REMARKS

by H.E. Ihor Prokopchuk, Ambassador of Ukraine, at business conference

«CHARTING PROGRESS: COMMERCIAL PLATFORM OF AND FOR UKRAINE»

16 April 2024

Introduction

• This conference takes place amidst ongoing large-scale war of aggression waged by Russia against Ukraine since February 24^th 2022. This is a factor that has a decisive impact on economic performance of Ukraine, on the region and has significant repercussions for global economy.
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• As this conference places particular focus on review of developments and progress I would like to highlight a few broad areas in this respect: Ukraine’s economic performance of last year; national reforms in the country to ease pressures of war, attract investment and stimulate economic activity; and rebuilding and reconstruction of Ukraine.

Economic performance and financial situation in 2023

• Despite the ongoing brutal war of the aggressor against Ukraine, Ukraine’s economy has demonstrated absolutely remarkable and outstanding resilience. The reasons must be attributed to the society and its unbending will, to efforts and policies of the President and state authorities, extensive macro-financial support of our partners, and also in large degree to patriotism and flexibility of Ukrainian businesses;
• Scores of people in central and western Ukraine have returned home. Everything functions, including mobile phone networks, internet, electricity, and public transport. Foreign credit cards can be used virtually everywhere and digital banking services are advanced
• Almost 90% of the Ukrainian enterprises have resumed their activity since the start of the full-scale invasion, adapting and adjusting their products;
• After a drastic fall of Ukraine’s GDP in 2022 recorded at -28,8%, last year, 2023, the GDP grew by nearly +5%. The expected GDP growth in 2024, according to the experts of the World Bank, is set at 3,2%;
• Among the sectors of economy of Ukraine, the leading drivers of recovery are construction, national trade, agriculture, processing industries, as well as the defence production;
• Ukraine has been making consistent effort to sustain its export capabilities. A major achievement – opening of alternative transit corridor from the seaports of Odesa. Agricultural products have the biggest share in export in 2023 – 31%;
• Prudent monetary policy has helped to maintain stability of exchange rate of the national currency. The hryvnia showed resilience in the transition from a fixed to a managed floating regime. At the start of the war, the NBU quickly implemented a fixed exchange rate regime to stabilise the currency. In October 2023, the NBU decided to abandon the exchange rate peg and has successfully transitioned to a managed floating exchange rate regime. The NBU engaged in increased foreign exchange interventions in the first days of the transition. Afterwards, the level of interventions stabilised and the UAH/USD remained within a narrow band.
• the National Bank has also been gradually lowering the key interest rate in Ukraine from 25%, installed after the full-scale invasion, to 14,5% in March 2024.

In the year of 2023 the Government of Ukraine, with the support of its partners, has met some of the most urgent needs. For example:

$1 billion was disbursed toward housing sector, with most being dedicated to the repair and reconstruction of damaged buildings.

More than 2,000km of emergency repairs were made on motorways, highways, and other national roads.

Local authorities rebuilt approximately 500 educational institutions and the share of educational institutions with bomb shelters has increased from 68% to 80%.

Reforms, investment and legislative improvements

Remarkably, it is now broadly recognized that in unprecedentedly difficult circumstances - during the war Ukraine has carried out more systemic reforms than ever,. These reforms have been driven by political will of President Zelenskyy and the Government, in coordination with the EU and the IMF, with strong support from the United States and the G7 group of nations.

On December 14, 2023, the EU decided to open membership negotiations with Ukraine. This landmark decision was based on Ukraine having fulfilled seven vital conditions set by the EU in June 2022. Four concerned the rule of law, three were political.

the IMF stated that the Ukrainian authorities had demonstrated “a strong commitment to reforms.” It noted that the authorities met seven of the 12 structural benchmarks for June-October 2023 on time, while four benchmarks were implemented with delays under very difficult circumstances.

• According to the National Bank of Ukraine, in 2023 the net inflow of foreign direct investment (FDI) was estimated at 4,4 billion USD, including reinvested earnings of 3,5 billion USD. The corresponding period of 2022 demonstrated the growth of more than 500 mln. USD;
• the Parliament of Ukraine has produced legislation that increases attractiveness of investment despite the pressures of war. In particular, the Law of Ukraine "On State Support of Investment Projects with Significant Investments in Ukraine" was adopted to stimulate entry of strategic investors, create new high- paying jobs, and increase the competitiveness of the economy by introducing state support for large investment projects. The main provisions of the act were exemption from payment of corporate income tax, land tax and value added tax, as well as exemption from import duty taxation of equipment and components imported for the implementation of investment projects;
• the Law of Ukraine "On Implementation of Investment Projects with Significant Investments" includes important provisions that the Ukrainian state guarantees compensation for losses caused by state bodies, as well as provides big investment projects with state support of up to 30% of amount of significant investments;
• the Law of Ukraine "On the State Budget of Ukraine for 2024" allocates UAH 1 billion to the Ministry of Economy to support creation of new Industrial Parks;
• A very important news emerged on 15 April 2024. The European Commission has adopted a proposal for a Council Implementing Decision that assesses positively the Ukraine Plan, Ukraine's comprehensive reform and investment strategy for the next four years. This step paves the way for regular and predictable support to Ukraine under the EU's up to €50 billion Ukraine Facility. Up to €32 billion of the Ukraine Facility is indicatively earmarked to support reforms and investments set out in the Ukraine Plan;
• According to the European Commission's assessment, the Ukraine Plan effectively addresses the objectives of the Ukraine Facility, by identifying those key reforms and investments that can boost sustainable economic growth and attract investments, to amplify the country's growth potential in the medium-to-long term.
• The reforms proposed under the Ukraine Plan cover 15 areas including energy, agriculture, transport, the green and digital transition, human capital, as well as state-owned enterprises, the business environment, public finances, and decentralisation;

Ukraine submitted its Ukraine Plan to the European Commission on 20 March. It presents a vision for sustainable growth, based on carefully selected priorities and a sequenced set of reforms and investments for the next four years. The Plan promotes investments that foster Ukraine's recovery, reconstruction and modernisation, including at the local level.

Rebuilding and Reconstruction

According to the “Rapid damage and needs assessment report”, published by the Government of Ukraine, the World Bank Group, the European Commission, and the United Nations currently estimates that as of 31 December 2023 the total cost of reconstruction and recovery in Ukraine is $486 billion over the next decade, up from 411 billion USD estimated one year ago;

The highest estimated needs are in housing, transport, , commerce and industry, agriculture, energy, social protection and livelihoods, and explosive hazard management.

Ukraine's Needs in Numbers:

• In 2024, the Ukrainian authorities estimate the country will need around 15 billion USD for immediate reconstruction and recovery priorities at both the national and community level. Key areas include housing, infrastructure, energy and transport. Some 5.5 billion USD of this funding has already been secured from both Ukraine’s international partners and its own resources;
• The Government of Ukraine has already prepared the necessary instruments for facilitating effective, inclusive and transparent mechanisms of this process;
• Thus, the Digital Restoration Ecosystem for Accountable Management (DREAM), a state digital end-to-end platform for restoration and modernization management, has been launched;
• On this platform (dream.gov.ua) any investor or project initiator can find excessive data for the humanitarian restoration projects in our country;
• Each step of the process of rebuilding can be closely monitored and posted online, providing full transparency and accountability to the investors. This includes the procurement of the necessary construction materials, equipment, services, et cetera;
• We invite interested companies to make business trips to Ukraine, to explore situation on the ground. The Embassy is ready to facilitate such visits;
• I would like to emphasize existing opportunities for the Romanian companies. Investing into the construction business in Ukraine right now is a win-win scenario for the upcoming future. Such investment may be realized through making Joint Ventures with the Ukrainian entrepreneurs or purchasing shares of the already existing enterprises on the territory of Ukraine.

Ukraine-Romania strategic partnership:

• Strong Ukraine-Romania bonds – a win-win for the two countries and people;
• Last year’s trade turnover exceeded 5 bl USD;
• Effective partnership in ensuring transit of Ukrainian products via Romanian territory/ development of EU Solidarity lanes – additional funds and investment in infrastructure, including port infrastructure, new technologies on Sulina canal, creation of new jobs, increased revenues from logistical services;
• Significant prospects for expanding cooperation in the energy security area, including in triangle Ukraine-Romania- Republic of Moldova;
• Cooperation in defence production

Assistance to Ukraine

• EU High Commissioner J.Borrel said on 9 April 2024 in Brussels: “High intensity conventional war in Europe, expanding beyond Ukraine, is no longer a fiction. Europe must be preparing for it”.
• Assistance to Ukraine and Ukraine’s victory is investment in one’s own security and prosperity of business operations.
• Whereas future reconstruction of Ukraine will be a collective endervour of enormous scale, currently a critical priority task is to do more to help Ukraine defend itself, to do more to prevent large-scale damage and destruction inflicted by Russian daily aerial attacks, missiles and drones. This means procuring more air defence systems, more weapons that will save lives of Ukrainian civilians!
• I also appeal to all of you to think what more you could do in your position as business representatives to support Ukraine’s victory, to provide assistance (emergency equipment, 4x4 vehicles, ambulances, construction materials, humanitarian assistance, help to children (including summer camps), pooling financial resources for Ukraine24 Foundation and other funds, etc). If you have any ideas or suggestions, the Embassy stands ready to engage with you.

Thank you for attention.