Ukraine reconstruction cost grows to €383bn, says World Bank, EU and UN

Wind turbine rising from field of sunflowers

A new joint assessment released by Ukraine and international partners reveals reconstruction costs following one year of invasion by Russia. 

The Government of Ukraine, the World Bank Group, the European Commission and the United Nations now estimates that the cost of reconstruction and recovery in Ukraine has grown to €383bn ($411bn).

The new estimate covers the one-year period from Russia’s invasion of Ukraine on 24 February  2022, to the first anniversary of the war on 24 February 2023. The cost of reconstruction and recovery is expected to stretch over ten years and combines the need for both public and private funds.

This figure was published in the second World Bank Rapid Damage and Needs Assessment (RDNA2) and represents a comprehensive evaluation of war impacts across 20 different sectors. It quantifies the direct physical damage to infrastructure and buildings and describes the impact on people’s lives and livelihoods.

The RDNA2 also includes the amounts needed for recovery and reconstruction in different sectors. For example, it estimates Ukraine will need $14bn for critical and priority reconstruction and recovery investments in 2023.

Prime minister of Ukraine, Denys Shmyhal, explained: “Conducting the second Rapid Damage and Needs Assessment is an important element in Ukraine’s reconstruction strategy. We are grateful to the World Bank for an up-to-date and thorough analysis, which will become an important tool for us and our partners in the implementation of recovery projects – recovery that has already begun.”

EU commissioner for neighborhood and enlargement, Olivér Várhelyi, added: “The Rapid Needs Assessment will help donors channel funds to the priority sectors on the ground. It is important to ensure fast recovery and basic services for the population, namely energy, education and health infrastructure and housing. The EU will continue supporting Ukraine, now a candidate country, with all its tools and instruments at its disposal.”

The RDNA2 estimated needs for the next decade and considers inflation, market conditions, surge pricing in areas of mass construction, higher insurance premiums and a shift in the future towards lower energy intensity and more resilient, inclusive and modern design. The highest estimated needs are in transport (22%), housing (17%), energy (11%), social protection and livelihoods (10%), explosive hazard management (9%) and agriculture (7%). 

Part of the reconstruction work has already been done, although the data in the report does not include detailed information on the loss of infrastructure, housing and business in the occupied regions of Ukraine.

World Bank vice president for Europe and Central Asia, Anna Bjerde, commented: “Continued support for Ukraine is an investment in both the country and the global economy. Development partner support for public investment needs to be complemented by significant private investment to increase the available financing for reconstruction.”

Denise Brown, United Nations resident coordinator in Ukraine, added: “Behind every home or hospital, or school destroyed, a Ukrainian life is affected. Loss of a life, lack of access to proper health care for pregnant women and the elderly or a child who is not able to go to school. While the psychological trauma is incalculable, the RDNA2 is just the beginning of the estimation of loss. But some things can’t be rebuilt.”

The producers of the report stress that estimates from both Rapid Damage and Needs Assessments issued to date should be considered as minimum reconstruction costs because needs will continue to rise as long as the war continues.

However, the report also suggests that the damages since the release of RDNA1 have not escalated as much as might have been expected. This is attributed to several factors, including that the most intense fighting has been contained within areas already faced with significant damage. Additionally, some of the country’s needs have been met by the Government of Ukraine with the support of its partners, as has been seen in the health sector with more than 500 affected health care facilities partially or fully repaired.

The energy and transport sectors have also already benefited from the provision of equipment, materials and financing to make rapid repairs. In addition, the ability to keep the government functioning and essential services flowing, has helped to limit the escalation of recovery and reconstruction costs.