As Russia targets Ukraine’s economy, keeping businesses alive takes priority

Businesses in Ukraine are facing an escalating challenge as Russian attacks continue to threaten their operations and the country's economy. Deputy Economy Minister Yegor Perelygin emphasized that the immediate concern is not just raising investment but ensuring the survival of supply chains and day-to-day operations, including pharmacies, food, and retail. The attacks have caused businesses to lose an estimated $10 billion this year alone, according to the Economy Ministry.

Government efforts to attract investment have faced hurdles, as many businesses struggle to afford expensive war-risk insurance. With a shortage of air defense systems, companies operating in Ukraine are increasingly vulnerable to Russian attacks and find themselves unable to pay for such insurance. Government support appears limited, leaving businesses to rebuild on their own with scarce resources.

One of the major issues for companies has been accessing war-risk insurance, with only 94% of companies in Ukraine being able to afford the premiums. The government is working on a compensation fund to cover up to $10 million in first losses, with the remainder covered by insurers. This fund aims to make it easier and cheaper for insurers to cover businesses and help damaged assets return to operation quickly, with compensation expected within 30 days.

In response to the crisis, starting in January, businesses from critical sectors like agriculture and energy will be eligible for a 2% fee to join the program and protect fixed assets, while inventory and goods won't be covered. The state plans to finance the fund by increasing the VAT rate from 20% to 21%, which Perelygin says will raise $1 billion per year. Despite this plan, some businesses are unhappy with the VAT increase, as higher consumer prices could harm their bottom line.

While the government has mostly focused on solutions for large or critical businesses, many smaller and noncritical companies feel they lack opportunities for support. For example, Osnovy, a Kyiv-based independent publishing house, lost nearly 40% of its inventory in a single attack, with losses comparable to their total annual revenue in 2025. Despite customers supporting the company after the attack, the state offered little help, as publishing is not considered a critical sector.