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Newsletter #25 Reconstruction Ukraine - June 2025

June brought some critical developments for Ukraine on both the military and diplomatic fronts. The country intensified its military operations launching a series of successful strikes, most notably the high-impact Operation Spiderweb. On the international stage, another major symbolic step was taken with the signing of an agreement to establish a Special Tribunal for the Crime of Aggression against Ukraine.

Yet even as Ukraine advances strategically and diplomatically, the toll of the ongoing war remains severe. The country continues to face relentless attacks across its territory, causing significant destruction and loss of life. Despite persistent diplomatic efforts toward peace, the escalation of assaults in June underscored Ukraine’s urgent need for sustained international support.

Against this backdrop, we take a closer look at the state of Ukraine’s economy as of June 2025 and examine the progress made in humanitarian demining since the start of full-scale war.

Also in this edition:

• New EU-Ukraine trade terms and financing initiatives for European companies operating in Ukraine, developed by EU and its member states;

• Italy’s contribution to Ukraine’s demining efforts;

• The latest IMF review of the Extended Fund Facility (EFF), unlocking new opportunities for financial support;

From the private sector:

• Grammarly’s $1 billion funding round and strategic expansion plans;

• The joint initiative by DTEK and Octopus Energy Group to enhance Ukraine’s energy resilience.

We are fully aware of the Ukraine Recovery Conference (URC) held in Rome in July — a key moment on the international agenda — and will return to it in detail in our next edition at the end of August, with a full analysis of the commitments made and their concrete implementation.

Enjoy the read!

Ukraine Reconstruction: Key Figures

• Macro

Ukraine’s economy continued to show resilience in the first half of 2025, despite the ongoing war and structural challenges. Strong consumer demand and stable banking conditions supported gradual recovery, although labour shortages, security risks, and inflationary pressure remained significant constraints. International partners remained an important source of macroeconomic stability, providing essential financial assistance that enabled the government to maintain balance and respond to urgent needs.

The figures below reflect key trends in Ukraine’s economic and financial landscape:

• 15.9% annual inflation rate recorded in May 2025, driven primarily by a sharp increase in prices for raw food products due to poor spring weather, active exports and rising production costs,sustained consumer demand.

• $45.1 billion volume of international reserves in June 2025.

• $22 billion total external financing attracted by the Ukrainian government in the first half of 2025, including:

             - $17.6 billion from G7 countries and the EU via the ERA mechanism (based on proceeds from frozen Russian assets),

             - $3.8 billion from the European Union through the Ukraine Facility (concessional loans and grants),

             - $400 million from the IMF,

             - $190 million from Japan (concessional financing),

             - $50 million from the World Bank (concessional financing).

• around $137 billion total budgetary support provided to Ukraine by international partners since the beginning of the full-scale war.

• 12% unemployment rate in June 2025, the lowest since the start of the full-scale invasion.

These indicators highlight both the scale of international support and the persistence of underlying risk. While Ukraine’s economy remains resilient, its stability continues to depend heavily on external financing and the broader security situation.

Source: Centre for Economic Strategy, National Bank of Ukraine, Ministry of Finance of Ukraine

• Demining activities

As of 2025, humanitarian demining remains a crucial yet highly complex part of Ukraine’s recovery process. Although an estimated 139,000 km² of territory is potentially contaminated with explosive remnants, including 14,000 km² of water bodies, ongoing hostilities currently limit demining operations to just 31,000 km².

Despite these considerable challenges, Ukraine has made substantial progress in expanding safe areas. Compared to the previous year, the total land declared safe has increased by nearly 50%, reflecting notable advancements in this demanding field.

Key data highlighting this progress include:

• ₴790.2 million (approx.€16.13 million) in total contractual commitments have been signed under the national compensation program for agricultural land demining;

• 13,300 hectares have been covered by initiated demining operations since the launch of the program;

• 2,870 hectares have been fully cleared;

• In June 2025, an additional 2,470 hectares were added to the program, with 820 hectares fully demined that month;

• 241 sites have already been inspected since the beginning of 2025, covering a total area of 32 km² ;

• A total of 58 contracts have been signed since the beginning of the program, including 7 in June;

• Ukraine now has 107 certified demining operators(+6 in June);

• 278 mechanical demining machines are available in the country (+3 in June);

• ₴162.8 million (approx.€3.32 million) has been disbursed for completed demining operations.

These figures show Ukraine’s determined efforts to mitigate the risks posed by explosive hazards and restore safe access to affected territories. Nevertheless, the scale of contamination remains significant, and continued support and resources will be essential to sustain and accelerate demining operations moving forward.

Source : Ministry of Economy of Ukraine, Ministry of Defence of Ukraine

Key developments for Ukraine’s Reconstruction

• Ukraine simplifies business participation in recovery through the adoption of a new public-private partnership law

The Verkhovna Rada of Ukraine has adopted a law that significantly simplifies the involvement of private businesses in the country’s recovery through the mechanism of public-private partnerships (PPP). The aim of the  new legislation is to:

• reduce bureaucratic barriers,

• provide financial guarantees for investors,

• speed up the implementation of critically important projects.

As Ukraine’s First Deputy Prime Minister and Minister of Economy Yuliia Svyrydenko noted, these legislative changes will allow the PPP mechanism to finally function effectively and attract up to $1 billion in investments for specific projects over the coming years. Priority areas include ports, hospitals, and municipal infrastructure.

What does the new law change?

1. Electronic Trading System (ETS). The entire process from announcing a tender to publishing the signed contract will take place online, ensuring greater transparency and efficiency.

2. Investor and creditor guarantees. The law provides for the protection of private partners’ rights, contract stability, and guarantees of non-discriminatory treatment. Importantly, changes to legislation will not affect the terms of existing agreements.

3. New sources of funding. The concept of a “donor” is introduced - international partners who can provide financial support directly or via public budgets. This approach minimizes risks for private partners and makes projects more accessible for public partners.

4. Simplified procedures for smaller projects. Projects valued at up to €5.5 million will no longer require a feasibility study, only a concept note will be needed for approval.

5. Special regime for recovery projects. A simplified procedure will apply to PPP projects aimed at rebuilding infrastructure destroyed by the war and will remain in effect during martial law and for seven years afterward.

6. “Infrastructure on installment”. The state will be able to pay private partners for infrastructure projects using budget funds after the facility has been put into operation. This approach will ease the financial burden on budgets at all levels and allow for the implementation of more socially important projects even in times of limited funding.

7. Broader list of public partners. State-owned enterprises will be allowed to participate in PPPs, which will help attract additional investment.

8. Special procedures for housing projects. Given the extensive destruction and urgent need for new housing, the law provides for simplified procedures for concluding PPP agreements for housing construction.

Expected impact

The law lays the groundwork for large-scale private investment in the development and modernization of Ukraine’s infrastructure. Annual additional investments of UAH 8–10 billion (approx. €163–204 million) are expected through the implementation of an average of five projects per region, each valued at UAH 50–100 million (approx. €1–2 million).

With these changes, Ukraine is making a significant step toward effective state-business cooperation, which is a critical element of the nation’s recovery and future development in the wake of war-related destruction.

Source: Ministry of economy of Ukraine

International Benchmark

• EU and Ukraine conclude negotiations on updated trade agreement

The European Commission has completed negotiations with Ukraine on the review of the EU-Ukraine Deep and Comprehensive Free Trade Area (DCFTA). The agreement in principle updates key trade liberalisation provisions under the broader Association Agreement and supports the long-term goal of Ukraine’s gradual integration into the European Union.

This review contributes to the gradual integration of Ukraine into the EU's Single Market and illustrates that the EU's commitment to supporting Ukraine is as firm as ever. It also reflects concerns raised by EU Member States, particularly regarding sensitive agricultural sectors.

Main Elements of the Revised Agreement

• Level-playing field: new market access is conditioned to the gradual alignment of Ukraine to relevant EU production standards, such as animal welfare, use of pesticides and veterinary medicines. Ukraine is expected to report every year on its progress in that regard.

• A robust safeguard clause: both sides will have the possibility to activate a safeguard mechanism enabling the adoption of appropriate measures in situations where imports may cause adverse effects to either party. In the EU's case, the assessment of a possible disturbance can be done at the level of one or more Member States.

• Enhanced trade flows: the revised agreement strikes a balance between supporting Ukraine's trade with the EU, and fully considers the sensitivities of certain EU agricultural sectors and stakeholders.

The negotiated market access varies:

• modest increases compared to the original DCFTA for the most sensitive items, such as sugar, poultry, eggs, wheat, maize, and honey;

• full liberalisation has been agreed for certain non-sensitive products;

• for other products, enhancements have been made to benefit both sides based on the complementary markets;

In addition, both sides have agreed on exploring measures to help Ukrainian exporters reach their traditional markets in 3rd countries.

Next steps

The following steps are foreseen in the finalisation of the revised agreement:

• Work will continue on the technical details of the agreement. EU Member States and the European Parliament will be informed of the outcome in the coming days.

• After legal review, the European Commission will propose the agreement to the Council for formal approval.

• Once endorsed, the revised DCFTA will be officially adopted by the EU-Ukraine Association Committee.

The agreement is part of the EU’s broader approach to strengthening its economic relationship with Ukraine and supporting its closer alignment with EU rules and standards.

Source: European Commission

• EIF and EIFO sign first EU export credit guarantee agreement for Ukraine

The European Investment Fund (EIF) and Denmark’s Export and Investment Fund (EIFO) have signed the first agreement under the European Union’s export credit guarantee program for Ukraine. This initiative aims to support European companies working with Ukraine and to strengthen Ukraine’s economic integration with the EU.

Key details

The EIF guarantee mechanism is implemented within the framework of an innovative “export credit” program supported by the European Commission’s InvestEU initiative.

This guarantee is expected to:

• provide financing of up to €20 million for export credit operations

• benefit about 40 Danish companies by enabling them to strengthen their presence in the Ukrainian market

Broader EU Initiative

This first agreement with EIFO launches a series of approximately 13 similar agreements in EU member states. In total, the export credit program, which provides about €300 million in guarantees to support European small and medium-sized enterprises (SMEs) and mid-cap companies from the EU, received application volumes significantly exceeding available funding just a few weeks after its launch in July 2024. This demonstrates the high level of interest from European businesses.

Source: Ministry of Economy of Ukraine, EIFO

• Italy and UNDP partner to strengthen Ukraine’s demining and recovery efforts

On 20 June, Italy announced a new significant contribution to Ukraine’s humanitarian demining efforts, formalised through the official signing of a EUR 1.5 million agreement with the United Nations Development Programme (UNDP) in Ukraine.

The signing ceremony in Kyiv, attended by high-level dignitaries, underscores the urgent need for continued international support in addressing the extensive mine contamination across Ukraine.

The agreement, whose main beneficiary will be the Ministry of Economy of Ukraine, aims to strengthen the UNDP Mine Action Programme, which is crucial for the country’s recovery and reconstruction.

UNDP’s Mine Action Efforts

Since the start of the full-scale invasion, UNDP, in close partnership with the Ministry of Economy of Ukraine and the National Mine Action Authority, has supported the development and testing of advanced technologies for humanitarian demining. This includes the use of drones, remote sensors, and artificial intelligence systems for training models to detect explosive devices.

The additional funding will enable an expansion of land clearance operations, improvements to information management systems, and support for specialized training programs for people with disabilities, veterans, and individuals affected by explosive hazards.

Source: UNDP, Ministry of Economy of Ukraine

• IMF completes eighth review of Ukraine's extended fund facility

On 30 June 2025, the Executive Board of the International Monetary Fund (IMF) completed the Eighth Review of Ukraine’s Extended Fund Facility (EFF), enabling the disbursement of US$500 million. These funds will be directed toward budgetary support. With this latest tranche, total disbursements under the IMF-supported program have reached US$10.6 billion.

Strong performance and reform progress

According to the IMF, Ukraine’s performance under the program continues to be strong. All quantitative performance criteria for end-March were met, along with one prior action and two structural benchmarks.

In support of ongoing reforms, four new structural benchmarks have been introduced:

• measures to update the single project pipeline;

• preparation of a prioritized roadmap for financial market infrastructure;

• implementation of international valuation standards;

• development of legislative proposals to align securitization and bonds with international standards.

To allow adequate time for implementation, the deadlines for several existing benchmarks have been adjusted.

Commenting on the review, IMF First Deputy Managing Director Gita Gopinath noted that Ukraine’s financial sector remains stable but stressed the importance of maintaining vigilance given the heightened risks. She emphasized the urgent need to address operational and governance challenges within Ukraine’s securities markets regulator. Strengthening capital markets infrastructure, she added, is essential for attracting foreign private investment to support the country’s post-war recovery and reconstruction.

Source: IMF, National Bank of Ukraine

• Finnvera and EIF sign agreement to boost finnish export guarantees to Ukraine

Finnvera and the European Investment Fund (EIF) have concluded a key agreement enabling new export credit guarantees to support trade with Ukraine. This new arrangement forms part of a broader European effort to deepen economic ties with Ukraine and support its EU accession process through private sector engagement.

Strategic objective

The newly signed guarantee arrangement allows Finnvera to offer up to €30 million in export credit guarantees specifically targeted at Finnish SMEs and midcap companies (with fewer than 500 employees) doing business with Ukrainian counterparts. This is part of a pilot initiative that could expand if successful.

The agreement is aimed at:

• supporting EU companies in trading with Ukraine

• facilitating economic relations with Ukraine;

• strengthening Ukraine’s economic resilience as it advances toward EU membership.

Legal & political framework

Within the framework of its normal guarantee policy, Finnvera cannot grant export credit guarantees to a country at war; however, in connection with Finland’s national plan for the reconstruction of Ukraine, Finnvera started granting export credit guarantees from 1 January 2024 on the basis of a special loss compensation commitment by the Ministry of Economic Affairs and Employment.

The Ministry of Economic Affairs and Employment can provide Finnvera with up to EUR 100 million in compensation for losses sustained in connection with export credit guarantees granted in 2025 for promoting exports to and investments in Ukraine.

EU-wide framework

The EIF guarantee is based on the EU Commission’s InvestEU export credit programme. Finnvera’s new agreement is one of approximately 13 similar arrangements across EU Member States, being rolled out by the European Investment Bank Group, European Commission, and national export credit agencies. The total package is expected to provide around €300 million in guarantees to European SMEs and midcaps, and the programme was reportedly oversubscribed within weeks of its launch in July 2024.

Source: Ministry of Economy of Ukraine, Finnevra

Focus on the private sector

• Grammarly raises $1 billion from general catalyst to accelerate growth and expansion and annonces its plans for acquisition of Superhuman

Grammarly, a trusted AI assistant for communication and productivity with Ukrainian roots, has secured a $1 billion investment from General Catalyst’s Customer Value Fund (CVF). The funding highlights General Catalyst’s longstanding partnership with Grammarly, which has recently repositioned itself as an AI productivity platform for apps and agents, following its acquisition of Coda in January 2025.

Purpose of the funding

The fresh capital will be used to :

• expand Grammarly’s go-to-market capabilities,

• scale sales and marketing efforts,

• pursue strategic acquisitions.

The investment is expected to support the company’s broader goal of growing its user base and increasing the global reach of its AI-powered solutions.

Plans for new acquisition

On June 30, 2025, Grammarly also announced plans to buy Superhuman, an AI-powered email app that helps users reply faster and save hours every week. This acquisition accelerates Grammarly’s evolution into an AI productivity platform for apps and agents, positioning email as a critical communication surface in the company’s vision of an agentic future.

Together with the recent Coda acquisition, which offers a workspace for managing smart apps that help users research, create, and collaborate, Superhuman completes an important part of Grammarly’s productivity vision.

This step is an important milestone for Grammarly and strengthens its role as a leader in AI productivity.

Source: Grammarly, Forbes.ua

• DTEK and Octopus Energy Group launch new initiative to boost energy resilience

DTEK, Ukraine’s largest private energy company, and global clean tech leader Octopus Energy Group have announced the launch of RISE (Resilient Independent Solar Energy) – a new initiative to deliver rooftop solar and battery storage systems to Ukrainian businesses and public sector institutions.

Announced at the Octopus’ Energy Tech Summit in London, the partnership brings together DTEK’s on-the-ground expertise and experience with Octopus Energy Group’s AI-powered operating system, Kraken, to strengthen energy resilience.

€100 million target to support 100 projects

RISE is the first programme of its kind in Ukraine, aiming to mobilise €100 million to develop 100 on-site energy systems over the next three years. These systems are designed to:

• Stabilise the national grid;

• Lower electricity costs for end users;

• Protect customers from outages and volatile pricing.

The solar and battery systems will be installed directly on customer premises by D.Solutions, DTEK’s business specialising in consumer energy supply and energy efficiency services, under its retail brand, YASNO.

AI-Driven energy optimisation

The systems will be powered by Kraken, Octopus’ proprietary AI operating system. Kraken enables:

• Real-time energy monitoring and optimisation;

• Reduction of energy use during peak demand;

• The sale of excess electricity back to the grid.

This enhances both financial savings and operational continuity for businesses during crisis periods.

Market potential

Ukraine’s commercial and industrial (C&I) behind-the-meter (BTM) energy market remains largely untapped, with an estimated annual potential of 300 MW, valued at approximately €200 million. YASNO currently serves more than 60,000 C&I customers and has the capacity to generate a project pipeline worth around €30 million per year in this market.

Source: DTEK

CCI France Ukraine initiatives

• SAVE THE DATE: Conference “Rebuilding in practice: projects, tools, and partnerships to support Ukraine”

The French-Ukrainian Chamber of Commerce and Industry is pleased to invite you to a special conference “Rebuilding in practice: projects, tools, and partnerships to support Ukraine”.

Date: Friday, September 5, 2025

Location: Paris

Welcome from 09:00 in Paris

Conference starts: 09:30 (Paris time) | 10:30 (Kyiv time)

Offline: Cabinet Jeantet (11, Galilée Street, 75116 Paris)

Online: on YouTube

Speakers:

●   Pierre Heilbronn, Special Envoy of the President of the French Republic for Ukraine's Reconstruction

●   Francis Malige, Managing Director, Head of Financial Institutions Business Group at the EBRD.

Meeting objectives:

●   Identify concrete examples of successful reconstruction projects involving French or European players;

●    Understand the conditions for feasibility: financing, insurance, local partners, administrative support, etc;

●   Give French companies a clear view of current opportunities (by sector, by region);

●   Share feedback from institutions (EBRD, France) to reduce risks and secure commitments;

●    Encourage the emergence of new cooperative ventures, particularly in the energy, infrastructure, agribusiness, health, training and digital sectors.

This is a unique opportunity to engage with key stakeholders and explore how your business can actively contribute to Ukraine’s reconstruction and long-term development.

• CCIFU unveils tool to support businesses in Ukraine's reconstruction

As Ukraine embarks on a concrete phase of reconstructing its territories and infrastructure, the mobilization of European and French companies has become more crucial than ever. This mobilization requires reliable and field-adapted tools to effectively support reconstruction efforts.

LET'S REBUILD UKRAINE: an Innovative tool

In this spirit, the Franco-Ukrainian Chamber of Commerce and Industry (CCIFU) has developed LET'S REBUILD UKRAINE, a study aimed at facilitating and securing the development of European companies in Ukraine's building and construction sector. Despite the war, the Ukrainian economy demonstrates remarkable resilience, with projected growth of 5% in 2024. Local sector actors will play a key role in reconstruction projects, with priority access to markets and financing. Therefore, it is essential for European companies to connect with these actors today.

Benefits of LET'S REBUILD UKRAINE

• Updated Mapping: Over 250 private Ukrainian companies are listed, covering the entire value chain, from manufacturers to construction companies.

• Tool for Suppliers and Investors: Designed for suppliers of products and solutions, investors, or any company seeking local partners.

• Gateway to the Ukrainian Market: A concrete solution for accessing the Ukrainian market, even in a context where on-site prospecting remains challenging.

Our ambition

Our goal is to save time and increase visibility for European companies by providing a clear vision and qualified contacts. We would be delighted to present this tool in more detail and discuss how it can address your challenges or those of your partners.

For any questions or to schedule a discussion, please feel free to contact: Pascal Hieronimus phieronimus(@)ccifu.com.ua

Discover the first pages of the study HERE