Second Economic Recovery Development Policy Loan

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The development objectives of the Second Economic Recovery Development Policy Loan in Ukraine are to: (i) foster de-monopolization and anticorruption institutions; (ii) strengthen land and credit markets; and (iii) bolster the social safety net. The operation is structured around three pillars aimed at supporting the Government in building a stronger, inclusive recovery, while protecting the vulnerable from the effects of the COVID-19 shock. Pillar 1 fosters de-monopolization and anticorruption institutions. Reforms supported clarify the regulatory framework for the extensive, but under-utilized, inland waterways in Ukraine that are dominated by a single, private sector player. By providing non-discriminatory access to inland waterways to both local and foreign vessels, supported measures promote competition and facilitate much-needed private investment to modernize and expand river transport with potentially significant growth, productivity, and environmental/climate spillovers. Pillar 2 strengthens land and credit markets. The establishment of the partial credit guarantee fund is an essential reform that is needed to ensure rapid provision of loans to small and medium sized farmers on affordable terms, thus supporting an inclusive recovery, especially for smaller credit-constrained producers that have long been under-served by the financial sector. Increased transparency in transactions, streamlined land transfer procedures, and strengthened land governance are fundamental reforms needed to support the transparent and efficient functioning of land markets, and to strengthen security of land tenure and incentives for productivity-enhancing investments in higher value-added agriculture. Pillar 3 bolsters the social safety net. During 2020, as part of crisis response measures, the Government scaled up overall social spending as part of efforts to strengthen the broader social safety net through two World Bank additional financing projects. Five households headed by a pensioner account for half the poor; the elderly are a particularly vulnerable group following the COVID-19 shocks due to significant health and income impacts.