Ukraine’s Reconstruction and Economy SURE Trust Fund is crucial for rebuilding Ukraine in the wake of damages caused by Russia’s War, estimated at $411 bn by the World Bank.
The SURE Trust Fund focuses on facilitating private investments and solutions for economic recovery, including mitigating war risks.
MIGA blends donor financing from the SURE TF with risk exposure on its own books, and crowds in public and private reinsurance where available, to deploy guarantees in support of Ukraine.
The mix of public and private capacity will vary and evolve depending on the intensity of conflict in Ukraine and the stage of reconstruction.
As of March 1, 2023, private sector reinsurance capacity is virtually non-existent, and therefore MIGA’s efforts have been directed at crowding-in public sector reinsurance toward its guarantees.
Rebuilding on such scale requires private investments and solutions that facilitate private sector investment, key among them mitigation of war risk. MIGA can provide meaningful contribution to offering such solutions to the private sector.
MIGA, which has been actively providing political risk insurance in Ukraine, will use this fund to support foreign direct investment and trade finance guarantees.
The United Kingdom will contribute £20 mn to the SURE Trust Fund, launched by the World Bank’s Multilateral Investment Guarantee Agency (MIGA), to reduce risks facing foreign investors in Ukraine.
The contribution from the UK, along with other international donations, will be instrumental in insuring a minimum of $100 mn of new investment in Ukraine, covering critical sectors like transport, housing, and energy for post-war reconstruction efforts.
We would like to thank our UK partners for their contribution to the SURE Trust Fund. In addition to the financial support the Fund is providing to the real sector of the Ukrainian economy, it is important to us that more and more countries are joining to support investors who are ready to participate in Ukraine’s recovery without waiting for the war to end.Yuliia Svyrydenko, First Deputy Prime Minister and Minister of Economy of Ukraine
“MIGA guarantees are an important risk mitigation tool to ensure the continuity of private sector operations and attract investment for the recovery and reconstruction of the country,” said Yuliia Svyrydenko.
“The support from the United Kingdom will be crucial in continuing our support to Ukraine, and help keep the economic engine humming. The SURE Trust Fund has already supported several projects in Ukraine. We are committed to help Ukraine and its people during this difficult time,” said Hiroshi Matano, Executive Vice President of MIGA.
MIGA has been a proactive provider of insurance in Ukraine, issuing more than $215 mn in political risk insurance guarantees since the russian invasion began in February 2022. Due to the ongoing war, private insurers have been unable to provide political risk insurance in Ukraine.
SURE Trust Fund allows MIGA to continue supporting foreign direct investment into Ukraine during this challenging period for the country.
Together with Norway’s contribution of approximately $22 mn, MIGA will now be able to insure a minimum of $100 mn of new investment in Ukraine.
“The signing gives businesses and investors the fundamental tools they need to get directly involved in Ukraine’s recovery,” UK Minister for Industry and Economic Security Nusrat Ghani as saying in a statement contained in a MIGA press release.
“Our £20 mn contribution into the MIGA insurance trust fund will de-risk projects and attract much-needed private investment into Ukraine to support economic recovery now and into the future,” Ghani said.
Norway also contributed $22 mn to the SURE Trust Fund to mitigate risks for foreign investors and meet the demand for military risk insurance.
The SURE Trust Fund was established by MIGA in February 2023 to help deploy a two-pronged strategy to assist Ukraine deal with the impact of the crisis.
MIGA was established in 1988 as a member of the World Bank to facilitate foreign direct investment in developing economies, helping to mitigate the risks of currency conversion and transfer restrictions, breach of contracts by the governments, expropriation, etc.
The agency is also involved in improving lending to private investors and lenders themselves.
Since its creation, MIGA has issued over $76 bn in guarantees across 123 developing countries, supporting more than 1,000 projects, the press service said.
by Yana Keller