New estimate: Total cost of reconstruction and recovery in Ukraine over next decade is $486B

After almost two years of Russia’s full scale invasion of Ukraine, an updated joint Rapid Damage and Needs Assessment (RDNA3)  released on February 15 by the government of Ukraine, the World Bank Group, the European Commission (EC), and the United Nations currently estimates that as of December 31 2023 the total cost of reconstruction and recovery in Ukraine is $486 billion (452.8 billion euro) over the next decade, up from $411 billion (383 billion euro) estimated one year ago, the EC said.

In 2024 alone, Ukrainian authorities estimate the country will need about $15 billion (14 billion euro) for immediate reconstruction and recovery priorities at both the national and community level, with a particular focus on supporting and mobilising the private sector alongside restoration of housing, soft infrastructure and services, energy, and transport.

The RDNA3 highlights that while about $5.5 billion (5.1 billion euro) of this funding has been secured, from both Ukraine’s international partners and its own resources, about $9.5 billion (8.9 billion euro) is currently unfunded.

Despite the ongoing full-scale war, the Ukrainian government, with the support of international partners, continues to implement a rapid recovery program. The execution of the Third Rapid Damage and Needs Assessment (RDNA3) allows us to approach this process more systematically. We are grateful to the World Bank and other partners for this work,” said Prime Minister of Ukraine Denys Shmyhal.

“We see that the needs for reconstruction have continued to grow over the past year. The main resource for Ukraine’s recovery should be the confiscation of Russian assets frozen in the West. We need to start this process already this year. Concurrently, the Ukrainian government is creating conditions to attract private investments, which will accelerate the reconstruction process and transform our country on its path to the EU,” Shmyhal said.

European Commissioner for Neighbourhood and Enlargement Olivér Várhelyi said: “Russia’s war of aggression continues to have far-reaching consequences on Ukraine. The EU will continue to play a key role in addressing the short and medium-term challenges identified in today’s RDNA3 report.

“By making available the updated information, RDNA3 helps to further focus the recovery, reconstruction and modernization effort through Ukraine Facility and Ukraine Plan,” Várhelyi said.

The RDNA3, which covers damages incurred over a nearly two-year period from Russia’s invasion of Ukraine on February 24 2022, to December 31 2023, finds that direct damage in Ukraine has now reached almost $152 billion (141.6 billion euro), with housing, transport, commerce and industry, energy, and agriculture as the most affected sectors.

Damage is concentrated in the Donetska, Kharkivska, Luhanska, Zaporizka, Khersonska, and Kyivska oblasts which are the same regions that suffered the greatest damage as reported in the previous assessment.

Across the country, 10 per cent of the housing stock has been damaged or destroyed, prolonging displacement of Ukrainians from their communities.

The destruction of the Kakhovka Dam and the hydropower plant in June 2023 has resulted in significant negative impacts on the environment and agriculture and exacerbated challenges already faced by people struggling to access housing, water, food, health services.

The RDNA3 lists critical investment needs for short-term recovery and medium-term reconstruction. Where possible, the assessment considers and excludes the needs that have been already met through the state budget and support provided by partners and the international community.

The RDNA3 also highlights the continued need for reforms and policies that catalyze private sector involvement and ensure an inclusive and green recovery, as well as integrating project planning into the medium-term budget planning process.

  “The last two years have seen unprecedented suffering and loss for Ukraine and its people,” said Antonella Bassani, World Bank Vice President for Europe and Central Asia.

“Yet, while this updated assessment documents the extensive damages and consequent needs, it is at the same time a testament to Ukraine’s resilience—demonstrating that the dedication and adaptability of its people have helped to already repair some of the damage and build towards recovery. As the Ukrainian authorities continue on their path towards economic recovery and ambitious reforms, we, the World Bank Group, remain deeply committed to working with them to secure a better future,” Bassani said.

The RDNA3 findings complement the priorities foreseen in reform and investment agenda of the Ukraine Plan that will lay the framework for implementing payments under the Ukraine Facility for the next four years by the EU.

As Ukraine prepares for the EU accession process, these reforms and investments support the principles of “building back better” and the institutional capacity of national and subnational authorities, the EC statement said.

Since the previous assessment (RDNA2), the government of Ukraine, with the support of its partners, has met some of the most urgent needs, the statement said.

For example, in the housing sector, according to the Government of Ukraine data, in 2023, $1 billion (931.7 million euro), was paid out toward housing sector recovery, with most being dedicated to the repair and reconstruction of damaged buildings.

In the transport sector, more than 2000km of emergency repairs were made on motorways, highways, and other national roads.

In the education sector, local authorities rebuilt approximately 500 educational institutions and since January 2023, the share of educational institutions with bomb shelters has increased from 68 per cent to 80 per cent.

The RDNA3 also includes stronger data and analysis of the impact on vulnerable groups of people and on communities. It presents the case for investment in Ukraine’s human capital, the EC said.

“The war is not over. The suffering is not over,” said Denise Brown, United Nations Resident Coordinator in Ukraine.

“But communities in Ukraine are demonstrating significant courage and commitment in driving their own inclusive recovery processes and they need the continued support of their international partners. The future of Ukraine depends upon the people of Ukraine; this is where we need to invest,” Brown said.

The overall costs reflected in the recovery and reconstruction figure of $486 billion —estimated over 10 years—include measures required for rebuilding for a modern, low-carbon, inclusive and climate-resilient future.

The highest estimated recovery and reconstruction needs are in housing (17 per cent of the total), followed by transport (15 per cent), commerce and industry (14 per cent), agriculture (12 per cent), energy (10 per cent), social protection and livelihoods (nine per cent), and explosive hazard management (seven per cent).

Across all sectors, the cost of debris clearance and management (and demolition where needed) reached almost $11 billion (10.2 billion euro), the statement said.

(Archive photo, of war damage in Mariupol in March 2022: Ministry of Internal Affairs of Ukraine)

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