Support to Ukraine’s Reconstruction and Economy Trust Fund (SURE TF)

What is MIGA’s Response to the War in Ukraine? 

Ukraine is in critical need of private sector participation to bolster its humanitarian efforts during the ongoing war, and recovery and reconstruction thereafter. The World Bank in its Rapid Damage and Needs Assessment Report for the period February 2022-23 (“RDNA Report”) estimates that around US$5 billion in private sector and SoE investments are required in 2023 alone towards immediate humanitarian and initial reconstruction efforts in Ukraine. Realizing such magnitude of private investments in Ukraine requires sustaining and catalyzing the private sector through de-risking solutions. 

The government of Ukraine, multilateral development banks, private investors and financiers alike have requested MIGA’s involvement in the country, to de-risk private sector investment with a particular focus on MIGA’s War and Civil Disturbance cover. MIGA, which promotes cross-border investment in developing countries by providing guarantees (political risk insurance and credit enhancement) to investors and lenders, is well positioned to offer such solutions.  

MIGA will adopt a phased approach toward supporting the private sector in Ukraine. In the immediate term during the ongoing war, MIGA will (i) provide trade finance guarantees and short-term loan capacity for imports of essential goods, working in partnership with IFC and EBRD; (ii) support liquidity and working capital for small and medium-sized enterprises in agribusiness, fuel, food, health, and logistics through PRI guarantees to international banks with branches in Ukraine; and (iii) provide PRI selectively for real sector projects.  

MIGA’s trade finance guarantees will support trade with Ukraine and ensure that urgent imports of drugs, food, fuel, and fertilizer continue. MIGA’s PRI guarantees 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. MIGA’s guarantees in the real sector will include support to the relocation of projects from the conflict-affected eastern parts of Ukraine to more secure areas within Ukraine. 

Following stabilization of conflict either entirely or in parts of Ukraine, MIGA will provide political risk insurance to international lenders and sponsors for reconstruction efforts in critical sectors including transport, housing, and energy.  

What is the SURE TF? 

Given the heightened risks of operating in Ukraine during the ongoing war, MIGA uses the Support for Ukraine’s Reconstruction and Economy Trust Fund (SURE TF) to enable its guarantee issuance in Ukraine. MIGA blends donor financing from the SURE TF with risk exposure on its own books, and crowds in public and private reinsurance where available, to deploy guarantees in support of Ukraine. The mix of public and private capacity will vary and evolve depending on the intensity of conflict in Ukraine and the stage of reconstruction.  As of March 1, 2023, private sector reinsurance capacity is virtually non-existent, and therefore MIGA’s efforts have been directed at crowding-in public sector reinsurance toward its guarantees.      

MIGA expects the SURE TF, which was established with Japan’s critical anchor contribution of $23 million, to grow to $300 million through contributions from additional donors. MIGA is also actively fundraising toward this end. 

How is the SURE TF used? 

MIGA deploys the SURE TF to support its projects in Ukraine. During the ongoing war in Ukraine, the SURE TF will be used as a first-loss layer or towards reinsurance for MIGA’s guarantees in the country.  

What are SURE TF’s Benefits? 

In the context of ongoing conflict and absence of private reinsurance in Ukraine, MIGA will blend donor financing from the SURE TF with risk exposure on its own books to help crowd in the available public reinsurance, and deploy guarantees in support of Ukraine. The SURE TF’s risk capital solutions also help make MIGA’s guarantees more available and affordable, particularly for smaller investors in Ukraine.