IFC and National Bank of Ukraine Sign Deals to Support Economic Recovery Amid War

Russia’s invasion has led to significant losses in Ukraine’s financial sector, with estimated damages reaching $5.7 billion by December 2023, as reported by the World Bank Group.

In a continued effort to bolster Ukraine’s economy amid ongoing challenges from Russia's invasion, the International Finance Corporation (IFC) has signed two cooperation agreements with the National Bank of Ukraine (NBU). These initiatives aim to increase access to finance, enhance digital services, and address the mounting issue of non-performing loans (NPLs) in the country.

Russia’s invasion has led to significant losses in Ukraine’s financial sector, with estimated damages reaching $5.7 billion by December 2023, as reported by the World Bank Group. However, the nation’s banking sector remains resilient, with a stable capital base and liquidity. The new agreements, supported by Switzerland’s SECO, the UK’s Good Governance Fund, and FIAS, focus on advancing digital financial services and creating a framework for Asset Resolution Companies (ARCs) to address NPLs.

Advancing Digital Financial Services

The first agreement builds on IFC and NBU’s ongoing work to expand Ukraine’s digital financial services. This collaboration will introduce more resilient digital services, facilitate agent banking models, and foster cashless transactions. These measures aim to elevate Ukraine’s financial sector, enhancing competition and aligning services with European standards. A regulatory sandbox will also be established, allowing businesses to test innovative financial solutions under NBU oversight.

Addressing Non-Performing Loans with Asset Resolution Companies

The second agreement tackles the urgent issue of NPLs, which have been exacerbated by wartime conditions. By establishing Asset Resolution Companies, Ukraine will gain an efficient means to restructure distressed assets and attract private investment. This initiative is expected to aid the recovery of small businesses and MSMEs, essential drivers of economic growth, by offering specialized debt solutions that foster long-term viability. Legislative reforms, policy harmonization, and training programs will help embed ARCs within Ukraine’s financial system.

“These agreements underscore IFC’s commitment to providing financing options to Ukrainian businesses amid the challenges posed by the invasion,” said Alfonso Garcia Mora, IFC Regional Vice President for Europe, Latin America, and the Caribbean. “Our partnership with SECO, FIAS, GGF, and the Government of Ukraine will build a more inclusive and resilient financial sector, which is critical to rebuilding Ukraine’s economy.”

NBU Governor Andriy Pyshnyy expressed gratitude for the support, highlighting IFC’s technical assistance across banking regulation, green finance, and the introduction of a war-risk insurance system designed to attract foreign investment.

Since the invasion began, IFC has directed $1.6 billion toward Ukraine, with $530 million mobilized. This support, part of a broader $47 billion World Bank Group package, has helped sustain essential services for over 15 million Ukrainians, enabling schools, hospitals, and infrastructure to continue operating during the crisis.