Investors Withdraw More Money from Ukraine Than They Pump In

In the first half of 2021, the inflow of new foreign capital to Ukraine is less than its outflow, accounting for $0.43 billion and $0.46 billion, respectively.

In particular, foreign direct investment in the economy of Ukraine due to the participation of a direct investor in the capital increased by $2.7 billion over six months. However, $2.3 billion of this sum (90%) is reinvested earnings. Only $430 million was pumped in as net foreign direct investment. This indicates the extremely low efficiency of government initiatives and authorities, in general, in attracting foreign investors.

Experts say the reason for the problem is that Ukraine does not protect investors but sues them. For example, long-term disputes, delays in the implementation of the signed Memorandum with “green” investors significantly damaged the image of the state.

Therefore, the country needs reforms. Among them are full-fledged judicial reform, support for the introduction of capital markets in Ukraine, further development of public-private partnerships in such areas as infrastructure, industrial modernisation, decarbonisation of the economy, energy efficiency projects, and much more. For example, Ukraine requires $20 billion in investment to increase gas production and about $17 billion in capital investment to upgrade its ports.

Natalia Tolub