Ukraine to set up Trust Fund to share investors’ risks - Economy Ministry

Ukraine is in negotiations with international donors on creating and filling a target Trust Fund, which could act as a reinsurance potential in order to increase investors’ interest.

This was reported by the press service of the Ministry of Economy, as seen by Ukrinform.

"Investment insurance plays the main role in the process of attracting funds for the reconstruction of Ukraine. In addition, war risk insurance is a multiplier tool able to carry many more different capital market instruments. As a rule, the reset of the investment market starts with debt instruments," the report reads.

It is noted that negotiations are currently underway with international donors regarding the creation and filling of a target Trust Fund (the so-called insurance pool), which could act as a reinsurance potential in order to increase the interest of international financial institutions, such as MIGA and DFC, in insuring investment projects.

"The Trust Fund must provide reinsurance capital. We expect to receive $510 million this year, which we will be able to multiply by two due to the multiplier effect and through attracting private capital. Most of these funds will then go to support long-term investments. In addition, by mobilizing large international reinsurers, we hope to launch the Ukrainian insurance market in the short term, in particular, in cooperation with the National Bank of Ukraine," said Deputy Minister of Economy Oleksandr Hryban.

The Ministry of Economy has explained four options for unlocking the international insurance market for Ukraine. The first is the creation of a special Trust Fund and Underwriting Department in the structure of the existing military and political risk insurance agency. The second is the utilization of existing expertise on military and political risk insurance within the new management structure. The third is the creation of a new military-political risk insurance agency at the national or multinational level, which will act as an Organizational Platform and expand the Underwriting and Administration Unit, sharing knowledge, skills, and approaches with the new entity. The fourth is the creation of a new agency for the insurance of military and political risks, based on the best practices of the global insurance market for this type of risks.

As Ukrinform reported earlier, Ukraine’s reconstruction is the most ambitious project of the 21st century, which requires enormous resources, and at the same time opens up new opportunities for investment. According to the World Bank, $411 billion is needed to ensure Ukraine's recovery.