From Capital to Transactions: What Is Holding Back Ukraine’s Reconstruction Investment?

LUCC’s Finance, Banking, Insurance & Reconstruction Capital Committee met on 10 September to examine why a growing pool of international capital has not yet translated into investment at the scale Ukraine’s recovery requires

Ukraine’s reconstruction does not lack interest from investors. It lacks enough projects that investors can actually finance. That was the central message to emerge from a meeting of the Finance, Banking, Insurance & Reconstruction Capital Committee of the Luxembourg-Ukraine Chamber of Commerce (LUCC) Advisory Platform, held in Luxembourg on 10 September.

International financial policy experts, Luxembourg legal specialists and Ukrainian economists examined why the growing pool of international capital has yet to translate into private investment at the scale Ukraine’s recovery requires. Ukraine’s reconstruction and recovery needs are now estimated at almost $588 billion over the next decade, according to the latest World Bank assessment — almost three times the country’s estimated nominal GDP.

As Evgenia Paliy, President of LUCC, who chaired and moderated the meeting, put it: the gap is not simply a shortage of money. What is missing, she explained, is the infrastructure that allows available capital to move into projects — appropriate risk-sharing, bankable projects, reliable information, effective governance, predictable cash flows and investor confidence.

“Ukraine does not face simply a financing gap. It also faces a risk-allocation gap, a bankability gap and, in some cases, an information and confidence gap,” Paliy said.

Public money as a catalyst

Prasad Ananthakrishnan, whose work sits at the intersection of international financial policy, financial stability and risk-sharing, examined how public finance can alter the risk-return equation sufficiently to attract private investors. The scale of that public backstop is already significant: in February 2026, the IMF approved a new $8.1 billion, 48-month Extended Fund Facility for Ukraine, part of a wider $136.5 billion international support package for 2026–29 — yet a residual financing gap of around $63 billion for 2026–27 remains. The central point, participants agreed, was that public and private resources do not need to finance the same risks: public institutions can target the risks that prevent otherwise viable private transactions from proceeding, while private investors retain an appropriate share of commercial risk.

Luxembourg has the tools — not yet the pipeline

Valerio Scollo, Partner, Banking & Capital Markets at GSK Stockmann Luxembourg, presented the Grand Duchy’s legal and financial toolkit for mobilising cross-border capital, including securitisation vehicles, structured-finance instruments and professional payment guarantees. Sophisticated structures, he noted, do not solve a more basic problem: a financing tool cannot manufacture a project that does not yet exist. The European Investment Bank has already provided more than €4.5 billion in financing to Ukraine since 2022, much of it through the €9.5 billion Ukraine Investment Framework — part of the EU’s €50 billion Ukraine Facility — which aims to mobilise €40 billion in public and private investment. Capital controls, currency restrictions and limits on repatriating funds remain significant obstacles to putting that architecture to work.

Resilience that comes with a price

Maria Repko, Deputy Executive Director at the Centre for Economic Strategy, provided the Ukrainian macroeconomic perspective. Ukraine’s economy has shown considerable resilience under extraordinary pressure, she said, but that resilience remains exposed to security shocks, delayed external financing, fiscal pressure, inflation and labour constraints. The energy system performed relatively well over the summer, but the winter outlook is more challenging, and restrictions on grain and metallurgy exports continue to weigh on foreign-currency earnings and fiscal revenues.

War risk remains the hardest risk to price

Participants, including Ihor Olekhov, Partner & Head of Banking & Finance at ADER HABER, highlighted the limited availability of insurance covering current military risks. There are signs that this market infrastructure is beginning to develop: in June 2026, the US International Development Finance Corporation and the World Bank’s Multilateral Investment Guarantee Agency agreed to establish a political-risk insurance framework for the United States-Ukraine Reconstruction Investment Fund, building on the London Conference Framework on War Risk Insurance for Ukraine.

Governance as financial infrastructure

Participants linked financing directly to governance, transparency and the ability to independently verify information — confidence in how funds are used, who controls counterparties and whether information can be trusted. This point also connects the Committee’s work with that of the Governance, Integrity, Legal & Market Access Committee, which reached a similar conclusion earlier in the week: financial risk mitigation alone is not enough if investors cannot establish where money goes.

Where Luxembourg can make a difference

Luxembourg is not going to finance Ukraine’s reconstruction by itself. Its potential role, participants agreed, is to connect capital, financial expertise and investment structures with credible Ukrainian opportunities — bringing together investment funds, banking, insurance, capital markets, securitisation expertise, legal structuring and risk management with projects that have been prepared well enough to attract institutional capital.

The discussion produced a clear conclusion:

Ukraine’s reconstruction challenge is not simply a shortage of capital — it is a shortage of bankable projects able to absorb the capital that already exists.

In her closing remarks, Evgenia Paliy was explicit about LUCC’s role: “not to become an arranger, an investment adviser or a financial intermediary,” but “to create the trusted institutional space in which the right people can meet, challenge assumptions, identify obstacles and — where there is a credible opportunity — take the conversation forward between the appropriate institutions and market participants.”

“Ukraine does not need another discussion about the theoretical availability of capital. It needs mechanisms that allow capital to move,” Paliy said.

The next stage of that discussion will take place at the Finance for Resilience Executive Dialogue on 13 October 2026, alongside the continuing work of the Governance and Energy Infrastructure committees.

ABOUT LUCC

The Luxembourg-Ukraine Chamber of Commerce (LUCC) connects Ukrainian and Luxembourg businesses, institutions and professionals and supports Ukraine’s economic integration with Europe. Through its Advisory Platform, business forums, executive dialogues and other initiatives, LUCC brings together decision-makers and expertise around the practical challenges of investment, market access and cross-border cooperation.