Geographical equalization of cost of insurance against military risks in Ukraine is unlikely – European Commission

The European Commission does not have the capabilities, including financial ones, to equalize the cost of insurance against military risks in Ukraine regardless of geography and proximity to the frontline, Director for Relations with Ukraine at DG ENEST (General Directorate for Enlargement and Eastern Partnership) of the European Commission Anna Jarosz-Friis said at the Ukraine-EU business summit in Brussels on Thursday, an Interfax-Ukraine correspondent reports.

Responding to business complaints that it is not possible to level the playing field not only between Ukraine and other countries, but also within Ukraine, she said this is not the goal. She said they have certain products and a standing call for interim financing that they have published, where they ask their partners to present projects and products that specifically target difficult geographical areas close to the frontline.

"We will see how they respond," Jarosz-Friis added.

Regarding the possibility of insuring investors' currency risks in Ukraine, the European Commission representative noted that the Commission does not have a special instrument for this.

She said the National Bank of Ukraine is pursuing a very prudent macroprudential policy, including in terms of restrictions on profit repatriation.

In terms of the issues that the European Commission leaves entirely to the discretion of Ukrainian institutions, Jarosz-Friis said that thanks to the excellent management of these risks by the National Bank of Ukraine and the Ministry of Finance of Ukraine, the country has maintained amazing financial stability and macro-financial stability throughout the war.

Lisa Kestner, Head of the International Finance Corporation (IFC) Regional Office in Ukraine, added that some of the risk-mitigation insurance for various programs and products that the European Commission has with IFCs also allows for financing in local currency.

IFC representative from the World Bank Group said that in some cases, they can provide financing in local currency. It is not easy in Ukraine right now, but it is possible. Overall, when it comes to investment and promoting investment in Ukraine, it at least removes some elements of the cost, she said.