Table of Contents
- Just The Facts. This is URN Daily's flagship section - All the news fit to read on the reconstruction of Ukraine, verified and originally reported by URN staff, unless otherwise attributed.
- The Reporter's Notepad. Exclusive reporting, observations from interviews and conversations with sources, plus the most comprehensive Meeting Notes you'll likely ever see.
- The Sober Second Thought. Reporting on the newest academic and think tank studies related to the reconstruction of Ukraine.
- The Rebuilder's Social. Important, influential or particularly insightful social media posts that illuminate the mood and plans of Ukraine and the rebuilders.
Domestic Funds
Ukrainian parliament passes tax hikes to support army
Ukraine's parliament has approved the country's first major tax hikes since the start of Russia's full-scale invasion, designed to support Ukraine's defense forces, according to a press release.
The new law, approved Thursday, increase the war tax to 5% from 1.5% for individuals, raises taxes for the self-employed and small businesses, retroactively doubles taxes on bank profits in 2024 to 50%, and sets taxes on the profits of other financial institutions to 25%, among other changes.
The finance ministry said in a press release the new level of taxation would bring UAH 23.2 billion ($563 million) to the budget this year and UAH 141.1 billion in 2025.
"The additional need for financing the Defense Forces in 2024 amounts to almost UAH 500 billion," the ministry noted, adding that increased domestic borrowing is the main source for covering those needs.
The tax hikes were heavily criticized by businesses in Ukraine. Ukraine-based European Business Association argued that any additional taxation could damage the competitive environment by practically incentivizing the shadow economy.
The American Chamber of Commerce in Ukraine stated earlier that the hikes will "discriminate significantly against bona fide transparent taxpayers while encouraging tax evasion."
The International Monetary Fund (IMF), though, has supported tax increases, calling them key to maintaining support of foreign donors and bondholders who seek greater guarantees of medium-term stability.
"The donors are looking for Ukraine to play its part in progressively becoming more self-reliant," IMF Ukraine mission Chief Gavin Gray said in August. "So, consequently, progress in adopting the tax package will influence donors' willingness to continue to support Ukraine."
Foreign Funds
USAID attracts nearly $1.75 billion in fresh funding for Ukrainian agricultural sector
The United States Agency for International Development (USAID) on Thursday announced the expansion of the Agriculture Resilience Initiative-Ukraine (AGRI-Ukraine), attracting nearly $1.75 billion in fresh funding for Ukraine's agricultural sector through nine new partners from the private sector, international financial institutions, and other donors.
The new investors include Astarta, Best Leasing, Crédit Agricole Bank, the US International Development Finance Corporation (DFC), the International Finance Corporation (IFC), IMC, OTP Bank, and Universalna Insurance Company, and the US Department of State's Office of Weapons Removal and Abatement, USAID said in a press release.
USAID stated the new financing brings the total leveraged through the AGRI-Ukraine initiative to more than $2.26 billion in private sector and partner investments since July 2022.
Since July 2022, AGRI-Ukraine has helped more than 15,000 Ukrainian farmers — or 34% of the country's registered farmers — receive seeds, fertilizers, crop protection, storage, and financing to produce their harvests.
This support helped save and generate the production of over 5.5 million metric tons of grain, which is worth over $1 billion in revenue for the Ukrainian economy, according to the statement.
World Bank approves new fund to manage non-EU contributions to G7 loan to Ukraine, sources tell Reuters
The World Bank's executive board approved the establishment of a financial intermediary fund to help meet a commitment by the G7 group of countries to provide Ukraine with $50 billion in funding by year-end, unnamed sources familiar with the matter told Reuters.
Contributions to the fund, which will be administered by the World Bank, are expected from the US, Canada, and Japan, with the exact amounts yet to be determined, sources said. The only objection to the vote, which took place on Thursday, came from Russia.
On Wednesday, envoys of the European Union member states approved a €35 billion ($38 billion) loan to Ukraine as the bloc's contribution to a larger loan package proposed by the G7.
In June, the G7 leaders agreed to issue the $50 billion loan to Ukraine by the end of the year, to be repaid with future profits from frozen Russian assets.
The World Bank's new fund will allow non-European countries to participate in the broader loan.
Japan's JETRO opens office in Kyiv
The Japan External Trade Organization (JETRO) on Thursday opened a representative office in Kyiv, Ukraine's government said.
The government sees cooperation between domestic and Japanese companies in the energy sector, infrastructure reconstruction, agriculture, engineering, and IT as particularly promising, it said in a press release.
"It is the private sector that will drive the reconstruction of our country and further economic growth," Ukraine's Prime Minister Denys Shmyhal said. "Ukraine's recovery is about large-scale modernization. Japan has this experience."
Earlier on Thursday, JETRO and the Ukrainian government's investment promotion agency UkraineInvest signed a memorandum of cooperation, according to a separate press release.
The JETRO office in Kyiv was registered in August, Ukraine's Deputy Economy Minister Taras Kachka said at the time, noting that Japan intends to provide $188 million to support Ukraine's economic recovery projects.
JETRO is an independent administrative body under the auspices of the Ministry of Economy, Trade and Industry of Japan, established to promote trade and economic cooperation with other countries.
EBRD and IFC formally announce $435 million in funding for historic Ukrainian telecom merger
The European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) formally announced a $435 million funding package to support Ukraine's newly merged telecom company.
The funding allows the merger of fLifecell and Datagroup-Volia, creating the second-largest telecom operator in Ukraine. Each institution will contribute $217.5 million, aiming to enhance digital connectivity and network resilience amid ongoing challenges from the conflict, according to a press release.
The merger was announced a month ago, with a consortium led by NJJ Capital, owned by French billionaire Xavier Niel, acquiring Lifecell, Ukraine's third-largest mobile operator, and Datagroup-Volia, in a deal worth at least $524 million overall.
"Through this high-impact transaction, the merged group will deliver improved mobile connectivity to 10 million subscribers and provide faster and more reliable fixed broadband access to 4 million homes," the IFC and EBRD said in the Thursday press release acknowledging their role in the deal.
"Leveraging its scale, the operational expertise of its new shareholders, and support from IFC and the EBRD, the group will also enhance protection against cybersecurity threats, introduce more competitive products and services, and implement best practice standards at a critical time," the release said. "Additionally, the project will support the telecom sector's recovery from the estimated $1.9 billion in direct damages and $750 million in losses incurred since Russia’s invasion."
The War
US believes Ukrainian military will hold territory in Russia's Kursk region for months, Bloomberg reports
Ukrainian forces may hold onto territory captured in Russia’s Kursk region for several months or longer, according to a US assessment, as reported by Bloomberg.
While Russia has reclaimed around a dozen villages since Ukraine launched its offensive into Kursk, its counterattacks have been limited, according to the report. US officials believe Russia's focus on eastern Ukraine has allowed Kyiv to supply the Kursk region, though the long-term costs remain a concern.
Ukraine launched its offensive in the border area on August 6, claiming control over 100 settlements and nearly 1,300 square kilometers (500 square miles).
Ukrainian President Volodymyr Zelensky has suggested the captured areas could be leveraged in talks with Moscow. Kyiv also stated that the offensive aims to create a buffer zone to prevent shelling of Ukrainian border areas.
Meeting notes
Today, URN staff will be covering the EU-UA Partnership Summit.
The all-day event will feature speakers including Andrey Kolodyuk, chairman of the Ukrainian Venture Capital and Private Equity Association, Michiel Scheffer, president of the Board of the European Innovation Council, and Markus Lux, VP Ukraine at Robert Bosch Stiftung, NGOs - Grants for UA.
Full meeting notes will be available soon after the event.
Exclusive: Finnfund to invest up to €10 million in a Ukrainian agri-firm by Q1 2025
Finnish development finance institution Finnfund expects to make the first investment in invest the first portion of a €25 million allocation for Ukraine by Q1 of 2025, the institution said.
The equity investment, expected to range between €5 million and €10 million, will target an agri-processing company in western Ukraine, Finnfund investment director Hanna Loikkanen.
"We are currently in the process of conducting due diligence," Loikkanen told Ukraine Rebuild Newswire in an interview. "And then the investment itself, hopefully, perhaps even before the year end, but most likely the first quarter of next year because there has been challenges to conduct due diligence on the ground because of the security situation in the area."
Finnfund received the allocation of €25 million for Ukraine late last year as part of the Finnish government's national reconstruction plan for the country, which focuses on financing and advisory services as well as "the participation of Finland's central government and various stakeholders in the reconstruction and the use of Finland’s development cooperation funds in Ukraine."
Since then, Finnfund has been looking for investment opportunities, a search made harder by the requirements that the target company must be in the private sector and the investment must have some level of Finnish involvement.
Without naming the company to receive the investment, Loikkanen said it's an investment in the "agri sector with a rather high value-add. It's a combination of primary agriculture with a value-add part of it, which is very specific and something we have been working on for quite some time."
The investment would create jobs, help mitigate climate change impact, boost the local economy through exports and checks off all the other criteria "that we would be looking at as an impact investor in any other country."
Finnfund is also looking at another investment, also in the agricultural sector, "but that's in the very early stage yet."
Although the agri-sector investment is Finnfund's first under the €25 million special allocation, the institution has had a much longer investment in Ukraine.
For example, Finnfund invested €15 million in 2019 in what was billed as Ukraine's largest wind farm at the time, in a co-investment with the European Bank for Reconstruction and Development (EBRD), the Nordic Environment Finance Corporation (NEFCO), Proparco and others.
The 250 MW Syvash wind park is now in Russian hands, seized shortly after the full-scale invasion of 2022.
Finnfund has also invested $15 million in the $350 million Horizon Capital Growth Fund IV, which seeks to invest in fast-growing, mostly technological and export-oriented startups in Ukraine.
Trump peace plan likely to fail as it misunderstands Russia's aims, think tanks say
The plan by US presidential candidate Donald Trump to bring peace to Ukraine will likely fail if he's elected president because it miscalculates Russia's intentions, according to a report.
"The most notable policy area a second term Trump Presidency will impact is the Russo-Ukrainian war, for which Trump has proposed a peace plan," says the report by The New Diplomacy Project, a London-based think tank advised by Sir David Manning, a former UK Ambassador to the US.
"This peace plan will likely fail for several reasons: Russia wants more, it misunderstands Russia’s war aims, it will face European and Ukrainian opposition, and it will face domestic opposition and strong reactions internationally," the report says.
USAID Economic Resilience Activity (ERA) outlines the results of a trip it organized by Ukrainian grain traders to Ireland to meet some of Europe's top grain importers, including R&H Hall, Cefetra Group, and ADM.
The Norwegian - Ukrainian Chamber of Commerce (NUCC) releases a report on "key trends in Ukraine’s agriculture sector, including the impact of war, climate change, and technological advancements like AI and drone usage."
Anna Ackerman, policy analyst for green reconstruction of Ukraine at the International Institute for Sustainable Development (IISD), welcomed the launch bu UNIDO Ukraine of a framework of guidelines for the green reconstruction of Ukraine.
The Kyiv School of Economics announced its launch, together with the Economy Ministry, of a portal, at http://investportalua.com, that "connects potential investors with current investment opportunities in Ukraine."
Naftogaz CEO Oleksiy Chernyshov posted that "Naftogaz Group enterprises produced over 11 billion cubic meters of gas in the 9 months of 2024 – 0.7 billion more than within the same period last year and 2% above target."
