European guarantee for reconstruction: how the Ukraine Investment Framework attracts investment to Ukraine

Ukraine’s reconstruction will require hundreds of billions of euros, and the scale of these needs far exceeds the capacity of the state budget and the volume of available international aid. One of the key tasks is therefore to attract private investment to the rebuilding effort.

To this end, the European Union has created special financial mechanisms, including the Ukraine Investment Framework (UIF). It not only finances projects but also helps attract additional capital from private investors and international financial institutions. This makes it possible to direct more resources towards restoring the economy and infrastructure, including in frontline and war-affected regions.

Pershyi Zaporizkyi explains how the UIF works, which projects and companies can make use of it, and how it helps attract investment into Ukraine’s reconstruction.

The investment arm of a major European programme

The European Union launched the Ukraine Investment Framework (UIF) in April 2024 as the second pillar of the Ukraine Facility programme. Unlike the first pillar, which provides direct budget support to Ukraine, and the third, aimed at reforms and preparation for EU accession, the UIF focuses on attracting investment into the country’s recovery and development.

Around €9.6 billion has been earmarked for the mechanism for 2024–2027. The UIF brings together various financial instruments, including EU guarantees, investment grants, technical assistance, and blended finance mechanisms. They are intended to reduce risks for investors and help attract up to €40 billion in public and private investment.

The mechanism is already attracting significant resources. In 2025, the volume of approved guarantees and grants amounted to around €2.2 billion. In particular, European Investment Bank (EIB) guarantees of €1.319 billion were approved for 15 projects in the portfolio of the Ministry for Communities and Territories Development of Ukraine.

As of early October 2026, the EU had already allocated €8.5 billion under the UIF in the form of guarantees and grants. According to the European Commission, this funding is expected to help attract around €25.7 billion in investment. A significant share of the planned resources has therefore already been directed towards investment programmes.

European guarantees reduce risks for investors

The main feature of the UIF is that the European Union does not finance projects itself but helps attract additional capital. To do this, the EU assumes part of the financial risks that deter banks and investors from investing in Ukraine.

The mechanism’s main instrument is guarantees. They allow financial institutions to be partially compensated for losses if a borrower fails to meet its obligations. For example, an international financial institution or bank may provide a loan to a Ukrainian enterprise, and the EU guarantee will reduce the lender’s risks. As a result, financial institutions can fund projects that would be considered too risky without such support.

Another important instrument is grants. These are directed towards projects of public significance that cannot fully pay for themselves on commercial terms. Grants may cover part of investment costs or finance the preparation of feasibility studies needed to implement projects.

Of the UIF’s total resources, around €7.8 billion is earmarked for guarantees, and a further €1.5 billion for grants, blended finance, and technical assistance.

How projects are selected and who finances them

Funding under the UIF is provided through authorised international financial institutions and development banks. Key partners include the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), the World Bank, the German development bank KfW, and Poland’s Bank Gospodarstwa Krajowego (BGK).

The mechanism provides for two main funding routes: direct financing of large projects by public authorities and other institutions, and support through partner banks, including for municipalities and small and medium-sized businesses.

The selection process begins with European Commission calls for authorised financial institutions, which submit investment programmes. The Commission assesses their compliance with EU policy and the priorities of the Ukraine Plan, their readiness for implementation, expected additional value, and potential risks.

After refinement and technical assessment, proposals are submitted to the UIF Steering Board for consideration. If approved, the European Commission and the relevant financial institution sign an agreement and begin implementing the programme.

Ukraine and the EU determine recovery priorities, while international financial institutions assess specific projects — their readiness, financial viability, and compliance with programme conditions. UIF support therefore does not guarantee automatic approval of every application: the decision depends on the requirements of the specific instrument and the results of the assessment.

For businesses themselves, this means two main routes: approach banks and financial institutions implementing EU-backed programmes, or submit an Expression of Interest for large strategic investment projects.

From social infrastructure to energy: which sectors the UIF supports

The mechanism covers several key areas on which the country’s recovery, community resilience, and economic development depend.

• Social infrastructure. Investment is directed towards restoring schools, hospitals, and housing. This makes it possible to restore basic services and improve living conditions in war-affected communities.
• Strategic industry and raw materials. Support in these areas is intended to promote the modernisation of production, increase the competitiveness of Ukrainian enterprises, and develop the economy.
• Digital technologies. Investment is directed towards developing digital infrastructure, telecommunications networks, and services for citizens and businesses.

One example is the investment by the French holding company NJJ in Ukraine’s telecommunications sector. With EU guarantees, the company invested €1.5 billion in acquiring and merging Lifecell and Datagroup-Volia. According to the European Commission, this is the largest foreign direct investment in two decades. The IFC and the EBRD also joined the financing. More than 10 million people are expected to receive better mobile coverage, and around 4 million households access to faster internet.

• Agri-food sector. Modernising agriculture and processing is intended to help Ukrainian producers remain competitive and make production more resilient.
• Infrastructure and transport. The UIF supports the restoration of roads, railways, public transport, and utility networks.
• Energy. Priorities include restoring energy facilities and developing renewable and decentralised generation, energy storage systems, and energy efficiency.
• Small and medium-sized businesses and the private sector. Financing helps enterprises restore assets, modernise production, purchase equipment, and create jobs.

In 2026, the EBRD and the EU expanded the programme supporting small and medium-sized businesses. Guarantees of €200 million, grants of €105 million, and technical assistance of €10 million are expected to enable up to €2 billion in new lending through EBRD partner banks. At least 3,000 enterprises are expected to receive financing, and the programme is expected to help preserve around 180,000 jobs.

At the Ukraine Recovery Conference in Gdańsk in June, the European Commission signed agreements worth more than €1.1 billion. Of this amount, €478 million is earmarked for municipal infrastructure, €343 million for defence and dual-use technologies, and €100 million for energy.

The mechanism is especially important for frontline areas

The UIF also provides for support to the areas most affected by the war, including de-occupied districts and frontline regions. Separate programmes are aimed at supporting veterans and displaced people.

“We are working to expand the circle of partners and to ensure that the needs of communities, including frontline ones, are taken into account when selecting projects,” says Maryna Denysiuk, Deputy Minister for Communities and Territories Development.

One example of such support is financing through Poland’s Bank Gospodarstwa Krajowego. Under UIF programmes, the EU has provided €100 million in guarantees and €20.4 million in grants, with particular attention to frontline areas.

Another example is the EIB Ukraine Recovery III programme. In November 2025, the EIB announced the allocation of €15 million for small recovery projects, including damaged hospitals, schools, and other social infrastructure facilities. The financing covers communities in various oblasts of Ukraine, with priority given to frontline areas. These include Zaporizhzhia Oblast.

The mechanism is especially important for frontline areas

In 2026, the UIF supported a guarantee programme for PrivatBank, which allows new sub-loans of up to €825 million to be issued. A separate component provides long-term financing for small and medium-sized businesses to modernise equipment and move to European standards. Priority is given to enterprises affected by the war, veteran-owned businesses, companies that help integrate IDPs, and businesses led by women and young people.

For larger investment projects, the European Commission introduced the Call for Expressions of Interest mechanism in 2026. Ukrainian and European companies can submit applications for projects in energy, manufacturing and processing, construction, critical raw materials, digital technologies, and transport. The minimum project value under this mechanism is €50 million, and the initiator’s own contribution must be at least 10%.

Submitting an Expression of Interest does not guarantee funding. The European Commission first assesses whether the project meets the established priorities, and may then pass it to international financial institutions for detailed review. The final decision depends on the project’s readiness, its financial viability, and the lender’s assessment.

Another example is the Ukraine SME Recovery Programme, which the EBRD and the EU launched in 2026. The UIF provides €46 million for it, including €41 million in guarantees and almost €5 million in technical assistance. The programme is expected to help attract at least €135 million in financing for Ukrainian companies and support no fewer than 15 investment projects. In addition, advisory support is planned for up to 34 start-ups.

The mechanism is especially important for frontline areas

The Ukraine Investment Framework has thus become one of the key mechanisms for attracting investment into Ukraine’s recovery. Its significance lies in the multiplier effect: every euro of European guarantee or grant support is meant to help attract additional funds.

This approach can reduce the dependence of reconstruction on donor aid and broaden the participation of private investors in developing the Ukrainian economy.

For businesses, the UIF opens up opportunities to modernise production, adopt European standards, cooperate with international partners, and create jobs. It also contributes to Ukraine’s integration into the European economic area.

Author: Oleksandr Nosok

Source: Pershyi Zaporizkyi