Ukraine’s post-war infrastructure reconstruction needs far exceed the capacity of public budgets and concessional finance alone. Fiscal constraints, high sovereign risk and elevated uncertainty require a broader, more diversified financing toolkit, beyond traditional public investment. Political and war risk insurance could help facilitate investment in the short term, while infrastructure asset securitisation and a national development bank (NatDB) could alleviate investment pressures in the medium to long term and ensure timely, resilient reconstruction aligned with long-term growth and European Union (EU) integration objectives.
Political and war‑risk insurance is critical to unlocking private investment for infrastructure and the broader economy in Ukraine. While demand for war-risk insurance has grown, coverage remains limited, fragmented and heavily reliant on multilateral support. A clear regulatory framework and credible state-backed compensation mechanisms can help attract insurers and reinsurers, thereby widening political and war-risk insurance coverage and helping restore investor confidence in long‑lived infrastructure assets.
Infrastructure asset securitisation can help close medium‑term financing gaps by monetising operational, revenue‑generating infrastructure assets while retaining public ownership. Investment vehicles, such as asset‑backed securities or investment trusts, can attract long‑term investors, freeing up capital for reinvestment into new infrastructure projects, and contribute to capital market development.
A well‑governed national development bank (NatDB) could play a catalytic role in Ukraine’s post-war reconstruction by filling market gaps in long‑term infrastructure investment, de‑risking projects, and crowding in private finance. To ensure additionality and credibility, a NatDB should have a targeted mandate, strong operational independence and capitalisation, and close co‑ordination with international financial institutions (IFIs) and EU institutions.
Exploring financing mechanisms for Ukraine’s infrastructure reconstruction
Ukraine’s recovery from Russia’s full-scale invasion will call for one of the largest infrastructure rebuilding efforts in Europe in recent history. As of the end of 2025, the invasion has caused over USD 195 billion in total damages, with nearly USD 588 billion in recovery and reconstruction needs; concentrated in housing and critical infrastructure sectors. The energy and transport sectors have experienced damages totalling USD 24.8 billion and USD 40.3 billion, respectively (World Bank, 2026[1]). The scale of destruction will require considerable investment to rebuild transport, energy and social infrastructure, to restore services to pre‑war levels and to support the development of future infrastructure to help the country achieve economic resilience and facilitate integration into the EU.
The Ukrainian government's capacity to rebuild key infrastructure will be constrained by limited fiscal space, necessitating alternative methods to mobilise capital. Ukraine’s budget deficit has widened from 4% of GDP in 2021 to nearly 19% in 2026, while public debt has surged to 123% of GDP, driven by a doubling of external borrowing and rising debt-servicing costs that now reach 4% of GDP (IMF, 2026[2]). This has resulted in an increasingly limited fiscal capacity that is constraining the state’s ability to fund large‑scale reconstruction or co‑finance major infrastructure projects. Ukrainian authorities will be hard-pressed to rely primarily on public financing for rebuilding efforts and, in the foreseeable future, will depend heavily on concessional donor support and mobilising private capital.
Meeting future infrastructure investment needs will require innovative financing mechanisms and structures that currently do not exist or are at early stages of development. Ukraine has made considerable efforts to implement a number of financing mechanisms to mobilise funds in recent years. While these mechanisms, and corresponding legislation and regulations have helped mobilise funding during the conflict, they alone may not be sufficient to meet the post-war investment needs. This policy brief provides an overview of a number of complementary financing mechanisms and instruments, namely, political and war-risk insurance, infrastructure asset securitisation, and the formation of a national development bank, that can reinforce existing financing tools and mobilise much-needed private financing for reconstruction.
The ability of Ukraine to attract long-term private sector investment for infrastructure as well as enabling business reconstruction will require the use of political risk insurance (PRI) and property insurance that includes coverage for war-risk.1 Investors face the real risks that invested assets (e.g. infrastructure or broader business assets) can be damaged, seized by invading forces or have operations disrupted. Such risks elevate the cost of capital for investment in general and threaten considerable, if not total, economic loss for investors. To protect investors against unforeseen political and war-related losses, and to help elevate investor confidence in the Ukrainian market, a range of insurance products could be provided (Table 1). For infrastructure projects in particular, which are capital‑intensive, immobile and reliant on long‑term financing, such insurance can play a catalytic role by improving project bankability and lowering the risk of financial or asset loss during times of war. Insurance can bolster existing public investment and support the EU’s Ukraine Investment Framework, which aims to attract private sector investment into the country, including in infrastructure.
Political risk insurance (PRI) can be an effective way to help mitigate the risks that international investors face when investing in Ukraine. Political risk insurance is a specialised form of insurance used by investors to protect their investments in countries with a history of political or civil unrest. In its simplest form, PRI typically insures foreign investors' capital investments and owners’ physical property in a country against political risks that can be triggered by factors such as political or civil unrest, expropriation, government breach of contract or non-payment of project obligations, currency transfer, and specific war and civil disturbance risks (OECD, 2025[3]). PRI is bespoke, and investors who use it can purchase an additional war-risk coverage that protects them from losses arising from physical damage to an invested project, interruption of payments, or seizure of assets - risks that are particularly salient for capital‑intensive infrastructure investments that have financing arrangements with long maturities. PRI is purchased by foreign investors and their creditors, such as multinational enterprises, foreign businesses and financial institutions, and foreign export firms, but also at times by domestic firms benefiting from foreign investment. Given the complexity of PRI, it requires particular expertise to be structured and, as such, is primarily provided by development finance institutions, foreign or domestic export credit agencies, and specialised private insurers.
Property insurance products could cover property damage due to war-related risk and help protect infrastructure, as well as business and household assets. Coverage and protection against war risk are excluded from standard property insurance, as insurers and reinsurance providers cannot reliably estimate the unpredictable and potentially large losses stemming from war, making it difficult to set accurate premiums (ZAIETS, 2022[4]). During conflicts or at times of heightened threat of conflict, war risk coverage can be added to standard property insurance products in order to protect against any property damage or loss arising from war or invasions, war-like events, political violence or riots, and acts of terrorism (Nagurney, Pour and Kormych, 2025[5]). For infrastructure assets, such coverage is particularly relevant not only to protect physical capital, but also to reduce disruption risks that can undermine cash flows, debt servicing capacity, and the long‑term financial viability of projects. Coverage for war risks can be provided for an additional premium (cost) for the insured and includes limits on the total coverage of the value of the asset that can be provided. The private insurance market offers property insurance products, but war-risk add-ons may be available only when demand or need arises. Sufficient reinsurance support and/or government backstops are likely to be necessary to share the risk with insurers by helping absorb the costs stemming from losses.
Overview of Ukraine’s developing political and war-risk insurance market
At the onset of the invasion, the need for PRI and war-risk insurance became an immediate need, but war-risk-related coverage was limited. Domestic insurers' capacity to provide insurance policies for physical property that included war-risk coverage was virtually non-existent at the start of the invasion. Offering deteriorated further when global reinsurers operating in Ukraine initially withdrew their services given the growing uncertainty. The market has slowly recovered in recent years, with increased demand for PRI and property insurance with war risk coverage, and various multilateral public and private initiatives have provided solutions to develop the basis for an emerging PRI and war-risk insurance market. However, the availability of insurance products with war-risk coverage varies by region; it is virtually unavailable in front-line regions, while coverage and costs improve further from active war zones.
Note: Infrastructure aggregates general infrastructure, energy, and renewable energy sectors
Source: Berne Union, OECD calculations
The demand for PRI products overall and for infrastructure in particular has grown significantly in last two years, reflecting the need for broad political and conflict-related insurance coverage. The total PRI coverage in Ukraine was declining in the years prior to the invasion, dropping to USD 94.6 million in 2021. In the year of the invasion, the volume increased to USD 210 million and rose further to USD 2.3 billion and USD 1.2 billion in 2024 and 2025 respectively. Between 2022 and 2025, of the total PRI coverage provided, nearly 29% was for infrastructure-related sectors, 25% for manufacturing, and 19% for transportation (Figure 1 A). The high share of PRI for infrastructure projects underscores the role of PRI as a key risk‑mitigation instrument for mobilising private capital for infrastructure reconstruction. Of the total PRI coverage since the invasion, the majority is provided by Export Credit Agencies (ECAs) (77.9%) and multilateral organisations (21.8%), with virtually no activity from the private sector (less than 0.3%) (Figure 1 B). However, in the years prior to the full scale invasion (2014 – 2021), the private sector was considerably more active, providing nearly 24% of PRI coverage (annual average of USD 75 million) and with multilaterals providing less than 2% of all coverage (annual average of USD 6 million), while ECA coverage share remained relatively similar. The inversion of the shares of PRI provided by the private sector and multilateral organisations after the invasion reflects the important role that multilateral support can provide when elevated political risks reduce private sector appetite.
A series of initiatives by multilateral, EU, public, and private actors is helping to make inroads in expanding war-risk insurance coverage beyond just PRI. The insurance and reinsurance market’s ability to provide broad coverage for war-related property damage was initially limited due to the potential for large losses. A number of multilateral initiatives have attempted to address this critical bottleneck by establishing reinsurance or guarantee facilities to enable local insurance companies offer coverage for war-related property damage for business, infrastructure projects, and households in Ukraine. In recent years, the World Bank’s MIGA programme, the US International Development Finance Cooperation (US DFC), and the European Bank for Reconstruction and Development (EBRD) have, together with other EU initiatives and several private sector programmes, provided reinsurance facilities to support the availability of insurance products that include war-risk coverage2.
Ukraine’s recent efforts to establish compensation support and a regulatory framework are the first steps toward developing a broader PRI and war-risk insurance market to protect businesses and support infrastructure investment. Ukraine’s Export Credit Agency (ECA) in 2024 has been providing a war-risk insurance product to support direct equity investments and loans for manufacturing and infrastructure projects that serve export-oriented businesses (Ministry of Economy of Ukraine, 2024[6]). Moreover, in November 2025, Ukraine’s Cabinet of Ministers approved Resolution No. 1541 establishing a new partial compensation mechanism administered by the country’s ECA and set procedures for provision of direct compensation for destroyed or damaged property and for the partial reimbursement of insurance premiums for war risk coverage (Cabinet of Ministers of Ukraine, 2025[7]), subject to defined limits for total compensation and premium reimbursement levels. The programme, operational since January 2026, is open only to Ukrainian residents, domestic businesses or entrepreneurs. Such efforts by Ukrainian authorities help expand the range of coverage available on the market for war-related risks and provide clarity for businesses, infrastructure investors, and insurers on how to deal with war-risk-related insurance products; although the effectiveness, uptake, and impact of the new programme remain to be assessed as implementation progresses.
Considerations for a resilient political and war-risk system
Ukrainian authorities are making inroads on developing a comprehensive war-risk insurance market. To address the fragmented war-risk insurance landscape, the government presented a draft law “On the System of War Risk Insurance” (Draft Law No. 12372, from December 2024), which aims to establish a comprehensive insurance war-risk system to compensate and provide both war-risk/political violence insurance (i.e., property insurance for war risk) and PRI aimed at compensating businesses and individuals from war-related damages. While the future of this legislation remains unclear, the following section briefly outlines areas that Ukrainian authorities can further consider in any future efforts to create a comprehensive war-risk insurance system.
Establishment of a comprehensive government backed compensation mechanism to help absorb the potential costs of PRI and war-risk coverage in property insurance, including for large-scale infrastructure projects, can contribute to increased private sector insurance coverage in Ukraine. The present international and multilateral guarantee programmes underpinning the political and war-risk insurance market may be too fragmented to constitute a wider compensation mechanism to support the development of a war-risk insurance market that can offer coverage to a wider range of parties, including infrastructure investors and developers.
A well-defined, state-backed compensation mechanism that helps absorb the cost of losses if claims arise will be critical to expanding the market and thus incentivise reinsurance and insurance providers to offer wider coverage in the country. However, such compensation mechanisms will impose contingent liabilities on already-strained public budgets. As such authorities should aim to provide clarity on the potential size of the mechanism and ensure that contingent liabilities are appropriately reflected in state budgets to safeguard fiscal transparency. Additionally, as the fiscal risks of such a compensation mechanism may be too high for Ukraine to bear on its own, collaborating with funding support from international financial institutions (European Investment Bank, International Financial Cooperation, EBRD, etc.) may help share the burden.
Developing an effective war-risk insurance framework will require balancing market expansion with cost and flexibility considerations for different businesses and infrastructure investment. Careful consideration of how policies address the actual exposure to real risks of different businesses is necessary. The draft law from 2024 considered ideas of mandatory war-risk insurance for a non-exhaustive list of sectors, such as construction and real estate with bank mortgages. While mandatory insurance would help create a mass market for war insurance coverage, expanding the base of policyholders and diversifying the risk pool of insured premiums, moral hazard may occur if people and businesses perceive that government compensation or intervention will occur regardless of whether they take out insurance. Private insurers may have better capacity to administer and provide such insurance at scale. Mandatory insurance may also impose a non-negligible cost burden on businesses, such as SMEs or construction firms operating in the infrastructure sector. The draft law also promoted the establishment of standardised insurance products, which could help create a larger market, but may require flexibility for certain businesses or infrastructure projects that may have specific, targeted risks not defined in such standard products.
Political and war-risk insurance functions well when underpinned by a legal and regulatory framework, and transparent procedures. Insurance products benefit from having clear eligibility and conditions in place supported by a robust regulatory and supervisory framework, which in turn provides clarity to address insurers' risks of entering the market and fair treatment and protection of policyholders (OECD, 2017[8]). For investors in infrastructure, transparent enforcement of insurance contracts is essential to ensure that insured risks are credibly transferred and that insurance coverage can be relied upon when deciding on coverage. The draft law on war risk insurance considered establishing a State Agency for War Risk to oversee the functioning of the political and war-risk insurance market, under the supervision of the National Bank of Ukraine (NBU), the current regulatory body of the domestic insurance industry. Any future considerations of a more comprehensive system would require clarity on how any public institution – be it an individual agency or the NBU – will regulate and guide the enforcement of contract disputes when war-risk considerations are included and ensure that the integrity of processes is free of graft and corruption. This will be central to give both domestic and international investors, the confidence that insurance contracts will be enforced in a transparent and non-discriminatory manner.
Asset securitisation mechanisms – such as Infrastructure Asset-Backed Securities (IABS) and Infrastructure Investment Trusts (InvITs) - could be a means to close the infrastructure financing gap once the war is over3. In addition to traditional methods of financing infrastructure projects, such as project loans, infrastructure asset securitisation is an alternative form of debt financing. Infrastructure asset securitisation allows the transformation of present or future cash flows of underlying individual or pooled infrastructure assets into liquid investment instruments (e.g. debt securities, trusts, listed funds). Through this mechanism, additional capital can be mobilised and risk partially transferred to private markets, with the investors who purchase the security product receiving payments from the underlying infrastructure asset (e.g., tolls from a motorway, electricity tariffs).
Asset-backed securities can be structured to attract a diverse set of investors by meeting different risk-return preferences. The improved liquidity and long duration of these instruments enhance their risk profile and make them well-suited for investors deterred by high transaction costs and those looking for greater diversification of their portfolio across investment types and maturities. Publicly listed securitisation vehicles, structured through trusts or fund platforms, can broaden the investor base. In the context of constrained fiscal space and rising infrastructure reconstruction and investment needs, asset securitisation may represent a valuable tool for Ukraine to leverage existing infrastructure assets and catalyse greater private investment.
Asset securitisation objectives and structures
An IABS framework transforms future cash flows from revenue-generating infrastructure assets into debt securities, helping to provide new sources of financing. Structurally, the basic principle of an IABS model is one in which an infrastructure asset owner (in Ukraine’s case, the government or state-owned enterprises) allocates predicted revenue streams of the asset (e.g. tolls, user fees) to a Special Purpose Vehicle (SPV). The SPV then issues debt securities (e.g. bonds) backed by these revenue streams on the open market. Securities can be structured into tranches of different risk-return layers and sold in both primary and secondary markets to private investors. Various IABS models exist, which can utilise a fund structure instead of an SPV (Box 1) and sell fund units to investors, comparable to equities. This framework allows asset owners unlock new sources of income to finance other operations or projects.
Investor risk can be reduced by separating cash-flow exposure from asset ownership through dedicated investment vehicles and by using credit enhancements. Under an IABS, the future cash flow generated by the underlying infrastructure asset is transferred to the SPV and ring-fenced from the originator's broader balance sheet and other public assets. This structure reduces investors' exposure by linking credit risk primarily to the performance of the underlying assets, rather than to the creditworthiness of the asset owner (in the Ukrainian context, the public sector). Additionally, credit enhancements – such as collateralisation, cash reserve accounts, access to liquidity facilities and government guarantees – can further support the cash flow. Investors are also not exposed to costs and depreciation risks associated with owning or maintaining the asset, as they only hold the rights to the future income it generates.
Infrastructure Investment Trusts (InvITs)4 is an alternative asset securitisation structure that monetises a pool of existing (brownfield) infrastructure assets to recycle fixed capital into new investment. Under an InvITs model, the government transfers its ownership stake in one or more (i.e. ‘pooling’) revenue-generating infrastructure assets, typically through a SPV, into a trust structure (Box 1). The trust then raises capital from investors, either through a public listing on a stock exchange or a private placement. The trust can use a combination of both equity and debt financing at either the trust level or within the underlying SPV. Pooling multiple assets under an InvIT through a regulated and transparent trust structure allows investors to gain exposure to returns of a diversified set of infrastructure assets without directly owning, operating, or managing them. The key difference between IABS and InvITs lies in the latter's design, which allows pooling of multiple assets and the addition of new assets over time. In Ukraine, where the majority of infrastructure assets are state-owned and operated, this structure could enable the government to undertake securitisation at scale.
IABS and InvITs are well-suited for long-term investors as they help mitigate key risks associated with direct infrastructure investment. Investors seek stable and predictable income streams to match their long-term obligations, which asset-backed securities are well-suited for, given their risk-return profile and structural features. Additionally, the asset securitisation structures separate asset ownership from financial exposure, shielding investors from operational risks, asset depreciation and operational complexities. This could better align with the preferences of investors that aim to limit exposure to high-risk or actively managed assets.
Thailand Future Fund
The Thailand Future Fund (TFFIF) is an infrastructure asset securitisation undertaken in Thailand. Established in 2016 by the State Enterprise Policy Office (SEPO) under Thailand's Ministry of Finance, the Fund was designed as an investment vehicle to monetise existing highway assets. The Fund's underlying asset consists of the rights to 45% of net toll revenues from two key expressways, secured through a 30-year Revenue Transfer Agreement with the Expressway Authority of Thailand (EXAT), which retains ownership and operational responsibility for both routes.
The TFFIF was listed via an IPO in October 2018, raising approximately USD 1.4 billion (THB 44.7 billion). The offering attracted a broad investor base: 46.1% of units were reserved for retail investors, 33.5% for cornerstone investors, 16% for institutional investors, and 8% for the Ministry of Finance. Fifteen cornerstone investors, including major insurers, banks, and asset managers committed to the IPO ahead of launch, lending the offering credibility. There are plans to expand the Fund's asset base to include additional motorways. The raised capital is earmarked for greenfield investment in variety of infrastructure sectors like ports, airports, telecommunications and urban connectivity.
India’s National Highways Infrastructure Trust
The National Highways Infra Trust (NHIT) is an Infrastructure Investment Trust (InvIT) created by the National Highways Authority of India (NHAI) to monetise toll-road assets while keeping the highways under public ownership. NHIT follows a standard InvIT structure with NHAI as sponsor, IDBI Trusteeship Services as trustee, a government-owned investment manager handling administration, and an NHAI-owned project manager responsible for operations and maintenance. The Trust’s portfolio has expanded through successive fundraising rounds to 15 operational toll roads across nine states, and the vehicle has been rated ‘IND AAA’/Stable’ due to its stable toll-based cash flows, quality asset base, and strong institutional framework.
NHIT has attracted a broad institutional investor base spanning foreign pension funds, domestic pension and provident funds, mutual funds, insurance companies, and banks. Across three monetisation rounds, NHIT raised about USD 3.09 billion (approximately Indian Rupee 26 125). The third round was especially significant, combining roughly USD 861 million in equity with USD 1.07 billion in debt, showing NHIT’s ability not only to attract long-term institutional capital but also to mobilise substantial financing at scale.
Source: World Bank (2025[9]), Asset Recycling Handbook, https://ppp.worldbank.org/sites/default/files/2025-05/Asset%20Recycling%20Handbook.pdf
Required conditions and compatibility with Ukraine
Adoption of specialised legislation governing asset securitisation currently constrains Ukraine’s ability to use asset securitisation to mobilise capital for infrastructure. Mortgage-backed securitisation was regulated under the Law on Mortgage Bonds, although only limited transactions have taken place, including a domestic issuance in 2007 by Ukragasbank, and a foreign mortgage-backed Eurobond by PrivateBank. Securitisation activity otherwise remains limited beyond this segment. A legal framework governing asset securitisation, clear rules on SPV structures, asset transfer, investor protection, and defined eligible asset classes creates legal certainty and enables more innovative securitisation mechanisms for infrastructure assets. A draft securitisation law was first circulated in 2023, and further efforts to regulate asset securitisation have been made with the introduction of the Draft Law “On Securitisation and Covered Bonds” (No. 15172) in the Verkhovna Rada of Ukraine in April 2026, which repeals the former Mortgage Bonds Law (Verkhovna Rada of Ukraine, 2026[10]). Adoption and implementation of this draft law will be essential to enable broader use of asset securitisation for Ukraine’s reconstruction efforts.
A defined pool of underlying assets with a demonstrated history of reliable revenues, managed by credible asset owners, is a prerequisite for infrastructure asset securitisation. An important requirement for successful asset securitisation is a clearly defined pool of operational (‘brownfield’) assets to draw upon with stable and predictable cash flows, and transparent revenue records. The needed scale, stability and risk profile can support a successful securitisation through bonds or investment trust structures. Equally important is the credibility of the asset owner or operator, whose financial and operational track record can strengthen investor confidence in the continuity and quality of the underlying cash flows. Ukrainian SOEs that own and operate profitable infrastructure assets are well-positioned to originate asset pools for securitisation. Provided that SOEs can demonstrate credible operational track records, transparent financial management and robust governance, they can help create scale and strengthen investor confidence.
By expanding the supply of long-term, tradable securities available to local and foreign investors, IABS can create alternative financing avenues and expand the investor base. Given the scale of Ukraine’s reconstruction financing needs, expanding the investor base to include strong participation of foreign capital will be necessary. An enabling legal and regulatory framework that supports transparency and predictable enforcement, together with non‑discriminatory treatment of foreign investors, will therefore be critical to facilitate access to infrastructure asset‑backed instruments. While credit ratings are not a prerequisite for asset‑backed security issuance, obtaining ratings—particularly for domestic‑currency instruments—can help boost their attractiveness to potential investors by improving transparency and comparability, although any plans to obtain a credit rating must be weighed against its costs. Over time, the issuance of IABS can also contribute to capital‑market development by supporting liquidity, standardisation and price discovery, even where initial market depth is limited. Additionally, the domestic retail investor base can be unlocked when infrastructure asset-backed securities are publicly traded. International experience, such as in Thailand, suggests that domestic retail investors may be keen to participate in instruments that allow them to share in the benefits of the country’s reconstruction.
The core objective of a national development bank (NatDB) is to provide financing to support the development of infrastructure projects that are too complex or require blended financing for private capital participation. NatDBs have a development-oriented mandate, aimed at supporting economic and social development through filling financing gaps (World Bank, 2026[11]). Private finance may be reluctant to invest in projects with uncertain economic and social returns (e.g. economic and social infrastructure) or assets that are difficult to value due to limited data or elevated risk perceptions. NatDBs can step in to fill emerging financing gaps when the private sector cannot take on the risks or has insufficient appetite for certain types of projects. Financial functions of NatDBs vary, however, primarily include direct or indirect lending, guarantees, equity injections, and/or channelling of government programs (World Bank, 2026[11]).
NatDB’s advantage lies in its ability to leverage public capital to crowd in private investment and deepen domestic financial markets. Typically, NatDBs fund their operations through capital contributed by shareholders (usually the state and external development partners), retained earnings and capital market funding. NatDBs are able to leverage explicit or implicit state backing to secure a superior credit rating, enabling them to raise private capital on national or international markets. This capital advantage enables them to lend directly to domestic borrowers or to leverage it as a capitalisation strategy to back other financial instruments aimed at crowding in long-term private financing. NatDBs can play an additional role in deepening domestic capital markets and contributing to financial market development.
Historically, NatDBs have been a cornerstone of reconstruction efforts for post-war economies and a gateway for EU structural funds in accession countries. The Kreditanstalt für Wiederaufbau (KfW), the German Development Bank, was first founded in 1948 to channel Marshall Plan funds into post-war reconstruction. Today, the bank is an AAA-rated institution financing Germany’s energy transition, the SME sector, as well as international development. Operational independence and a long-term mandate that evolves with national priorities have been credited for the KfW’s success. France’s Bpifrance was created in 2012 by merging several public financial institutions under the Caisse des Depots group. The institution combines SME financing, private equity and export credit insurance functions. Most recently, the Polish National Bank, Bank Gospodarstwa Krajowego (BGK), served as the primary channel for EU pre-accession and structural funds, demonstrating how a NatDB can play a key role in helping distribute EU financial instruments in accession countries.
Different NatDB models exist that could help shape a future NatDB in Ukraine. There are three overarching NatDB model types: a policy bank, a promotional bank, and a wholesale/second-tier bank. The policy bank model is characterised by state ownership and close government oversight, with the policy mandate ranking precedence over strict credit viability considerations. Under the promotional bank model, as exemplified by KfW in Germany and Bpifrance in France, the state retains ownership and sets the broad mandate, but operational decisions are made by arm’s length management, who are hired for their professional credentials, and according to transparent credit criteria, with independence protected by statute. A wholesale or second-tier model does not lend directly to end-borrowers (often SMEs), and instead, through intermediaries (typically commercial banks). This model limits the NatDB’s burden of being a credit originator and having to monitor lending activity, and in turn helps provide lending support that develops the banking system. In the face of the comprehensive infrastructure reconstruction and business development needs Ukraine is facing, a hybrid model, combining promotional bank and wholesale lender functions, could best fit the country’s needs. A NatDB in Ukraine could direct financing towards infrastructure and policy priorities, and simultaneously channel investment through the banking system to fill the gaps in lending to small-scale business segments that require financing above local bank lending limits, but below IFI program thresholds5.
A well-designed NatDB can more effectively facilitate financing towards priority sectors and infrastructure, and harness the expertise of the private sector. Preliminary estimates suggest that the private sector could meet one-third of the total reconstruction needs of Ukraine (World Bank, 2023[12]). However, realising this private sector potential requires institutional mechanisms that can reduce investment risks, provide long-term capital at affordable rates and build a bankable project pipeline needed to attract private investors. A NatDB can support the potential to create such mechanisms and provide the necessary instruments to catalyse private investment. Chief among them are co-lending or syndicated loans, along with credit guarantees, and first-loss tranches that can crowd-in private sector participation (such as banks and private investors) by reducing their risk exposure in large scale and long-term projects.
Key considerations for a well-functioning NatDB in Ukraine
A NatDB in Ukraine could play a key role in filling market gaps through a targeted mandate. In a post-war environment, Ukraine’s reconstruction efforts will likely face a number of issues when trying to mobilise financing for projects, most notably limited private capital and elevated country and project counterparty risks. However, a Ukrainian NatDB can fill these gaps by providing long-term, affordable capital to SMEs, municipalities (hromadas) and in key sectors such as infrastructure. To this end, such an institution will require a targeted mandate anchored in policy priorities that reconcile immediate reconstruction needs and development objectives.
Efforts to develop a NatDB in Ukraine are underway with the newly established National Development Institution (NDI), which began operating in 2026 (Verkhovna Rada of Ukraine, 2025[13]). The core mandate of the NDI is to “promote economic and social development and recovery of Ukraine” and it is geared towards financial and technical support of MSMEs under the second-tier NatDB model (NDI, 2026[14]). This is an encouraging first step, however, the government may consider expanding the organisation’s mandate to enable direct financing functions for large strategic infrastructure projects or on-lending to municipalities.
Additionality considerations should be a central principle governing NatDB financing operations to not crowd out private investment and coordinate efforts with multilateral partners. Additionality in the financial sense is the principle of complementing existing stakeholder financing activities instead of duplicating them. Private lending in Ukraine is mostly carried out by banks, which are liquid but have difficulty providing the long-term financing needed for reconstruction investment in infrastructure, industrial and regional projects. A Ukrainian NDI could fill this gap and provide long-term, affordable capital to segments underserved by commercial banks; however, it is critical for the NDI to observe the principle of additionality and avoid crowding out private sector participation in projects that otherwise would have occurred without the NDI’s intervention. The NDI should take care to coordinate its operations with multilateral partners to avoid duplication of efforts.
For the NDI to effectively carry out its mandate and access international capital markets, its credibility must be anchored in robust capitalisation, government backing and institutional design. In a post-war context, the NDI will face elevated market risk perceptions, which will need to be mitigated to secure funding from international and domestic capital markets on favourable terms that can be passed through to domestic borrowers. A capitalisation strategy, that is government-led, may be structured as an equity injection within the broader reconstruction financing policies and frameworks, and coordinated with the Ukrainian Facility. An adequate initial equity base that could support leverage ratios consistent with achieving investment-grade capitalisation can enable the NDI to generate its own funds for reconstruction, rather than relying exclusively on further government transfers. The law establishing the NDI puts a 51% state ownership floor, yet the institution is currently fully state-owned, with management exercised through the Ministry of Finance. Participation of EU partners and other international stakeholders as shareholders can further strengthen the NatDB’s capital base and credibility, while also providing technical assistance, capacity building and the transfer of institutional best practices. Aligning governance and management frameworks with international standards will be critical both to reinforce institutional credibility and to support Ukraine’s broader EU accession objectives, ultimately underpinning sustained access to international capital markets.
A NatDB in the Ukrainian context will require strong governance and independence of operations. Sound and independent governance is a critical dimension of any NatDB to prevent misallocation of funds and to safeguard operational independence from political direction in lending decisions. This is best achieved through a combination of statutory protections from political involvement, an arm’s length board composition, transparent lending criteria and technical assistance from European development partners on institutional design. Legislation should explicitly prohibit direct government influence on individual lending decisions, with lending policy set by an independent board of directors rather than a line ministry. Board composition is also important, with international best practices calling for a majority of independent directors with relevant professional experience. While the current NDI mandate includes transparency, financial sustainability and strategic oversight considerations, the mandate could be further strengthened to enshrine political independence and define the mechanisms through which national policy priorities are aligned with the NDI strategic objectives.
Consider combining government guarantees with international support to create a facility to address existing insurance gaps, along with the advancement of relevant legislation, defining compensation arrangements, and strengthening regulatory oversight.
Develop dedicated legislation on asset securitisation to enable securitisation of infrastructure assets. Consider implementing clear and transparent legislation that includes provisions covering the legal structure of securitisation mechanisms, eligibility criteria for underlying asset, and the processes governing securitisation.
Establish a survey of state-owned infrastructure assets to identify those suitable for securitisation, based on their revenue-generation track record and operational maturity. From this, develop a pipeline of infrastructure assets fit for securitisation and consider pooling multiple assets under a single securitisation structure to diversify risk.
The mandate and functions of the NDI could be further developed to address the financing gaps and development objectives needed for Ukraine’s post-war infrastructure reconstruction and development efforts. The mandate can be strengthened to incorporate an additionality driven approach and alignment with national priorities. Robust capitalisation, operational independence, IFI participation and alignment with EU instruments can position the NDI as a credible institution for financing long-term investment.
OECD (2026) Infrastructure Policy Review of Ukraine, OECD Publishing, Paris, https://doi.org/10.1787/eeef2059-en
OECD (2026), “Insuring against war – how to protect investments in times of geopolitical uncertainty”, https://www.oecd.org/en/blogs/2026/04/insuring-against-war-how-to-protect-investments-businesses-and-households-in-times-of-geopolitical-uncertainty.html
OECD (2025), G20/OECD Report on blended finance derisking measures: The case of guarantees and credit enhancement instruments, OECD Publishing, Paris, https://doi.org/10.1787/9df5fe74-en.
References
[7] Cabinet of Ministers of Ukraine (2025), № 1541 - Деякі питання надання часткової компенсації вартості майна суб’єктів господарювання, знищеного чи пошкодженого внаслідок збройної агресії Російської Федерації, а також часткової компенсації страхових премій за договорами страхування від воєнних ризиків.
[2] IMF (2026), April 2026 World Economic Outlook, https://www.imf.org/en/publications/weo/issues/2026/04/14/world-economic-outlook-april-2026.
[17] Kyiv School of Economics (2024), , https://kse.ua/about-the-school/news/kse-presented-recommendations-for-improving-the-ukraine-investment-framework-under-the-ukraine-facility/.
[6] Ministry of Economy of Ukraine (2024), ECA insures first investment loan against war risks: Yuliia Svyrydenko, https://www.kmu.gov.ua/en/news/eka-zastrakhuvalo-pershyi-investkredyt-vid-voiennykh-ryzykiv-iuliia-svyrydenko.
[5] Nagurney, A., I. Pour and B. Kormych (2025), “Integrated crop and cargo war risk insurance: application to Ukraine”, International Transactions in Operational Research, Vol. 33/1, pp. 5-37, https://doi.org/10.1111/itor.70038.
[14] NDI (2026), , https://bdf.gov.ua/pravovi-zasady/.
[3] OECD (2025), G20/OECD Report on blended finance derisking measures: The case of guarantees and credit enhancement instruments, OECD Publishing, Paris, https://doi.org/10.1787/9df5fe74-en.
[16] OECD (2022), “Financing transportation infrastructure through Land Value Capture: Concepts, tools, and case studies”, OECD Regional Development Papers, No. 27, OECD Publishing, Paris, https://doi.org/10.1787/8015065d-en.
[8] OECD (2017), OECD Guidelines on Insurer Governance, 2017 Edition, OECD Publishing, Paris, https://doi.org/10.1787/9789264190085-en.
[15] OECD/Lincoln Institute of Land Policy, PKU-Lincoln Institute Center (2022), Global Compendium of Land Value Capture Policies, OECD Regional Development Studies, OECD Publishing, Paris, https://doi.org/10.1787/4f9559ee-en.
[10] Verkhovna Rada of Ukraine (2026), Draft Law of Ukraine “On Securitisation and Covered Bonds (Reg. No. 15172), https://itd.rada.gov.ua/billinfo/Bills/Card/69875.
[13] Verkhovna Rada of Ukraine (2025), Law of Ukraine On the National Development Institution (No. 4622-IX).
[11] World Bank (2026), Good Practices for National Development Bank: Guidance Note for the Western Balkans, https://documents1.worldbank.org/curated/en/099021626052516859/pdf/P500581-ac09ac24-be64-4e03-ab38-ef1a9b8c7ce5.pdf.
[1] World Bank (2026), “Ukraine Fifth Rapid Damage and Needs Assessment (RDNA5), , February 2022 - December 2025”, https://openknowledge.worldbank.org/entities/publication/c52d910e-e4f9-4bcd-9257-6867bdd89dd4 (accessed on 19 March 2026).
[9] World Bank (2025), Asset Recycling Handbook, Washington, DC: World Bank, https://ppp.worldbank.org/sites/default/files/2025-05/Asset%20Recycling%20Handbook.pdf.
[12] World Bank (2023), Private Sector Opportunities for a Green and Resilient Reconstruction in Ukraine: Volume 1 Synthesis Report, https://www.ifc.org/content/dam/ifc/doc/2023/synthesis-report-private-sector-opportunities-for-a-green-resilient-reconstruction-ukraine.pdf.
[4] ZAIETS, O. (2022), “INSTITUTE OF MILITARY RISKS INSURANCE: IMPLEMENTATION OF NORMS OF INTERNATIONAL LEGISLATION”, Economic innovations, Vol. 24/3(84), pp. 43-50, https://doi.org/10.31520/ei.2022.24.3(84).43-50.
← 1. Also referred to as political violence.
← 2. A non-comprehensive list of support initiatives since the invasion includes: MIGA directly deploying USD 217 million in PRI and developing war-risk insurance products with Poland's ECA. The US DFC is working with global reinsurer AON in 2024 to establish a joint war-risk insurance program that issued USD 50 million in PRI facility to support reinsurer ARX to expand war-risk insurance offerings, and with MIGA to insure a manufacturing project. The EBRD, along with AON, created the Ukrainian Recovery and Reconstruction Facility (URGF) to provide a guarantee enabling global reinsurers to underwrite war-risk insurance coverage for Ukrainian insurance companies. The private sector has also become involved, with McGill and Partners providing the Ukraine War Risks Reinsurance Facility to expand insurance coverage. Marsh McLennan developed the Unity Facility, with the Ukrainian government and private sector participants, to provide war-risk insurance for grain/goods cargo ships operating in the Black Sea. The EU has eased state-aid rules for Poland so that its ECA can support reinsurance and insurance war-risk coverage for the transport sector in Ukraine. The Ukraine Donor Platform brings EU member state ECAs, which are providing guarantees, insurance, and medium-long term lending to help reduce investment risk for EU businesses investing in Ukraine
← 3. While not covered in this policy brief, land-value capture mechanisms are an alternative to infrastructure asset securitisation that represent a distinct but important approach to mobilising infrastructure financing. Unlike infrastructure asset securitisation, which monetises revenues from existing operational assets, land‑value capture instruments enable public authorities to recover part of the increase in land values generated by infrastructure investment. These revenues can be earmarked or pledged to support infrastructure investment; for more information, see (OECD/Lincoln Institute of Land Policy, PKU-Lincoln Institute Center, 2022[15]) and (OECD, 2022[16])
← 4. It should be noted that in civil law jurisdictions, such as Ukraine, the use of InvITs – which are more widely implemented in common law jurisdictions - would likely require specific enabling legal and regulatory frameworks to support trust-based or equivalent investment vehicles (e.g., funds).
← 5. Such as for lending at EUR 5-10 million (Kyiv School of Economics, 2024[17]).