European Union funds meant to promote investment in Ukraine's reconstruction risk gravitating toward large companies because smaller ones are too focused on survival to invest, warned a development bank official working with the funds.
Bogdan Zawadewicz, head of Geopolitical Risk Analysis at BGK (Polish National Development Bank), said in an interview with Kyiv Post that the creators of the EU's €50 billion Ukraine Facility "assumed that it could operate even in wartime conditions."
"Unfortunately, the reality is somewhat different—companies fighting for survival are not investing because they need funds to sustain their current operations," he added. "They are supported by working capital loans or refinancing. The proportion of investment loans is relatively low."
He added that his bank is preparing to apply for guarantees from the European Commission's €50 billion Ukraine Facility, Pillar II, after officials called late last month for proposals from development banks and other participants seeking to pass on EU loans and guarantees to Ukrainian firms and projects.
"At this stage, BGK is seeking investment projects that support the economic development of Ukraine, which could be implemented by Polish and Ukrainian entities," he said. "The investments should have a developmental and modernization character."
