Ukraine was severely devastated by fierce fighting (Photo: Reuters).
A new study by the World Bank, the United Nations, the European Commission and the Ukrainian government shows that rebuilding Ukraine's economy after Russia's special military operation is expected to cost $486 billion.
This figure is 2.8 times higher than Ukraine's projected economic output in 2023.
The estimate, released on February 15, covers the period from February 24, 2022, to December 31, 2023. The study looked at direct physical damage to buildings and other infrastructure, the impact on people's lives and livelihoods, and the cost of "rebuilding the economy," the World Bank said.
The $486 billion figure is an estimated 10-year cost, up from the $411 billion estimate in March last year. Of the $486 billion figure, 17 percent ($80 billion) will be for housing reconstruction, 15 percent ($10 billion), and 14 percent for commercial and industrial construction.
"$486 billion is an unimaginably large amount of money and of course it reflects real needs," said Arup Banerji, the World Bank's director for Eastern Europe.
He also noted that the pace of the war has slowed significantly compared to the outbreak, resulting in less severe devastation in recent times.
The report said direct damage from the war had amounted to nearly $152 billion, with damage concentrated in regions such as Donetsk, Kharkov, Lugansk, Zaporizhia, Kherson and Kiev.
Disruptions to economic output and trade, as well as other costs associated with the war, such as clearing areas where fighting took place, could add another $499 billion.
The new estimate does not include reconstruction needs that have been met through the Ukrainian state budget or through international partners.
Ukraine has suffered enormous damage over the past two years: About 2 million housing units – 10% of Ukraine's total housing stock – have been damaged or destroyed, as well as 8,400km of motorways, expressways and other national roads and nearly 300 bridges destroyed.
The report said Ukraine needs about $15 billion to cover its most urgent repair, recovery and reconstruction needs by 2024, of which about $5.5 billion has been met through the state budget and donor support.
Mr Banerji said the Ukrainian government was using “every penny it could” from the budget to cover costs, including social benefits to keep people from falling into extreme poverty. He said Ukraine also planned to implement about 200 separate reforms in governance, energy and other areas.
“As it became clear that the war was going to last longer than most of us imagined, Ukrainians themselves were saying they needed to implement reforms to get the economy going, to attract private sector investment to grow and to increase tax revenues,” he said.
“Ukraine is starting to take more ownership of its own future,” he said.
He said the Ukrainian economy had shown remarkable resilience in the face of hostilities. The news that more than $4 billion in foreign direct investment had flowed into Ukraine in the first three quarters of 2023 showed that foreign investors saw good opportunities.
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