Ministry of Economy on US contribution options to the investment fund: America is considering military aid or funds
Kyiv • UNN
The US may contribute its share to the Reconstruction Investment Fund either through military aid or funds. Both options are currently being considered by the American side.
The US can contribute to the Reconstruction Investment Fund with military aid or funds. Both mechanisms are being considered by the Americans.
This was announced by the First Deputy Minister of Economy Oleksiy Sobolev during a press conference, reports UNN.
Details
How does the Fund's mechanics work? The initial agreement with the US is 50/50 in the distribution of profits from the Fund. Contributions from Ukraine - 50% of royalties and licenses for auctions. The Fund is built on this basis, it earns profits and they are distributed 50/50. The US can contribute its share with military aid or funds. Both mechanisms are being considered by the US. That is, in the negotiations on these technical agreements, there are discussions about the technical implementation of all this. Therefore, we see that the US is very serious about both mechanisms. We expect that both mechanisms will be launched this year
Sobolev also said that the Ministry of Economy, together with the Ministry of Finance and the Ministry of Environment, assessed the possible profit from the Fund.
We made an assessment of this with the Ministry of Finance and the Ministry of Environment. Imagine that the agreement was signed in 2019, how much money would have come into this Fund from licenses, from royalties - it is about UAH 3 billion. In this sense, we understand that in order for the Fund to be successful and earn in the volumes that are of interest to Ukraine and the US, additional cash inflows from America are needed. How do we think this will happen? Firstly, they can make contributions to the Fund itself. Secondly, our partner - the DFC corporation, is a US development bank, that is, its task is to develop critical, strategically important projects for the US around the world
Therefore, according to him, for every hryvnia that the Fund invests in Ukraine, it is determined that its investments can be exclusively in Ukraine. Investments from the DFC itself will also be added.
Similarly, the agreement, which needs to be ratified, stipulates that the parties, including the United States, are interested and will make efforts to attract additional investors from the private sector, international financial organizations. Thus, for every hryvnia that the Fund invests in Ukraine, there will be several additional hryvnias from the DFC and additional investments from other international partners
Thus, according to Sobolev, the amount that will be multiplied in the Fund in investments in Ukraine.
The first 10 years there is an agreement that profits are not distributed. Profits can only be reinvested and after 10 years profits can be distributed. Not contributions from Ukraine, which come from royalties, but profits. Thus, in 10 years, we expect that this will allow us to increase the asset base of the Fund, which will be a powerful structure. But now everything depends on the initial launch, I will not announce approximate figures
Context
Ukraine signed an agreement with the United States on the creation of a Reconstruction Investment Fund, which is called an agreement on mineral resources.
Prime Minister Denys Shmyhal reported that the agreement is based on five key principles:
- equality: the Fund is created on a 50/50 basis and both parties have equal voting rights;
- preservation of control: Ukraine retains full control over mineral resources, infrastructure and natural resources;
- new investments, not debts: the agreement does not provide for any debt obligations;
- guaranteed investors and buyers: the Fund will invest in projects and will guarantee commercial purchases of products on a "take or pay" basis;
- consistency with the European integration course: the agreement will not be an obstacle for Ukraine to become a member of the EU.
On May 2, the Cabinet of Ministers submitted to the Verkhovna Rada a draft law on the ratification of the Agreement between Ukraine and the United States on mineral resources.
