Business news from Ukraine

European Bank for Reconstruction and Development (EBRD) First Vice President Jurgen Rigterink led the bank’s high-level delegation to western Ukraine to discuss in Lviv further strengthening the bank’s commitments to Ukraine as the country enters its second year of war, the EBRD press service reported.

With the participation of EBRD Managing Director for Eastern Europe and the Caucasus Matteo Patrone and the bank’s Deputy Head of Industry, Trade and Agribusiness in Ukraine Lesya Kuzmenko, Rigterink discussed future investments with Lviv Mayor Andriy Sadovy.

According to the press release, Lviv and western regions of Ukraine are near the border with several European Union countries. As the war challenges Ukraine’s ability to import and export through its Black Sea ports, road and rail connections to the west of Lviv become crucial to support the economy. The area is also seen as a likely starting point for future reconstruction efforts.

That said, as the largest population center in the west, Lviv has received a significant number of internally displaced people, putting pressure on key municipal services at a time when the city needs to generate revenue. In December 2022, the EBRD provided EUR25 million to Lviv and its municipal enterprises, and U.S. credit support covered half of that loan to provide liquidity for adaptation.

EBRD representatives reportedly visited the city’s hospital and the Nezlamni rehabilitation ecosystem being built in Lviv, where war wounded warriors have access to multidisciplinary teams of surgeons, trauma surgeons, prosthetists, psychotherapists and rehabilitation specialists.

The delegation also visited several EBRD projects in Lviv and the region and discussed existing and potential projects with clients. In particular, among them is the Bank Lviv, which received a syndicated loan of EUR 10 million in August 2022 for lending to small and medium-sized enterprises.

In addition, representatives of the EBRD got acquainted with the implementation of the project “Lviv Industrial Park M10”, located 60 km from the Polish border. Its first phase = construction of a warehouse complex of 14,400 square meters is nearing completion. In December 2022 the EBRD undertook to invest up to $24,5 mln to acquire a 35% share in the project.

According to the bank’s press service, other meetings included visits to new production facilities recently created with the EBRD’s support by yeast producer Enzyme, communication with representatives of pet food producer Kormotech, gas station operator Galneftegas (GNG), ventilation system producer Prana and IT company Softserve.

In Lviv EBRD representatives also visited the Superhumans rehabilitation center – a humanitarian project of the bank’s client, owner of one of Ukraine’s largest container terminals TLC Andriy Stavnitser. The center provides prosthetic limbs for adults and children.

The delegation toured the small company, a car wash that was destroyed by rocket fire last April, but resumed and returned to work within a month.

As reported, the EBRD allocated a record EUR1.7 billion to Ukraine in 2022, while attracting additional co-financing from partner banks and international grants and guarantees from donors and shareholders.

The EBRD, Ukraine’s largest institutional investor, has committed to invest EUR3 billion during 2022-2023 and is ready to play a leading role in financing the country’s reconstruction when conditions permit.

The press release stresses that since the start of the war, the EBRD has moved quickly from condemning the Russian invasion to preparing an immediate financial response. This assistance is aimed at ensuring the sustainability of Ukraine and the refugee host countries in preparation for the country’s future reconstruction.

The European Bank for Reconstruction and Development (EBRD) and Multilateral Investment Guarantee Agency (MIGA) signed the first co-financing agreement in their history, under which MIGA provides guarantees for up to $200 million of trade finance risks to EBRD under its Trade Facilitation Program (TFP).
“The first country to benefit from this agreement will be Ukraine…The guarantee will cover EBRD trade finance in selected state banks, primarily in Ukraine,” the bank said in a press release Tuesday.
According to it, the MIGA guarantee was signed by the agency’s executive vice president, Hiroshi Matano, during a visit to EBRD President Odile Reno-Basso.
The EBRD recalled that it had sent EUR1.7 billion to Ukraine in 2022 and promised to increase this amount to at least EUR3 billion by the end of 2023, and had established an international partnership to help Ukraine and its financing with shareholders and donors.
“The MIGA and EBRD partnership will facilitate needed trade finance in Ukraine and other countries supported by MIGA and EBRD at a time of growing economic pressures and heightened geopolitical risks affecting trade, supply chains and critical imports,” Matano said in the release.
“This guarantee will be important in helping us expand our trade finance business in Ukraine, which is one of our strategic priorities in working in the country,” Reno-Basso said in turn.
The EBRD pointed out that since the outbreak of the war in Ukraine in February 2022, trade flows and supply chains in Ukraine have been seriously disrupted. In particular, the agricultural sector, which accounts for 11 percent of the country’s GDP, nearly 20 percent of the labor force, and nearly 40 percent of all exports, has been affected.
In addition to the physical disruption of transportation routes, financial intermediation has been a significant problem, as foreign commercial banks have stopped taking any direct risk on trade finance transactions in Ukraine. To address this problem, the EBRD’s TFP Program significantly increased the provision for Ukrainian banks to cover some of the increased demand.
Since February 2022, TFP has supported more than EUR400 million in trade transactions involving critical commodities for the Ukrainian economy. TFP also supports the entire supply chain to address food security issues: facilitating imports of seeds, fertilizers, fuel, tractors and combines into Ukraine, as well as exports of grain, oilseeds and vegetable oils to other EBRD countries of operations, including Egypt, Morocco, Turkey and Tunisia.
The EBRD has developed its Trade Facilitation Program to promote and facilitate international trade with and within Central and Eastern Europe, the CIS and Southern and Eastern Mediterranean countries (SEMED). TFP provides guarantees to international commercial banks to cover political and commercial payment risk on transactions made by issuing banks in the EBRD’s countries of operations.
More than 100 issuing banks in 26 countries participate in the program, working with more than 800 confirming banks and their subsidiaries worldwide.
Since the program’s launch in 1999, TFP has supported over 30,000 trade finance transactions totaling over EUR30 billion, including 3,000 foreign trade transactions of Ukraine totaling over EUR4 billion.

The European Bank for Reconstruction and Development (EBRD) has deployed €1.7 billion in Ukraine in 2022 and mobilised a further €200 million from partner banks. This represents more than 10 per cent of the Bank’s annual business volume.
This means the EBRD is on track to deliver on its commitment to invest €3 billion for Ukraine over the period 2022-23, with the exceptional support of shareholders and donors who share part of the risk of the investments that the EBRD has taken on its own books.
The results were achieved despite the extremely challenging global economic environment in the wake of Russia’s war on Ukraine and confirm the EBRD’s countercyclical role in supporting its countries of operations and clients.
“The Bank and its shareholders moved swiftly, following the beginning of the war, to provide adequate support,” said EBRD President Odile Renaud-Basso. “This impressive operational performance is testimony to our resilience and determination to support our countries of operations and clients.”
To support the real economy in Ukraine through investments in vital infrastructure, energy and food security, trade and support for the private sector, the EBRD deployed €1.7 billion. A further €200 million were mobilised from partner banks.
The Bank raised €1.4 billion of donor funds in 2022, including unfunded guarantees, which are dedicated to Ukraine and other countries most affected by the war in 2022 and 2023. The Bank bore 60 per cent of the risk related to the investments deployed in Ukraine in 2022.
Highlights of EBRD work in Ukraine in 2022 – which has successfully attracted further foreign grants – include providing Ukrzaliznytsia (Ukraine’s railway company) and Ukrenergo (the national power grid operator) with €150 million each of emergency liquidity last summer, to keep the country’s trains running and the lights on.
The Ukrzaliznytsia financing was supported by partial risk coverage from France and the European Union, and the financing for Ukrenergo by the European Union, United Kingdom, United States of America and The Netherlands.
A later financing package of €370 million to Ukrenergo in the autumn consisted of a €300 million EBRD loan and a €70 million grant from The Netherlands, for emergency repairs to the national power grid necessitated by Russia’s strikes on civilian infrastructure.
Likewise, the EBRD provided the gas company Naftogaz with a financing package of just under €500 million to compensate for the loss of natural gas production following the Russian invasion. Norway will provide a €190 million grant, which complements the €300 million financing line from the EBRD, which is supported by partial risk coverage by the USA, Canada, Germany and France.
The EBRD provided Ukraine with a total trade finance turnover of €459 million during 2022.
Together with partner financial institutions, it also supported food security by providing more than €280 million to the agribusiness value chain, and bolstered the resilience of other private-sector companies, including small and medium-sized enterprises, with €170 million.
Policy activity remains intense, via the Ukraine Reforms Architecture programme (a comprehensive technical assistance programme jointly managed by the EBRD and the European Union since 2016, following requests by the government of Ukraine for support with the implementation of key reforms), the promotion of good governance in state-owned enterprises with which the EBRD works, and support for human capital in partnership with Ukraine’s Ministry of Education.
The EBRD’s focus in 2022 has been on providing emergency liquidity to keep the lights and heating on and the trains running, supporting communities and sustaining companies. This is now shifting to providing finance for emergency repairs and the rebuilding of infrastructure that is coming under Russian attack.
“In the future, we also intend to expand our work with municipalities, including in de-occupied zones. For this, we foresee that we and our partners will need new financial instruments – a higher proportion of grants rather than loans. We have been requesting further support from shareholders or donors, either in the form of donor funds or guarantees, to continue sharing the risks of investing in Ukraine with us this year,” said President Renaud-Basso.
The EBRD President added: “We will remain agile in 2023, responding to changing circumstances and making adjustments according to the needs on the ground as we did last year.”
“When circumstances allow, we will help launch a reconstruction programme for Ukraine to rebuild livelihoods, jobs and businesses, vital infrastructure, good governance, and access to services. As the largest institutional investor in the country, one with an unrivalled presence on the ground, the EBRD is ready and willing to play a central role in reconstruction.”
The EBRD is a multilateral bank that promotes the development of the private sector and entrepreneurial initiative in 36 economies across three continents. The Bank is owned by 71 countries as well as the EU and the EIB. EBRD investments are aimed at making the economies in its regions competitive, inclusive, well-governed, green, resilient and integrated. Follow us on the web, Facebook, LinkedIn, Instagram, Twitter and YouTube.