It is urgent to finance hospitals and schools, the heating of housing, mine clearance and agriculture, pleads the World Bank.
The war is far from over. But its cost is already considerable. From February 24, the first day of the invasion of Ukraine by Russia, to the end of May, the amount of damage amounts to 97 billion dollars, the World Bank, the European Commission and the Ukrainian government have calculated. Added to this are $252 billion in losses due to disruptions in economic flows and production, as well as additional war-related expenses.
At this point, the overall cost of reconstruction reaches 349 billion dollars (347 billion euros), which is equivalent to almost 1.6 times the GDP of Ukraine in 2021. A temporary figure. The bill will increase as the war continues, underline the authors of the study, specifying that they take into account the investments necessary to “build back better” and helping Ukraine modernize its Soviet-era infrastructure.
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Physical war damage, concentrated in the east and south of the country, in the oblasts of Kharkiv, Zaporijjia and Donetsk, particularly affects housing (40% of damage) and transport (31%). Over the first three months of the war, more than 800,000 homes have already been damaged. Nearly 40% of them are not rebuildable.
The impact of the significant invasion
The displacement of a third of Ukrainians, either abroad or inside the country, is expected to push the average poverty rate up to 21%, compared to 2% before the war. And the impact of the invasion is likely to be felt “for generations, with displaced and separated families, disruption of human development, destruction of cultural heritage and reversal of a positive economic trajectory,” worry the authors of the report.
It is therefore necessary to invest quickly in “health, education and social protection. This is essential to prevent further deterioration of living conditions,” says Anna Bjerde, World Bank Regional Vice President for Europe and Central Asia.
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The study indicates that 105 billion dollars are needed to meet short-term needs, such as supporting hospitals and schools or restoring heating to homes.
GDP down by 30 to 35%
Urgent support is also needed for agriculture, both for the local population and for exports to the rest of the world. A lot of equipment and head of cattle have been destroyed and nearly 10 billion dollars are needed to revive the sector. This also implies the restructuring of essential transport routes, adds Anna Bjerde. Added to this, among other urgent tasks, is the decontamination of the land. Demining and elimination of explosives scattered on the territories are essential.
Rare good news is that, according to Arup Banerji, World Bank Regional Director for Eastern Europe, the economy is doing “slightly betterthan we feared. GDP is expected to contract by 30-35% in 2022, instead of 45%.
Since the start of Russia’s brutal and unlawful aggression against Ukraine, the EU has mobilized €10 billion in funding, humanitarian aid and military assistance for Ukraine.
Ursula von der Leyen, President of the European Commission
Ukrainian Prime Minister Denys Chmyhal estimates that kyiv needs 17 billion dollars for the first stage of its recovery, including 3.4 billion this year. Then, say advisers to President Volodymyr Zelensky, donor countries would have to provide $5 billion per month throughout 2023.
The European Union is making its contribution. “Since the start of Russia’s brutal and unlawful aggression against Ukraine, the EU has mobilized €10 billion in funding, humanitarian aid and military assistance for Ukraine. Another five billion euros are in preparation,” European Commission President Ursula von der Leyen said on Friday.