World Bank approves over $2 billion in funds for Ukraine

The World Bank's Board of Directors on Dec. 18 approved $2.05 billion in Development Policy Operation (DPO) grants to Ukraine, part of which is funded by a portion of the new U.S. $20 billion loan backed by frozen Russian assets.

The funding supports the Ukrainian government in implementing reforms that will strengthen and stabilize the economy, the World Bank said in press release.

The DPO funds are co-financed by two sources: $1 billion from the Facilitation of Resources to Invest in Strengthening Ukraine Financial Intermediary Fund (F.O.R.T.I.S. Ukraine FIF) and $1.05 billion from the Advancing Needed Credit Enhancement (ADVANCE) Ukraine Trust Fund, supported by the U.K. and Japan.

The $1 billion grant via the intermediary fund represents the first payment Ukraine will receive from the Group of Seven (G7) plan to issue $50 billion in financing to Kyiv backed by frozen Russian assets.

The U.S., which is contributing a loan worth $20 billion to the G7 effort, transferred its portion to the World Bank's intermediary fund on Dec. 10.

"Despite significant challenges, the Government of Ukraine has stabilized the economy and remains focused on its development goals, particularly its ambition to join the European Union," Bob Saum, World Bank Regional Country Director for Eastern Europe, said on Dec. 18.

"There have been significant achievements, and Ukraine continues to advance in its efforts to implement reforms to establish a vibrant market economy. The World Bank Group and our international partners will continue to support the Ukrainian people in realizing their EU aspirations."

The DPO funds will focus on Ukraine's growth potential, supporting the railway sector, banking, and renewable energy generation, the World Bank said. Funding will also support efforts to increase domestic revenues.