Ukraine needs $486 billion to recover, rebuild after nearly two years of war – World Bank
That 10-year cost estimate is up from $411 billion last March, with housing needs topping the list at $80 billion or 17%, followed by transport needs of $74 billion or 15%, and commerce and industry at $67.5 billion, or 14%.
The $486 billion is an unfathomably large amount, and, of course, it reflects real needs, said Arup Banerji, World Bank regional country director for Eastern Europe, although he noted that the high rate of damages seen in the first months of the war had slowed sharply.
The losses it maps out are staggering, with about 2 million housing units – about 10% of the total housing stock of Ukraine – either damaged or destroyed, as well as 8,400 km (5,220 miles)of motorways, highways, and other national roads, and nearly 300 bridges.
The report said Ukraine needed some $15 billion to cover the most urgent repair, recovery, and reconstruction priorities in 2024, of which about $5.5 billion had already been met through the state budget and donor support.
Banerji lauded the Ukrainian government for squeezing every cent they could out of their budget to cover costs, including social transfers to keep citizens from falling into abject poverty. They also planned to undertake some 200 separate reforms to governance, energy, and other areas, he said.
As it becomes clear that the war will be longer than most of us imagined or feared … the Ukrainians themselves (are) saying we need to do the reforms for our economy to grow, to attract private sector investment … to increase our tax revenues, he said. Ukraine is starting to take much more ownership of its own future.
The report noted that as of December, about 5.9 million Ukrainians remained displaced outside of the country, compared with 8.1 million reported in the last needs assessment in 2023. The number of internally displaced persons had also gone down to around 3.7 million, compared with 5.4 million in spring 2023.
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Ukraine faces an enormous financial burden as it looks to recover and rebuild after nearly two years of war, requiring a staggering $486 billion, according to a report by the World Bank. This amount represents an increase from last year’s estimate of $411 billion. The report highlights the urgent need for funds in various sectors, with housing needs topping the list at $80 billion, followed closely by transport needs of $74 billion and commerce and industry at $67.5 billion.
Arup Banerji, the World Bank’s regional country director for Eastern Europe, acknowledged the magnitude of the financial requirement, stating, The $486 billion is an unfathomably large amount, and, of course, it reflects real needs. He also noted that while the rate of damages had slowed after the initial months of the war, the losses suffered by the affected regions, such as Donetsk, Kharkiv, Luhansk, Zaporizhzhia, Kherson, and Kyiv, were significant, with direct damages reaching almost $152 billion. The report further anticipates additional war-related costs, including economic output disruption, trade interruptions, and debris removal, which could potentially add another $499 billion in financial burdens.
The report highlights the extensive damage inflicted on Ukraine, with approximately 10% of the country’s total housing stock, equivalent to about 2 million housing units, either damaged or destroyed. In addition, over 8,400 kilometers (5,220 miles) of motorways, highways, national roads, and close to 300 bridges are in urgent need of repair and reconstruction.
To address the current financial crisis, Ukraine requires $15 billion specifically for repair, recovery, and reconstruction priorities in 2024. Of this amount, $5.5 billion has already been obtained through the state budget and donor support. Banerji commended the Ukrainian government for their efforts in maximizing their budget to cover costs and implementing social transfers to prevent citizens from falling into poverty. Moreover, they plan to undertake approximately 200 governance and energy reforms, among others, to ignite economic growth, attract private sector investments, and increase tax revenues.
The report also indicates a positive trend in terms of the number of displaced Ukrainians. As of December, around 5.9 million Ukrainians remain displaced outside the country, a decrease from the 8.1 million reported in the previous needs assessment conducted in 2023. Similarly, the number of internally displaced persons has decreased to approximately 3.7 million from 5.4 million in spring 2023.
Despite the extraordinary financial challenge Ukraine currently faces, Banerji expressed admiration for the country’s resilience and its ability to attract foreign direct investment. He noted that foreign investors continue to view Ukraine as an appealing opportunity, with over $4 billion in foreign direct investment flowing into the country during the first three quarters of 2023. Many businesses, although affected by the war, have managed to sustain their operations by leveraging digital platforms or relocating their sites.
Ukraine’s path to recovery and rebuilding is undeniably arduous, but the Ukrainian government has demonstrated a firm commitment to addressing the crisis. As ownership of their own future becomes increasingly apparent, the government aims to implement essential reforms that will revitalize the economy, attract private investments, and increase tax revenues. Despite tremendous setbacks, the nation’s resilience, coupled with international support, offers hope for a brighter future.
