The Forbes Money forum in Kyiv highlighted the pressing concerns surrounding Ukraine's investment climate. Oleksandr Vodoviz, representing Metinvest Group, pointed out that foreign investments are hindered by currency restrictions alongside the ongoing war. Despite these challenges, there are opportunities to attract capital through investor guarantees and risk insurance. However, Ukrainian businesses currently lack access to such mechanisms. The urgency of economic stability is paramount for both national security and the continuation of state functions.
Vodoviz emphasized that without sufficient capital inflows, Ukraine's economy risks losing its sustainability. The nation experienced a significant drop in foreign direct investment from $7.8 billion in 2021 to just $3.3 billion in 2024. Addressing this issue requires a balanced approach where fiscal policies do not overly burden businesses, ensuring their survival and continued tax contributions. Meanwhile, Danylo Hetmantsev advocates for a strategic relaxation of currency controls while acknowledging the constraints imposed by the balance of payments.
Challenges in Securing Foreign Investments
Oleksandr Vodoviz outlined the difficulties faced by Ukrainian enterprises in securing international financing due to stringent currency regulations. These limitations pose a substantial obstacle in discussions with potential lenders, as repayment becomes impractical under current conditions. For instance, Metinvest aims to construct a solar power plant but faces hurdles in repaying large-scale loans.
Foreign direct investment in Ukraine has plummeted significantly over recent years, reflecting broader economic challenges exacerbated by conflict and restrictive monetary policies. In 2024, only $500-600 million represented net investments, compared to nearly double that amount three years prior. Vodoviz warned that without addressing these issues promptly, the country's economic foundation could falter. He stressed that sustaining business operations and encouraging reinvestment are crucial for long-term growth and resilience against external shocks.
Potential Solutions for Economic Stability
Despite the grim outlook, avenues exist to enhance Ukraine's appeal to global investors. Tools like investor protections, risk mitigation strategies, and participation in international funding programs offer promising pathways forward. Yet, local firms remain excluded from leveraging these resources effectively. A shift toward more inclusive financial frameworks is essential to stimulate economic recovery.
Vodoviz advocated for a pragmatic policy adjustment that balances budgetary needs with corporate viability. By avoiding excessive taxation or regulatory burdens, the government can foster an environment conducive to entrepreneurship and innovation. Additionally, gradual liberalization of exchange rate controls, as suggested by Danylo Hetmantsev, may alleviate some pressures on exporters and importers alike. Such measures aim to restore confidence among domestic and international stakeholders, reinforcing Ukraine's position as a viable destination for future investments amidst geopolitical uncertainties.