Ukrainian communities will soon be able to access funding for their projects directly from the Polish state development bank BGK. This funding is intended for the restoration of critical infrastructure, including water supply and heating systems, as well as energy and transport projects. A key advantage is the ability to combine the bank’s credit lines with EU grants, which significantly reduces the cost of borrowing for communities.

During a working meeting between Olha Zykova, Deputy Minister of Finance of Ukraine, and a BGK delegation led by Karol Tofil, practical steps for launching the bank’s operations in Ukraine were discussed. After the ratification by the Verkhovna Rada and the signing by the President of the relevant Agreement in March, BGK was granted a status in Ukraine similar to that of international financial organisations. This allows the bank to operate without unnecessary bureaucratic barriers.

Proposals for communities:

• Direct funding for local projects – renovation of boiler houses, networks and critical infrastructure facilities.
• Combination of instruments – EU grants + BGK loans to reduce the cost of resources.
• Guarantees for local borrowing – risk mitigation mechanisms for communities.
• VAT privileges for international technical assistance projects and foreign loans.

Framework projects already approved:

Two BGK projects for Ukraine have been approved under the Ukraine Investment Framework (UIF):

1. Private sector – investments in energy, transport, and construction (approximately EUR 200 million).
2. Public sector – support for the restoration of community infrastructure (EUR 20 million).

The Decentralisation Portal reported earlier that on 26 February, the Verkhovna Rada ratified the Agreement between the Government of Ukraine and the Government of the Republic of Poland on the activities of Bank Gospodarstwa Krajowego in Ukraine. We then described in detail how this Agreement explicitly identifies local governments (municipalities) as key beneficiaries, and also provides for technical assistance and training for local officials. The parties are now moving on to the practical implementation of these agreements — specific mechanisms for approving local borrowing and the terms of cooperation through Ukrainian state-owned banks with European Commission guarantees are being discussed.

Community leaders should start preparing their investment projects for the restoration of critical infrastructure right away. The Polish BGK, together with the Ministry of Finance of Ukraine, is continuing practical coordination to launch practical financing at the local level as soon as possible. There is an agreement to continue the exchange of experience and joint initiatives to strengthen the Ukrainian-Polish partnership in reconstruction.