Germany, which recently provided Ukraine with a EUR150 million loan, is rapidly preparing another such loan, German Chancellor Olaf Scholz said at the High-Level International Donor Conference for Ukraine in Warsaw on Thursday.
“We will provide much-needed liquidity to the budget of Ukraine. Recently, a special loan of EUR150 million was allocated. Another loan of EUR150 million is being prepared on an accelerated basis,” he said.
Scholz added that, as part of bilateral development cooperation, Germany had already provided EUR122 million to Ukraine to address the economic and social consequences of the war. “And we intend to provide another EUR140 million for development financing,” the chancellor said.
The Cabinet of Ministers has approved a draft loan agreement for EUR 150 million between the government of Ukraine and the KfW bank (Frankfurt am Main) to support entrepreneurship.
According to Taras Melnichuk, representative of the Cabinet of Ministers in the Verkhovna Rada, the government made the corresponding decision at a meeting on Tuesday.
The Cabinet of Ministers of Ukraine has approved a loan from the French Development Agency for a total amount of up to EUR 300 million in 2022.
“State external borrowing in 2022 is carried out by raising a loan from the French Development Agency for a total amount that does not exceed EUR 300 million and is provided in accordance with a loan agreement between Ukraine represented by the Finance Minister as a borrower and the French Development Agency as a creditor, within provided for by the law on the 2022 national budget of Ukraine,” the government said in resolution No. 358 dated March 24.
According to the terms, the loan amount bears interest at a fixed annual interest rate of 1.04%, which is paid every six months.
The final repayment of the loan is carried out after 15 years from the date of conclusion of the loan agreement (taking into account the grace period for deferring loan repayment for a period of five years from the date of conclusion of the loan agreement).
Ukraine’s spending on the development and procurement of weapons and military hardware in 2022 has been increased by UAH 67.57 billion with UK loans totaling 1.7 billion and aimed at bolstering capacities of the Ukrainian Navy.
The Ukrainian Verkhovna Rada adopted the respective bill by 342 votes on Tuesday.
The bill enlarges this year’s budget expenditures from UAH 1,525.930 trillion to UAH 1,593.5 trillion with the special fund’s growth to UAH 221.11 billion.
Meanwhile, the budget deficit ceiling was raised from UAH 188.8 billion to UAH 256.36 billion, including UAH 96.1 billion for the special fund.
In addition, the budget no longer has restrictions at the amount of 3% of the planned revenue for the provision of state guarantees, as well as restrictions at the amount of UAH 10 billion and UAH 20 billion, respectively, for the provision of portfolio guarantees and loan guarantees, in order to increase the national defense capacity.
The bill limits road fund expenditures. “The money will be primarily spent on repaying the state debt, defense, and the development and maintenance of roads,” the Servant of the People faction said in comment on the bill.
An explanatory note says that Ukraine will be implementing state investment projects to purchase two minesweepers from British suppliers, to deliver and service these minesweepers, to ensure the joint construction of eight missile craft, and to deliver and install weapons on the available ships. It is also planned to jointly build a frigate and to receive advisory and technical support for the construction of naval infrastructure, including the delivery of equipment.
At the end of January, the Verkhovna Rada ratified a framework intergovernmental agreement on loan funding of the development of the Ukrainian Navy. The agreement was signed in London on November 12, 2021, to envisage allocations for the construction of eight missile craft, the procurement of two minesweepers from the UK, and the opening of two naval bases in Ukraine.
The Government of Canada has offered to provide a loan of up to CAD 120 million to support the economic stability and development of Ukraine.
“Today, the Honourable Harjit S. Sajjan, Minister of International Development and Minister responsible for the Pacific Economic Development Agency of Canada, and the Honourable Mélanie Joly, Minister of Foreign Affairs, announced that Canada has offered to provide a loan of up to CAD 120 million to the Government of Ukraine to support the country’s economic resilience and governance reforms,” the Government of Canada said in a statement on Friday.
In addition, Canada has also offered to provide a technical assistance grant of up to CAD 6 million to support the implementation of the loan. Canadian and Ukrainian officials are already meeting to discuss the potential terms of the loan and a timeline for its implementation.
“Ukrainians can always count on Canada to be there for them when needed. By working together, we can strengthen the economy and help advance governance reforms. I authorized this proposed loan to support Ukraine’s ability to respond to its population’s needs amid Russia’s aggressive actions. This is just one step in helping build a secure future for Ukrainians, and I will continue to look at ways to support Ukraine,” Sajjan said.
The Government of Canada also said that in 2014 and 2015, the country provided a CAD 400 million (CAD 200 million per year) loan to Ukraine to the then new government to support its economic recovery and development goals, and this loan was fully repaid with interest as scheduled in 2020.
The new assistance is provided under the CAD 620 million sovereign loan program approved in 2018. According to it, the maximum loan term is up to ten years. Principal and interest payments must be made at least once a year, with a possible grace period in certain circumstances, and a fixed rate of interest equal to the cost of the Canadian government loan.
The total amount of loans to the country under this program cannot exceed CAD 120 million.
On January 20, the National Bank of Ukraine said that due to the military threat from Russia, Ukraine’s eurobond rates rose to double-digit stress levels, and the country temporarily lost access to the market for external commercial loans. According to the NBU, in such conditions, the role of financing from international financial organizations such as the IMF and the World Bank, as well as partner countries, increases.
Ambassador of Ukraine to the United Kingdom Vadym Prystaiko, on behalf of the Cabinet of Ministers, signed a Ukrainian-British framework agreement providing for the allocation of funds for the construction of eight missile boats, the acquisition of two minesweepers from the United Kingdom, and the creation of two naval bases in Ukraine, the ZN.UA publication said on Saturday.
The signed agreement details the financial side of the agreements, that is the loan totaling GBP 1.7 billion provided to Ukraine by the U.K. for ten years.
Thanks to the U.K., Ukraine covers the primary needs of the country’s naval forces, which must be ready to contain Russia’s aggression from the Black and Azov Seas, ZN.UA said.
Agreements on the development and strengthening of the Ukrainian Navy were reached a year ago. During the last year’s visit of Ukrainian President Volodymyr Zelensky to London, a memorandum on strengthening cooperation between Ukraine and the United Kingdom in the military and military-technical sectors was signed. The memorandum stipulated the raising of financing from the UK’s export credit agency in the amount of GBP 1.25 billion. In the summer 2021, in Odesa, a memorandum on maritime partnership projects between the consortium of British industry and the Ukrainian Navy was signed.
