MIGA and Japan Partner to Support Ukraine
WASHINGTON, February 23, 2023 – The Multilateral Investment Guarantee Agency of the World Bank Group (MIGA) is launching a new initiative to address humanitarian efforts and support economic activity and reconstruction in war-torn Ukraine, with the inaugural contribution agreed to by the government of Japan. The contribution comes on the one-year anniversary of the Russian invasion of Ukraine.
Japan’s critical contribution of $23 million is the first to MIGA’s Support for Ukraine’s Reconstruction and Economy (SURE) Trust Fund. The fund, which MIGA expects to grow to $300 million through contributions from additional donors, will allow MIGA to provide trade finance guarantees, insurance on bank reserves during the conflict, and political risk insurance to support reconstruction after the war.
Addressing a crisis of such magnitude requires, apart from grants and loans to the government of Ukraine, the delivery of high-leverage solutions that enable private sector investment toward the crisis response, including reconstructing infrastructure and preserving economic activity. MIGA, which promotes cross-border investment in developing countries, is well positioned to offer such solutions.
The trade finance guarantees will support trade with Ukraine and ensure that urgent imports of drugs, food, fuel, and fertilizer continue. The insurance on reserves will allow for increased lending by international bank subsidiaries in Ukraine, which will support essential liquidity in the economy, especially for small businesses that are under pressure due to the war.
After the fighting ends and Ukraine is stabilized, the SURE Trust Fund will provide political risk insurance to international lenders and sponsors for reconstruction efforts in critical sectors including transport, housing, and energy. These guarantees will jump-start the rebuilding and reconstruction that will be required to resuscitate Ukraine’s economy and end the ongoing humanitarian crisis.
“MIGA is extremely grateful for the government of Japan’s generous contribution today, which launches MIGA’s SURE Trust Fund for Ukraine,” said Hiroshi Matano, Executive Vice President of MIGA. “MIGA has extensive experience in Ukraine and in providing support in fragile and conflict-affected contexts. With this expertise, Japan’s funds and those of additional donors will allow MIGA to support humanitarian and economic relief during the war and begin to rebuild Ukraine afterward.”
“Japan stands in solidarity with Ukraine and is glad to inaugurate this important means of catalyzing private sector investment in the country,” said Toru Oe, Director of the Multilateral Development Banks Division at Japan’s Ministry of Finance. “MIGA’s guarantees will help provide a critical value add to Ukraine in that they address a vital need to support the survival of Ukraine’s private sector during the ongoing war and necessary private sector engagement during post-conflict reconstruction. Japan highly appreciates MIGA’s expertise in mobilizing private capital and operation in the region, as well as fragile and conflict-affected countries. We encourage other donors to join us in enabling MIGA to offer guarantees that will help Ukraine both during the war and after peace is restored.”
The ongoing conflict in Ukraine, which began one year ago today, is having far-reaching human and economic impacts in the country, including increased food insecurity and shortages of essential goods. The World Bank estimates Ukraine’s economy contracted at least 35% in 2022, with an additional eight million Ukrainians living in poverty and a 15-year setback to poverty reduction goals. Half of Ukrainian business have shut down and the other half are operating well below capacity. Trade has been severely disrupted due to damaged transits and disruption to access to the Black Sea.
About MIGA
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping to mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war and civil disturbance; and offering credit enhancement to private investors and lenders.
Since its creation, MIGA has issued nearly $70 billion in guarantees across 122 developing countries in support of nearly 1,000 projects.
Contacts:
In Washington:
Elizabeth Howton, (202) 458-5922, ehowton@worldbankgroup.org
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