Attracting private capital for reconstruction of Ukraine requires solving the issue of insurance - Dombrovskis

  • 2023-06-22
  • LETA/TBT Staff

LONDON - Currently, the main task of politicians is to involve the private sector in the reconstruction of Ukraine, therefore one of the most important issues at the conference on the reconstruction of Ukraine is the issue of so-called war insurance, Executive Vice President of the European Commission (EC) Valdis Dombrovskis (New Unity, JV) emphasized to LETA on the sidelines of the Ukraine Reconstruction Conference.

"It is clear that investing in a country or conducting business with a country that is at war is very risky. Therefore, solving this insurance issue will significantly improve the involvement of the private sector," Dombrovskis believes.

Although Latvia has allocated 1.3 percent of gross domestic product (GDP) to support Ukraine and wants to continue to provide active support to Ukraine, the work to ensure that Latvian companies are active and able to be even more involved in the reconstruction process of Ukraine returns to the same war insurance issue, the politician assessed.

According to him, work on this insurance has already started. "That is why we will support an important pilot project of the European Bank for Reconstruction and Development (EBRD), for which the European Union (EU) will also provide its support in the form of guarantees - this project requires financing in the amount of 150-300 million euros, which the EU plans to cover together with other donors, e.g., Great Britain," said Dombrovskis.

He explained that this program is more focused on insurance and reinsurance companies to provide insurance services at a reasonable cost. The aim of the project is to help cover potential first losses and other types of support so that the private sector is ready to offer this service.

On Wednesday, several initiatives were signed with the European Investment Bank on providing financing to small and medium-sized enterprises in Ukraine.

Dombrovskis assessed the great interest in the conference as a signal that the international community is ready to continue supporting Ukraine - that it was not just such a short-term mobilization after the start of the war, but that the support will continue in the medium term and also in the long term.

"We are currently working on funding for the reconstruction of Ukraine in the medium term. The EU is the first to come up with a large funding offer for the medium term. Of course, we expect other donors to follow suit," said Dombrovskis, referring to the 50 billion funding package announced by the EC on Wednesday for Ukraine for the next four years.

The executive vice president of the EC explained that this funding, both in the form of grants and loans, will come from the EU's multi-year budget.

"In this context, we also announced the use of Russian assets to support Ukraine, and we will soon come up with a specific proposal in this area," added Dombrovskis.

Asked about the success of the fight against corruption in Ukraine, he said that the fight against corruption is still on the agenda. "These are the conditions of the current macro-financial assistance program for Ukraine, which we provide this year - it is 18 billion euros, and it will undoubtedly be reflected in the reconstruction plan of Ukraine, which will have to be prepared in the context of this 50 billion package," said Dombrovskis.

The Ukraine Reconstruction Conference is an annual high-level event. Previously, the conference mainly focused on the progress of reforms in Ukraine, but since 2022, the priority of the conference is the process of reconstruction of Ukraine. The emphasis of this year's conference is the more active involvement of the private sector in the reconstruction of Ukraine.

This year, more than 1,000 participants from 61 countries - representatives of international institutions, financial institutions and the private sector - are taking part in the conference.