Ukraine’s reconstruction gap: Why public finance has not yet crowded in private capital
Every Ukraine Recovery Conference since 2022 has concluded that private capital must be mobilised for Ukraine's reconstruction – four years on, it has not arrived. Paul Klouman Bekken argues that international public finance has so far substituted for private capital rather than crowding it in, reinforcing a state-led rather than market-based reconstruction.
Summary
The World Bank puts Ukraine's reconstruction needs at almost $600 billion. At every Ukraine Recovery Conference since Lugano in 2022, the conclusion has been the same: public money alone cannot meet a bill this size, and private capital must be mobilised. Four years on, it has not arrived. Fresh foreign equity since the invasion totals roughly $2.9 billion — equivalent to 1.5% of some $200 billion in non-military support over the same period.
This paper draws on three original registers of project-level data from international financial institutions (IFIs), the EU Ukraine Investment Framework (UIF) and Ukraine's Single Project Pipeline — together mapping roughly $80 billion in reconstruction commitments and plans. The registers tell a clear story: public institutions sit at every layer, and public money rarely crowds in private capital.
For support to public authorities (34% of UIF and 33% of IFI project finance), this is logical. However, even support to publicly owned companies with commercial activities and to the private sector so far rarely attracts announced private co-investment. Although 43% of Ukraine's public investment pipeline by volume generates income, almost no private participation has been secured. Hence, public finance substitutes for private capital in segments that in peacetime would engage private participation.
International financial support is no longer only filling a gap; it is settling who will own Ukraine's productive assets after the war. A state-led structure built now will have to be unwound later to meet EU competition rules.
