Olga Zykova: Ukraine’s healthcare sector requires over $19 billion for recovery over the next ten years

Since February 2022, all domestic budget resources have been directed toward defense. Therefore, Ukraine relies on partner support to finance social expenditures, including healthcare. Deputy Minister of Finance Olga Zykova emphasized this during the Ukraine ReHealth 2025 conference at the panel “Bridging Finance and Recovery Processes: Strategies from International Financial Institutions.”

“In wartime, the Ministry of Finance is compelled to balance between priorities. Today, the top priority for the state is to ensure defense expenditures. Therefore, to cover healthcare needs, which amount to over UAH 200 billion in 2025, the Government relies on the support of international partners,” said Olga Zykova, adding that about 60% of the budget is currently directed to security and defense, while nearly 40% is allocated to social expenditures.

The Deputy Minister stressed that support for the healthcare sector must go beyond financing salaries for medical workers and investments in infrastructure. It also requires systemic changes and sector-wide transformation in the context of Ukraine’s European integration path. The process is further complicated by the constant need to restore medical facilities damaged by the war and the increased burden on hospitals due to the growing number of internally displaced persons.

According to the Fourth Ukraine Rapid Damage and Needs Assessment (RDNA4), the total recovery and reconstruction needs for Ukraine’s healthcare sector over the next ten years amount to USD 19.4 billion. This figure, as of December 31, 2024, represents 4% of Ukraine’s total recovery needs of USD 524 billion. Healthcare has been identified as one of the priority recovery areas for 2025. Recovery priorities for 2025 cover both public investment projects and non-investment programs.

The Deputy Minister underscored that the success of large-scale healthcare recovery programs depends on effective coordination of partner support, flexibility in its implementation, necessary reforms on Ukraine’s part, and expanded cooperation with the private sector.

Olga Zykova highlighted several key shifts in cooperation with international partners since the start of the war:

Focus on flexibility. Over the past 3.5 years, cooperation has shifted from emergency response to strategic partnership. This combines financial instruments with systemic reforms and recovery processes, enabling not only the repair of destruction but also the building of a more effective, resilient, and transparent healthcare system.

Improved partner coordination. The Ministry of Finance plays a central role in coordinating with international donors and partners to attract and oversee foreign funding for healthcare recovery. This ensures that assistance is aligned with the country’s strategic priorities.

Division of roles among IFIs. Each international financial institution supports healthcare in line with its mandate: the World Bank focuses on systemic reforms and the social sector; the EBRD provides liquidity support for state-owned enterprises; the EIB prioritizes investments in municipal and social infrastructure, transport, energy, education, and private sector projects; the IFC leads on blended finance by mobilizing private investment alongside grants. This division helps avoid duplication and ensures coverage of all critical recovery areas.

Adopting EU standards. By prioritizing efficiency and transparency in financing, the Ministry helps bring Ukraine’s healthcare system closer to EU standards. “Build back better” approach not only restores infrastructure but also reforms the system, making it more sustainable, transparent, and equitable in the long run - a crucial step toward Ukraine’s future EU accession.

Strengthening the blended finance model. Incorporating grant components into loan programs (as seen with the EIB and EBRD) has proven effective in reducing financial risks for communities and private businesses. This model should be scaled up for future investment projects.

Expanding cooperation with the private sector. Involving private healthcare institutions in recovery processes - including through financing mechanisms provided by international partners - will help diversify the healthcare market, reduce the burden on the State Budget, and foster innovation.

“If in February 2022 there was little clarity on how international organizations should adapt their mandates to Ukraine’s wartime conditions, today our partners are demonstrating maximum flexibility - using existing tools and creating new ones. International financial institutions have started to reshape their approaches to Ukraine, and these tools can ultimately be applied in other countries as well,” noted Olga Zykova.

She also underlined that the Government of Ukraine continues to move toward more transparent and predictable processes in cooperation with partners. This helps strengthen donor confidence in Ukraine, which in turn increases international budget support flows.

Over the past 3.5 years Ukraine has mobilized nearly USD 145 billion in budget support from international partners.