Natalie Jaresko: “The international community has to come together with a much greater financial support package”

Natalie Jaresko is the Chairperson of the Aspen Institute Kyiv Supervisory Board. She was a speaker at the sixth #UkrainianDialogue that Aspen Institute Kyiv held with Aspen Institute Romania. Natalie spoke about possible costs of rebuilding and revitalizing Ukraine.

This will be the largest rebuilding that the world has ever seen to date

Natalie estimated that rebuilding Ukraine will cost hundreds of billions of dollars, if not close to a trillion. This will be the largest rebuilding that the world has ever seen to date. 

— When we look at the Marshall Plan, it was a plan that in today’s dollars cost 115 billion dollars. In reality, the Marshall Plan was not about rebuilding but re-energizing and providing dollars into European economies as well as getting Europe to trade and become a more cohesive economy. This is a bit larger than after the Iraq and Afghanistan Wars, larger than what I have lived through here in Puerto Rico after Hurricane Maria in 2017. We had a hundred billion dollars in damages, and Puerto Rico is 1/66 the size of Ukraine.

 The Ukrainian budget is lacking approximately 5 billion dollars per month

Natalie stressed that besides rebuilding in future, it is important to keep essential services for the 40 million people who remain in Ukraine during the war enabling them to continue life. It also needs a great financial support package.

— The Ukrainian budget is lacking approximately 5 billion dollars per month. And that’s just in keeping with the war-time budget, which a bare minimum expenditure being made to pay the military their salaries, to pay the families of the deceased military, pensions, medical care, payment for the internally displaced people so they can make their lives in the new part of the country. If you look at the amount of money that has been committed for macro support since the war started, is about 11 billion dollars. It is important to note that only 1,4 bln of them are grants. Much of it is the concessional loans and those loans are going to be very hard to repay. It means that the international community has to come together with a much greater financial support package.

Russian frozen assets must be a core base of a rebuilding campaign 

Natalie stressed the one thing that Ukrainian partners can do right now is legislate to take the frozen assets from the Central Bank of Russia and other sanctioned entities to set them aside as a core base of a rebuilding campaign. 

—  We have frozen approximately 300 billion of the Central Bank reserves and another 100 billion globally in sanctioned oligarchical entities. That money should serve at the core, then bilaterally and multilaterally. It is very important that the private sector money must come in an organized, coordinated fashion to rebuild Ukraine once we prevail in the war. I believe there should also be ongoing Russian reparations, whether to tax on oil and gas sales in the future or some other constant source of revenue for this fund. 

There is no single party that can be responsible for rebuilding

Natalie said that there is no single party that can be responsible for rebuilding. It is simply too large. 

—  I believe that we really need to expand the parties that are part of the rebuilding effort from the focus of sourcing the amount of necessary money. The EU should be an enormous part and associated with the United States, Canada and Japan. Moreover, I frankly think we need to move beyond the G7 to the G20. This is in addition to the alphabet soup that we always look towards: the IMF, the World Bank, the EBRD, the EIB and others. 

Natalie believes that investment into rebuilding from other parties will be almost entirely grant-oriented to the maximum extent possible. For donors there will be important to imply two critical issues:

—  I think the critical issue from the donor side will firstly be having confidence in the plan of rebuilding and on the Ukrainian side, for sure. Ukrainian authorities need to provide a plan. For instance, they are not going to rebuild everything that was destroyed. They will need to rebuild but in an improved manner to its predecessor. The second element that the donors will want confidence in is the money being used appropriately, as they are intended to. I think it is based on procurement and that we need to have a single procurement system which is transparent, repeatedly and constantly audited as well as reviewed. This is so that the donors can have confidence in it and at the same time does not slow down what should be a very urgent rebuilding process.