UNDP and National Development Institution launch Local Development Finance Facility to drive Ukraine’s sustainable recovery

KYIV, 19 February 2026 — The United Nations Development Programme (UNDP) in Ukraine, in partnership with the Ministry of Finance and the National Development Institution (NDI), today officially presented the Local Development Finance Facility (LDFF) to international development partners. This catalytic platform is designed to bridge the gap between Ukraine’s urgent reconstruction needs and the available private and institutional capital.

With Ukraine’s recovery needs projected at over half a trillion U.S. dollars through 2035, the LDFF arrives at a critical juncture where public-sector funding alone is insufficient to meet the scale of the challenge. The facility will serve as a strategic tool to resolve bottlenecks in loan and grant utilisation, boosting local capacity and mobilising financing for priority sectors including energy, environment, SME development, and municipal infrastructure.

By integrating de-risking instruments and blended finance, the LDFF aims to transform reconstruction priorities into bankable projects capable of attracting investment from Ukrainian banks, international financial institutions, and foreign investors.

“Ukraine’s recovery and long-term resilience require financing at an unprecedented scale. The magnitude of reconstruction needs significantly exceeds what the State Budget and donor financing alone can sustainably provide, given that Ukraine allocates 27.2% of its GDP to security and defense needs, while the Government covers social expenditures with support from international partners.

Public finance remains indispensable, but it must be used strategically – to reduce risks and attract additional investment. Our key challenge is to translate recovery priorities into financed investments, particularly at the local level, where recovery is implemented and where its impact is most tangible. The more independent, knowledgeable and experienced the local level is, the more resilient recovery becomes at the national level,” said Olga Zykova.

The Deputy Minister of Finance also emphasized that, for Ukraine, the LDFF is a scalable platform that can be integrated with donor programmes and international financial institution initiatives. The Ministry of Finance views the LDFF as part of Ukraine’s transition from a recovery model financed primarily by international assistance to one increasingly driven by investment.

The launch also marks the renewed mandate of the National Development Institution, formerly known as the Business Development Fund. Following recent legislative changes, the NDI is now positioned as a fully-fledged development finance vehicle tasked with crowding in international capital and supporting EU accession objectives.

Chairperson of the Management Board of the NDI Andrii Hapon highlighted the facility’s role in empowering local communities.

“For the National Development Institution, the Local Development Finance Facility is both a practical recovery instrument for communities and a strategic platform for strengthening our role as a development finance institution,” he said. “By combining technical assistance with financial de-risking tools, the LDFF enables us to transform well-prioritised municipal projects into bankable investments, mobilise capital, and systematically bridge public policy objectives with financial markets.”

The LDFF will build upon UNDP’s extensive nationwide presence and existing technical assistance programmes to ensure a “bottom-up” approach to recovery. This ensures that municipalities remain at the centre of the decision-making process while maintaining high standards of transparency and accountability.

UNDP Resident Representative in Ukraine Auke Lootsmaunderscored the facility’s long-term impact on Ukraine’s resilience.

“The Local Development Finance Facility represents a fundamental shift in how we approach Ukraine’s reconstruction by moving beyond traditional aid to sustainable, market-driven solutions,” he said. “By de-risking investments and building local capacity, we’re creating a transparent ecosystem where international capital can flow directly into the heart of Ukrainian communities, accelerating both recovery and the nation’s path toward EU accession.”

The LDFF is set to become a flagship anchor of UNDP’s operations in Ukraine for 2026–2027, ensuring that the current momentum of reform and recovery translates into tangible development across the country aligned with the UN’s Sustainable Development Goals.