeconomic indicators.

• 1.1% – GDP growth since the beginning of the year as of March 2025, according to the Ministry of Economy of Ukraine. The NBU forecasts GDP growth to accelerate to 3.1% in 2025.

• 14.6% – inflation rate in March 2025. The NBU forecasts that by the end of 2025 it will slow to 8.7%, and in 2026 it will return to the NBU’s target of 5%.

• $42.4 billion – Ukraine’s international reserves as of April 1, 2025.

• $55 billion – expected international aid in 2025. The budget deficit is projected to decrease from 19% of GDP in 2025 to 7% in 2027.

• $118 billion – total foreign financial assistance to Ukraine since the beginning of the full-scale invasion, according to the Centre for Economic Strategy.

• 12.1% unemployment rate in Ukraine as of March 2025— the lowest level since the start of the full-scale war.

Despite ongoing challenges, Ukraine’s economy shows signs of resilience and gradual recovery in 2025.  Continued recovery will rely on sustained aid, effective reconstruction, and adaptive economic policy amid the ongoing war.

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

• Human Capital

One of the most pressing challenges in the context of Ukraine's recovery and reconstruction is the return of citizens who have moved abroad. Ensuring the return of Ukrainians is not only a demographic issue, but also a critical factor for the restoration of human capital and the country's long-term economic sustainability.

In March, the Centre for Economic Strategy published the Fourth Wave of Research on Ukrainian Refugees, once again thoroughly analyzing the situation of Ukrainian refugees, their current living conditions abroad, and the key factors influencing their willingness and ability to return home.

• 5.2 million Ukrainians (+0.3 million over the year) were residing outside Ukraine as of the end of November 2024.

• 43% of Ukrainians currently abroad plan to return to Ukraine. 77% plan to do so after the war

• 1.7 to 2.7 million Ukrainians may remain outside Ukraine after the war ends

• 56% of Ukrainians abroad were engaged in the labor as of December 2024, up from 45% in January 2024.

• 74% of Ukrainian refugees have higher or incomplete higher education.

• 5.1% to 7.8% of pre-war GDP  is the estimated annual economic loss to Ukraine due to non-return of Ukrainians.

Thus, with the right policies, incentives, and conditions for safe reintegration, Ukraine has the potential to bring back a significant portion of its displaced population. Their return could become a powerful driver of economic revitalization and accelerate the country’s long-term recovery.

Source: Centre for Economic Strategy

Key developments for Ukraine’s Reconstruction

• Ukraine and the United States signed agreement to establish Reconstruction Investment Fund

On April 30, 2025, Ukraine and the United States signed an agreement to establish the Reconstruction Investment Fund, a key financial mechanism aimed at attracting investments for Ukraine’s economic development and deepening strategic cooperation between the two countries. This economic partnership positions two countries to work collaboratively and invest together to ensure that mutual assets, talents, and capabilities can accelerate Ukraine’s economic recovery.

The agreement was signed by Yuliia Svyrydenko, First Deputy Prime Minister and Minister of Economy of Ukraine, and Scott Bessent, U.S. Secretary of the Treasury.

Purpose of the Fund

The Reconstruction Investment Fund will serve as a critical tool to enable financing for critical projects in the development of natural resources, while also fostering innovation, technological development, and recovery. The United States will assist in mobilizing both private and public investment from international funds, companies, and governments supporting Ukraine. The U.S. companies will gain access to new business opportunities in Ukraine’s natural resource development and post-war reconstruction sectors.

Key guarantees for Ukraine

The agreement provides several key guarantees for Ukraine, as outlined by the Ministry of Economy of Ukraine:

• Alignment with the Constitution of Ukraine and EU accession path. The Agreement fully complies with Ukrainian legislation and international obligations.

• Full control over national resources. Ukraine retains exclusive ownership of all subsoil, territorial waters, and natural resources. Only Ukraine determines the conditions and locations for resource development.

• Preservation of state ownership. Ukrainian state-owned enterprises remain state property. The Agreement does not affect privatization processes.

• Optimal legislative adjustments. The Fund's operation requires only limited amendments to the Budget Code of Ukraine. The Agreement itself will be subject to ratification by the Ukrainian Parliament.

Operational framework of the Fund

The Ministry also clarified how the fund will operate:

• U.S. Contributions: The United States will contribute to the Fund either through direct financial input or through new military assistance. The Agreement focuses on further, not past U.S. military assistance.

• Ukraine's Contributions: Ukraine will contribute 50% of future revenues from new royalties (i.e., newly issued licenses for critical minerals, oil, and gas exploration). Existing projects or budgeted revenues are excluded.

• Exclusive Investments in Ukraine: The Fund’s resources will be invested exclusively in Ukraine—either in extraction projects or infrastructure reconstruction.

• Profit Reinvestment: For the first 10 years, profits will be fully reinvested into Ukraine’s economy. After this period, profits may be distributed between the partners.

• Joint governance: The Fund will be managed on a parity basis, with Ukraine and the U.S. holding equal decision-making power.

• Investment and Technology Transfer Support: The U.S. will support additional investment and technology transfers into Ukraine. The Fund is backed by the U.S. government through the Development Finance Corporation (DFC), which will facilitate the attraction of capital and technologies from investors in the U.S., the EU, and other allied countries.

• Technology transfer is one of the key elements of the Agreement, ensuring Ukraine not only receives investment but also access to innovation.

• Tax exemptions: Fund contributions and income will be exempt from taxation in both Ukraine and the United States.

This initiative marks a new phase in the U.S.-Ukraine economic collaboration, combining investment, innovation, and international partnership to support Ukraine’s sustainable recovery and future resilience.

Source: Ministry of Economy of Ukraine, U.S. Department of the Treasury

• Ukraine moves forward with business deregulation: over 200 regulatory instruments abolished

On April 8, 2025, the Cabinet of Ministers of Ukraine took another significant step in advancing business deregulation by abolishing more than 200 state regulatory instruments. This accounts for nearly 45% of the total instruments recommended for cancellation by the Interdepartmental deregulation working group, following a comprehensive review of Ukraine’s regulatory framework.

Key decisions by the government

The Cabinet approved a draft resolution developed by the Ministry of Economy, which declares 43 regulatory acts and provisions in 30 additional government decisions as no longer valid. In total, the resolution abolishes 182 regulatory instruments, including:

• 150 instruments related to healthcare and sanitary control.

• 17 instruments within the agro-industrial sector.

• 15 instruments in areas such as labour protection, trade, construction, fire safety, and foreign economic activity.

Examples of abolished instruments

The cancelled instruments include:

• Sanitary-epidemiological service permits for selling goods outside of business premises.

• Sanitary transport passports.

• Assessments on the feasibility of constructing health facilities.

• Permits for manufacturing new types of perfumery and cosmetic products.

• Approvals for business repurposing projects and others.

Since its launch, the Interdepartmental working group on deregulation has reviewed 1,323 business-related regulatory instruments, of which:

• 584 were recommended for simplification,

• 456 for cancellation.

With the latest government decision, a total of 352 instruments have now been officially abolished.

Source: Ministry of Economy of Ukraine

International Benchmark

• IFC and UKRSIBBANK launch €66 million risk-sharing facility to support Ukrainian mid-sized businesses

On April 28 IFC and UKRSIBBANK, owned by BNP Paribas and the EBRD, announced a new risk-sharing facility (RSF), totaling €66 million, to address the critical financing needs of medium-sized and larger corporates (midcaps) in Ukraine. The facility aims to help these businesses grow while preserving and creating jobs, and delivering essential goods and services.

Bridging the financing gap for midcaps

RSFs allow IFC’s partner financial institutions to share the credit risk on portfolios of eligible loans and other assets, helping to support lending, particularly in volatile markets. The new RSF will cover a portfolio of new loans and other credit instruments, enabling UKRSIBBANK to scale up lending to eligible midcaps in sectors such as agribusiness, manufacturing, trade, and logistics.

Promoting energy security and sustainability

Approximately 20 % of the RSF will be dedicated to financing small-scale renewable energy generation and energy efficiency projects. These investments are designed to:

• Strengthen Ukraine’s short-term energy generation capacity,

• Enhance long-term system resilience,

• Contribute to a reduction of 34,080 tons of CO₂ equivalent emissions per year.

Strong international backing

Under the agreement:

• IFC will assume 50 % of the credit risk, up to €33 million.

• This commitment is backed by a partial guarantee from the government of France.

• Additional financial support is being provided by the United Kingdom’s Foreign, Commonwealth & Development Office to incentivise midcaps to invest in long-term, sustainable initiatives.

This investment represents IFC’s sixth risk-sharing transaction in Ukraine since Russia’s full-scale invasion began in 2022. It is expected to unlock up to $100 million in new financing for midcaps through UKRSIBBANK.

In total, IFC’s RSF program in Ukraine is projected to generate approximately $1 billion in financing for small and medium-sized enterprises and midcaps.

Source: IFC, UKRSIBBANK

• EIB boosts Ukraine’s cross-border rail connectivity with €50 million investment

The European Investment Bank (EIB) and the government of Ukraine have signed a major agreement to strengthen Ukraine’s rail infrastructure at key border crossings with EU countries. The deal allocates €50 million in EIB financing to Ukrainian Railways (Ukrzaliznytsia) to modernise rail connections with Poland, Slovakia, Hungary, and Romania, contributing to the EU-Ukraine Solidarity Lanes initiative.

Financing and institutional support

The investment package is supported by a combination of financial instruments and technical assistance:

• EU guarantee under the Ukraine Facility: backed by an EU guarantee,the investment will improve freight operations and strengthen Ukraine’s trade and transport links with the European Union.

• Co-Funding via the Connecting Europe Facility (CEF).

• Advisory Support from JASPERS (Joint Assistance to Support Projects in European Regions), a joint initiative of the European Commission and the EIB.

Scope of the infrastructure upgrade

The funding will support the modernisation of border infrastructure and nearby railway sections on the Ukrainian side. Key components of the upgrade include:

• Repairs to worn-out tracks

• Relocation of wagon inspection

• Reconstruction of an intermodal terminal

• Installation of equipment, such as cranes

These improvements are designed to increase the volume and speed of goods moving across borders.

While the primary focus is on enhancing freight transport, the upgraded rail lines will also benefit passenger services. The improvements will support safer, faster, and more efficient cross-border travel for both freight and passengers.

This financing is part of the EIB’s broader €150 million support for modernising Ukraine’s railways. In 2022, the first €100 million was provided as part of the EIB’s Ukraine Solidarity Urgent Response to finance emergency repairs and restore essential rail services. It was complemented by a €6.7 million EU grant to address urgent wartime needs.

Source: Ministry for Development of Communities and Territories of Ukraine, EIB

• €157 million finance package to boost Ukraine’s renewable energy security

Concern Galnaftogaz (OKKO) has signed an agreement to raise €157 million for the construction of a wind farm in the Volyn region. This project marks a major step in strengthening Ukraine’s energy security and accelerating its shift toward renewable energy.

Financing of the project

The total cost of the project is estimated at €225 million. Galnaftogaz will cover around €68 million from its own funds, while the remaining €157 million will be provided through international financing. The funding is distributed as follows:

• EBRD: €60 million

• IFC: €60 million

• BSTDB: €37 million

The funds will be allocated to Wind Power GSI Volyn LLC and Wind Power GSI Volyn 3 LLC, which will be responsible for the project implementation.

Project impact

Once completed, the new wind power plants will have a total capacity of 147 MW. They are expected to:

• Generate at least 380 GWh of renewable, zero-carbon electricity each year.

• Save around 245,000 tons of carbon dioxide emissions annually.

This is one of the first major private greenfield energy projects launched in Ukraine since the Russian invasion in 2022. It demonstrates strong international confidence in Ukraine’s future and plays a crucial role in building a more sustainable and resilient energy sector.

With the support of major global financial institutions and governments, Galnaftogaz’s initiative will help Ukraine secure cleaner energy, strengthen its energy independence, and move closer to its climate goals.

Source: IFC, EBRD, Forbes.ua

• The EBRD has extended a risk coverage instrument to Raiffeisen Bank to support €100 million in strategic energy investments

The European Bank for Reconstruction and Development (EBRD) is reinforcing Ukraine’s energy security by extending an unfunded portfolio-risk-sharing facility to Raiffeisen Bank Ukraine (RBU). This initiative will unlock €100 million in energy-related investments.

Raiffeisen Bank Ukraine becomes the latest financial institution to join the EBRD’s Energy Security Support Facility (ESSF), alongside Ukrgasbank, PrivatBank, and Oschadbank.

Objective of the mechanism

Under the ESSF, EBRD’s portfolio guarantee will partially cover the risk on a total of EUR 100 million of sub-loans extended by RBU to micro, small and medium-sized enterprises (MSMEs) and eligible corporate and household clients for the implementation of decentralised energy generation, storage and energy efficiency measures critical for Ukraine’s energy security.

Targeted support

• Technical assistance: all ESSF sub-borrowers will receive technical assistance with structuring and implementation of their investments

• Green Transition Focus: At least 70% of sub-loans under this facility will support projects aligned with the Green Economy Transition (GET) criteria.

• Up to 20 per cent of the total sub-loans will support financing of the long-term capital investments of MSMEs to upgrade their technologies and equipment to European Union (EU) standards under the EU4Business-EBRD Credit Line. Eligible sub-borrowers will receive EU-funded technical assistance and grant support.

• Residential Investments: Up to 2% of sub-loans will be allocated to households and housing associations, which will also receive grant support from the EBRD Crisis Response Special Fund (CRSF).

Grant incentives and war-related support

Eligible sub-borrowers across all categories will receive grant support covering 10–30% of investment costs. Higher incentives will be directed toward:

• War-affected businesses and households, including those impacted by asset destruction, loss, or relocation due to the war

• Projects supporting the reintegration of war veterans, persons with disabilities, internally displaced persons, and those located in acutely war-affected areas

The EBRD facility will be supported by partial first-loss risk cover guarantees extended by France and the European Union’s Ukraine Investment Framework (UIF).

This new partnership between the EBRD and Raiffeisen Bank Ukraine marks a significant step in strengthening Ukraine’s energy resilience. By mobilising €100 million in targeted investments and offering tailored support to those most affected by the war, the initiative not only addresses urgent energy needs but also contributes to the country’s long-term green and economic recovery.

Source: EBRD, Raiffeisen Bank Ukraine

Focus on the private sector

• NUNC Capital launches €20 million venture building initiative to support Ukrainian defense innovation

NUNC Capital, a Netherlands-based venture-building investment firm, has announced the launch of a €20 million early-stage Venture Building Initiative aimed at investing in emerging Ukrainian defense technologies. This initiative aims to create a strategic bridge between Europe's defense markets and Ukraine's innovative defense technology ecosystem.

Investment focus

The Venture Building Initiative will concentrate on six strategic technology domains with high innovation potential:

• Electronic warfare

• Unmanned systems

• Smart materials

• Sensors & payloads

• GPS-denied communication

• Navigation technologies

This targeted approach addresses specific areas where European strategic autonomy requires strengthening while leveraging Ukrainian expertise developed through operational experience.

About NUNC Capital

NUNC Capital is a venture-building investment firm focusing on defense technology. Since 2013 NUNC Capital has successfully established a niche portfolio of defense companies operating in critical domains such as advanced materials, unmanned systems, strategic sourcing & supply and mission-critical software.

Source: NUNC Capital

• South Korea’s ITOXI invests into two float glass plants in Ukraine

On April 16, Ukrainian company City One Development and South Korean conglomerate ITOXI Corp.signed a long-term strategic memorandum of cooperation aimed at advancing glass production in Ukraine, a critical sector for the country’s industrial revival and economic development.

Scope of the partnership

Under the memorandum, the first stage of the partnership includes the construction of two high-tech glass manufacturing plants:

• One in the "Misto Skla" industrial park in Berezan, Kyiv region

• Another in the "Galicia" industrial park in Kalush, Ivano-Frankivsk region

These facilities will introduce cutting-edge production technologies, help create new jobs, and strengthen Ukraine’s position as a producer of high-quality float glass for domestic and export markets.

About ITOXI Corp.

ITOXI Corp., a multidisciplinary investment group from South Korea, is known for managing major infrastructure and industrial projects worldwide.

Its decision to invest in Ukrainian glass manufacturing reflects strong confidence in Ukraine’s industrial potential, even amid ongoing recovery from war.

Source: City One Development, ITOXI Corp.

CCI France Ukraine initiatives

• CCIFU unveils tool to support businesses in Ukraine's reconstruction

As Ukraine embarks on a concrete phase of reconstructing its territories and infrastructure, the mobilization of European and French companies has become more crucial than ever. This mobilization requires reliable and field-adapted tools to effectively support reconstruction efforts.

LET'S REBUILD UKRAINE: an Innovative tool

In this spirit, the Franco-Ukrainian Chamber of Commerce and Industry (CCIFU) has developed LET'S REBUILD UKRAINE, a study aimed at facilitating and securing the development of European companies in Ukraine's building and construction sector. Despite the war, the Ukrainian economy demonstrates remarkable resilience, with projected growth of 5% in 2024. Local sector actors will play a key role in reconstruction projects, with priority access to markets and financing. Therefore, it is essential for European companies to connect with these actors today.

Benefits of LET'S REBUILD UKRAINE

• Updated Mapping: Over 250 private Ukrainian companies are listed, covering the entire value chain, from manufacturers to construction companies.

• Tool for Suppliers and Investors: Designed for suppliers of products and solutions, investors, or any company seeking local partners.

• Gateway to the Ukrainian Market: A concrete solution for accessing the Ukrainian market, even in a context where on-site prospecting remains challenging.

Our ambition

Our goal is to save time and increase visibility for European companies by providing a clear vision and qualified contacts. We would be delighted to present this tool in more detail and discuss how it can address your challenges or those of your partners.

For any questions or to schedule a discussion, please feel free to contact: Pascal Hieronimus phieronimus(@)ccifu.com.ua

Discover the first pages of the study HERE

• Save the date: Webinar - “Fostering partnerships in Ukraine: economy, reconstruction, and business opportunities”

The French-Ukrainian Chamber of Commerce is pleased to invite you to its upcoming webinar  “Fostering partnerships in Ukraine: economy, reconstruction, and business opportunities”.

 Date:  Tuesday, May 27, 2025,  11:00 AM (Kyiv Time) / 10:00 AM (Paris Time)
 

Online – ZOOM
 

Webinar language: English

As the war in Ukraine enters its fourth year, the country continues to face numerous challenges. According to the latest RDNA 4 assessment, the estimated cost of reconstruction stands at 524 billion USD. Against this backdrop, many opportunities are emerging for foreign businesses that are ready to invest for the long term and actively contribute to the country’s recovery.

Speakers:

• Carlos de Cordue, Administrator of CCI France Ukraine, Chairman of the Management Board of Credit Agricole Ukraine

• Isabella Mascolo, International Relations Expert, Business Partnership Platform

• Yuliia Mazana, International Cooperation Lead, Business Partnership Platform

During the webinar, experts will cover the following topics:

• An update on Ukraine’s current economic situation

• Key sectors in the reconstruction process and existing financial mechanisms

• Presentation of a new business partnership platform designed to connect international companies with reliable Ukrainian partners
   

This webinar will provide a strategic overview of Ukraine’s post-conflict reconstruction and help you identify concrete opportunities for Franco-Ukrainian cooperation.

Please register by Monday, May 26 at 18:00.

• Save the date: Conference - “Rebuilding in practice: projects, tools, and partnerships to support Ukraine”

The French-Ukrainian Chamber of Commerce and Industry is pleased to invite you to a special conference “Rebuilding in practice: projects, tools, and partnerships to support Ukraine”.

Date:  Monday, June 16, 2025

Location: Paris

Language: French

Speakers:

• Pierre Heilbronn, Special Envoy of the President of the French Republic for Ukraine's Reconstruction

• Francis Malige, Managing Director, Head of Financial Institutions Business Group at the EBRD.

Meeting objectives:

• Identify concrete examples of successful reconstruction projects involving French or European players;

•  Understand the conditions for feasibility: financing, insurance, local partners, administrative support, etc;

• Give French companies a clear view of current opportunities (by sector, by region);

• Share feedback from institutions (EBRD, France) to reduce risks and secure commitments;

•  Encourage the emergence of new cooperative ventures, particularly in the energy, infrastructure, agribusiness, health, training and digital sectors.

This is a unique opportunity to engage with key stakeholders and explore how your business can actively contribute to Ukraine’s reconstruction and long-term development.

• Together, let’s support the UNBROKEN Center alongside Danone

At the initiative of one of our members, Danone, we are launching a fundraising campaign in support of the UNBROKEN National Rehabilitation Center in Lviv.

UNBROKEN is a project that the Franco-Ukrainian Chamber of Commerce and Industry (CCIFU) has been actively supporting for the past two years. It embodies Ukraine’s commitment to providing comprehensive medical, psychological, and social care to war-wounded individuals, both military and civilian. Its new rehabilitation unit, specializing in severe spinal injuries, opened in November 2024 and has already treated over 50 patients.

Today, the center needs our help to complete construction and purchase the specialized equipment required for this unit. Together with Danone, let’s rally our business community to provide meaningful and lasting support.

A donation certificate combining all donations will be officially presented to UNBROKEN during our major charity evening on June 26, in the presence of donors, or on their behalf if they are unable to attend.

If your company — or you personally — would like to contribute to this initiative, don't hesitate to get in touch with Natalia Demianchuk at [ndemianchuk(@)ccifu.com.ua] so we can include your donation in the total amount.

Every contribution matters. Together, let’s support those who are rebuilding their lives.

• Podcast

In the 21st episode of Season 2 of our podcast series dedicated to Ukraine’s resilience and reconstruction, Sébastien Gobert speaks with Martin Duplantier, architect and urban planner, and founder of Martin Duplantier Architectes. Martin shares his expertise and vision for the post-war reconstruction of Ukrainian cities.

Key quotes from the episode:

“Transforming Ukraine into a model of sustainable development is an opportunity we must seize for the future.”

“France has a key role to play in Ukraine’s reconstruction thanks to its expertise in urban planning and architecture.”

Topics covered:

• The challenges and opportunities for urbanism in post-war Ukraine

• The role of architecture and urbanism in rebuilding Ukrainian cities

• The need to modernize Soviet-era standards to foster innovation

• How France can support Ukraine in this transformation

• The importance of international partnerships for sustainable and lasting reconstruction
   

A thought-provoking episode for anyone interested in urban reconstruction, architectural innovation, and international cooperation for a sustainable future in Ukraine.

Link to the PODCAST