The FINANCIAL — The World Bank’s Board of Executive Directors approved a loan to Ukraine in the amount of USD 300 million for the Second Additional Financing for COVID-19 Response under the Social Safety Nets Modernization Project. This additional financing will help strengthen Ukraine’s Guaranteed Minimum Income Program (GMI) to prevent around 1 million Ukrainians from falling into poverty due to the COVID-19 pandemic. It is the second Additional Financing under this Project, after USD 150 million were approved on April 30, 2020.
World Bank projections show that, due to the COVID-19 epidemic, poverty in Ukraine could increase by 4 percent, reaching around 23 percent by the end of 2020. The new funds will help finance Ukraine’s COVID-19 social protection emergency response by introducing fast cash transfers to individuals and households who have lost their jobs or income sources because of the pandemic. Poor households will receive benefits through the country’s GMI Program.The loan also supports scaling up Ukraine’s social protection over the next years. According to World Bank estimates, 60 percent of the Ukrainians who may fall into poverty because of the COVID-19 outbreak do not currently benefit from any existing social protection program.
“The World Bank support to Ukraine in these critical times, aimed at protecting the poor severely affected by the COVID-19 outbreak, has a significant anti-poverty effect,” said Arup Banerji, World Bank Regional Country Director for Eastern Europe (Belarus, Moldova, and Ukraine). “The social protection measures to be supported by the new loan would help the Government of Ukraine to finance social programs aiming to prevent around 1 million Ukrainians from falling into poverty.”
The ongoing Social Safety Nets Modernization Project and two additional financings (total of $750 million) are supporting Ukraine’s poverty reduction reforms and policies for protecting the poor, together with programs to systematically graduate families out of poverty. While the COVID-19 crisis has demanded fast emergency responses, such as expanding cash transfers, it has also highlighted the need for the country to improve the resilience of its social protection infrastructure and to develop systems that can deliver cash to people in a crisis. The second additional financing will support the introduction of online enrollment and the extension of electronic/digital payments. The new delivery system supported by the loan would significantly increase the resilience of the Ukrainian social safety nets to respond to future shocks, including economic crises and natural disasters.
The World Bank Group, one of the largest sources of funding and knowledge for developing countries, is taking broad, fast action to help developing countries strengthen their pandemic response. It is supporting public health interventions, working to ensure the flow of critical supplies and equipment, and helping the private sector continue to operate and sustain jobs. The WBG is making available up to $160 billion over a 15-month period ending June 2021 to help more than 100 countries protect the poor and vulnerable, support businesses, and bolster economic recovery. This includes $50 billion of new IDA resources through grants and highly concessional loans and $12 billion for developing countries to finance the purchase and distribution of COVID-19 vaccines.