OCDE - Exploring financing mechanisms for Ukraine’s infrastructure reconstruction

23 June 2026 Key messages • 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 p ublic investment. Political and war risk insurance could help facilitate investment in the short term, while infrastructure asset securitisation and a national development bank (NatDB) coul d 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 multil ateral support. A clear regulatory framework and credible state-backed compensation mechanisms can help attract insurers and reinsurers, thereby widening political and war-risk insurance cov erage 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 indepe ndence and capitalisation, and close co-ordination with international financial instituti ons (IFIs) and EU institutions.

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 bi llion in

institutions.

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 bi llion in total damages, with nearly USD 588 billion in recovery and reconstruction needs; concentrated in housing Exploring financing mechanisms for Ukraine’s infrastructure reconstruction2 

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and critical infrastructure sectors. The energy and transport sectors have experienced dam ages 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 constrain ed 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 hardpressed 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

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 an d war-risk insurance, infrastructure asset securitisation, and the formation of a national development ban k, that can reinforce existing financing tools and mobilise much-needed private financing for recon struction. Political and war risk insurance 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-rela ted losses, and to help elevate investor confidence in the Ukrainian market, a range of insurance products coul d be provided (Table 1). For infrastructure projects in particular, which are capital-intensiv e, 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 Framewo rk, 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 r isks 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 i ts 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 un rest, expropriation, government

to protect their investments in countries with a history of political or civil unrest. In i ts 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 un rest, expropriation, government breach of contract or non-payment of project obligations, currency transfer, and specific war a nd 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 inves ted project, interruption of payments, or seizure of assets - risks that are particularly sal ient for capital-intensive infrastructure investments that have financing arrangements with long maturities. PRI is pu rchased by foreign investors and their creditors, such as multinational enterprises, foreign busines ses and financial institutions, and foreign export firms, but also at times by domestic firms benefiting from foreign investment. 3

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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 agenc ies, and specialised private insurers. Table 1. Overview of how war-risks are covered under different insurance products Type of insurance What does it cover How is war risk covered Who typically provides the insurance Typical actors who take out the insurance Political risk insurance (PRI) is typically taken out by foreign investors or their creditors to ensure that their investment (physical assets or financial interests) is protected against potential losses in a country with perceived or real risk of political or civil unrest. PRI coverage can be structured to insure against the following risks : • Expropriation and nationalisation • Breach of contract in a host country • Currency transfer restrictions • Property damage due to war, political violence, and civil disturbance (property damage) PRI coverage can include

structured to insure against the following risks : • Expropriation and nationalisation • Breach of contract in a host country • Currency transfer restrictions • Property damage due to war, political violence, and civil disturbance (property damage) PRI coverage can include coverage for property and investment loss arising from war, invasion, and political violence. • Development Financial institutions (e.g. World Bank, MIGA, and US DFC) • National export credit agencies (ECAs) supporting their country’s exporters and investors • Private insurers (speciality market)- Lloyds, AXA, etc. • Foreign direct investors and creditors • Multinational enterprises • Export firms from abroad Property insurance is typically taken out by businesses or households to protect against property damage and related losses (e.g. business interruption, additional living expenses) Typically, property insurance coverage protects against various types of perils or hazards: • fire • natural hazards • theft and vandalism. War risk is typically excluded from standard household and business property insurance War risk or political violence coverage can be acquired if private insurers offer it either as a standalone coverage or an addon to existing coverage, for an additional premium (cost) for the insured. War risk or political violence coverage typically includes damages from war, political violence, riots, and terrorism. • Private insurers: • War risk coverage is available from speciality market insurers, and in conflict zones may be offered by domestic non-life/general insurers (when war risk coverage needs arise). • Domestic firms and businesses • Households and individuals • Public entities

• Foreign

speciality market insurers, and in conflict zones may be offered by domestic non-life/general insurers (when war risk coverage needs arise). • Domestic firms and businesses • Households and individuals • Public entities • Foreign investors with direct asset ownership in a country Property insurance products could cover property damage due to war-related risk and hel p 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 diffi cult 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 ri ots, 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-ri sk add-ons may be available only when demand or need arises. Sufficient reinsurance suppor t 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 warrisk-related coverage was limited. Domestic insurers' capacity to provide insurance po licies for physical property that included war-risk coverage was virtually non-existent at the start of the invasion. Offering4 

At the onset of the invasion, the need for PRI and war-risk insurance became an immediate need, but warrisk-related coverage was limited. Domestic insurers' capacity to provide insurance po licies for physical property that included war-risk coverage was virtually non-existent at the start of the invasion. Offering4 

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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 privat e 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 frontline regions, while coverage and costs improve further from active war zones. Figure 1. Political risk insurance coverage provided in Ukraine

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 tot al 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 fu rther 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 r econstruction. 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%)

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 m illion) and with multilaterals providing less than 2% of all coverage (annual average of USD 6 mil lion), while ECA coverage share remained relatively similar. The inversion of the shares of P RI provided by the private sector and multilateral organisations after the invasion reflects the important r ole 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 larg e losses. A number of multilateral initiatives have attempted to address this critica l 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 y ears, the World Bank’s MIGA programme, the US International Development Finance Cooperation (US DFC), and 0 500 1000 1500 2000 2500 2019 2020 2021 2022 2023 2024 2025 USD Millions Infrastructure Manufacturing Natural resources Nonspecific Other/Multiple Transportation 0 500 1000 1500 2000 2500 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 202 2 2023 2024 2025 USD Millions ECA Multilateral Private

A. PRI coverage provided by sector B. PRI coverage provided by provider 5

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institutions (European Investment Bank, International Financial Cooperation, EBRD, etc.) ma y 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 i s necessary. The draft law from 2024 considered ideas of mandatory war-risk insurance for a non-exhaustive list of sectors, such6 

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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. Priv ate 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 ins urance 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 c larity 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 whe n 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 i ndustry. Any future

USD Millions ECA Multilateral Private

A. PRI coverage provided by sector B. PRI coverage provided by provider 5

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the European Bank for Reconstruction and Development (EBRD) have, together with other EU i nitiatives and several private sector programmes, provided reinsurance facilities to support the av ailability of insurance products that include war-risk coverage 2. 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 a nd 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 establish ing 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 Jan uary 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 r isks 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 assess ed as implementation progresses. Considerations for a resilient political and war-risk system Ukrainian authorities are making inroads on developing a comprehensive war-ri sk insurance market. To address the fragmented warrisk 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

Ukrainian authorities are making inroads on developing a comprehensive war-ri sk insurance market. To address the fragmented warrisk 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-ris k/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 infrastr ucture projects, can contribute to increased private sector insurance coverage in Ukraine. The present international and multilateral guarantee programmes underpinning the political and war-r isk 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 ins urance 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 inte rnational financial institutions (European Investment Bank, International Financial Cooperation, EBRD, etc.) ma y 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

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 i ndustry. Any future considerations of a more comprehensive system would require clarity on how any public instituti on – be it an individual agency or the NBU – will regulate and guide the enforcement of contract disputes when warrisk considerations are included and ensure that the integrity of processes is free of graft an d 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. Securitisation of infrastructure assets 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 po oled infrastructure assets into liquid investment instruments (e.g. debt securities, trusts, listed funds). Through this mechanism, additional capital can be mobilised and risk partially tran sferred to private markets, with the investors who purchase the security product receiving payments from the underlying infrastr ucture 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 riskreturn 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 tho se looking for greater diversification of their portfolio across investment types and maturities. Public ly 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

diversification of their portfolio across investment types and maturities. Public ly 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 infrastruc ture assets into debt securities, helping to provide new sources of financing. Structurally, the basic pr inciple of an IABS model is one in which an infrastructure asset owner (in Ukraine’s case, the government or state -owned 7

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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 origi nator'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 wi th owning or

(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 wi th 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’) revenuegenerating 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 a