WB approves $1.5B loan to Ukraine under Japanese guarantees

The World Bank’s Board of Executive Directors has approved the $1.5 billion Ukraine Relief and Recovery Development Policy Loan (DPL), Report informs referring to the WB website.

This loan is guaranteed by the Government of Japan under the Advancing Needed Credit Enhancement for Ukraine Trust Fund (ADVANCE Ukraine) and forms an integral part of the international support package for Ukraine to meet its financing needs in 2023.

The lending operation will support three main areas of government reforms to mitigate the impacts of Russia’s invasion. First, it will help to address the needs of the newly poor and displaced because of the war by providing relief to households. Second, it will support reforms to enhance the transparency and accountability of public resources expenditures. Third, it will help markets to function better during and after the war.

The loan will support the strengthening of Ukraine’s social protection system to provide relief for the poorest and the most vulnerable by enabling reforms that remove potential exclusions for internally displaced persons (IDPs) in the Housing and Utility Subsidy program and to ensure adequate and effective pension administration for citizens.

The loan will also support reforms that increase the accountable and transparent use of public resources. For example, the development policy loan will fund reforms to establish a damaged or destroyed property register to enable compensation payments and to guide the reconstruction of housing in Ukraine. It will also help strengthen the public procurement system and improve the country’s tax reporting framework to curb tax evasion and avoidance.

Finally, the loan will bolster the ability of markets to function during wartime and to eventually contribute to economic recovery through reforms that target land, energy, and financial markets. Among other things, this will improve reporting of land transaction prices, mitigate corruption risks in public land privatization processes, enhance cost recovery in wholesale electricity markets, and strengthen financial sector stability.