Ukraine’s state budget on Thursday received a $1.5 billion concessional loan through the World Bank’s Trust Fund mechanism under guarantees from the Japanese government, the Finance Ministry said.
“The raised funding will be used to restore the economy and strengthen social protection of the population,” the release quoted Finance Minister Serhiy Marchenko as saying, thanking the WB and Japan for the allocation of funds.
The Finance Ministry recalled that since the beginning of Russia’s full-scale invasion, Ukraine has received more than $581 million in concessional financing from the Japanese government through the Japan International Development Agency (JICA).
“This year, the Japanese government is expected to provide another $2 billion in direct budget support through the World Bank Trust Fund,” the ministry added.
As previously indicated by the Ministry of Finance, as of July 21 this year, Ukraine’s state budget received funding from international partners in the amount of $23.6 billion, compared to $32.1 billion last year, with a need for this year of about $42 billion.
Since then, the budget has also received EUR1.5bn of the sixth tranche of EU macrofinancial aid.
The European Bank for Reconstruction and Development (EBRD), with partial support from the European Union, is providing Ukraine’s Kredobank with a EUR25m guarantee to cover the risks of new lending, as well as a EUR25m Trade Facilitation Program (TFP) loan for trade finance to Ukrainian clients.
“The new risk-sharing agreement will allow Credobank to reduce the funding gap, and continued access to financing will help companies to remove bottlenecks in trade in food and agricultural products,” – quoted in the message on Wednesday the words of the EBRD Managing Director in the sector of financial institutions Francis Malizh.
It is noted that the new financing will be available to companies operating in such critical sectors as primary agriculture and agricultural services, food processing, transportation and logistics, retail and pharmaceuticals.
Under the risk-sharing agreement, which the two institutions with prior cooperation experience signed on Wednesday in London, the EBRD is providing a EUR25m unfunded risk-sharing instrument that covers 50% of the credit risk on Kredobank’s new financing totaling EUR100m, but not more than 50% of the portfolio. The EBRD guarantee is provided in two equal tranches.
In addition, EUR15m of the total EUR100m portfolio covered by the guarantee will be available to finance long-term investments by micro, small and medium-sized enterprises (MSMEs) in technologies and equipment meeting EU standards, including investments in sustainable and green technologies under the EU Eastern Partnership SME Competitiveness Program (EaP SMEC), the EBRD said.
He added that participation in the EaP SMEC program will also allow Kredobank and its clients to receive expert assistance in the form of training and advisory support. Eligible borrowers will also receive grant support in the form of investment incentives upon completion of their investment projects.
The EBRD guarantee is backed by a 50% first-loss coverage guarantee financed by donors as part of the sustainability package. The conclusion of this new agreement increases to EUR468 million the total amount of funding supported by such guarantees since the beginning of the war.
As for the EUR25mn under the Trade Facilitation Program, the lender notes that participation in this program will allow Kredobank to increase its support to Ukrainian exporters and importers.
Kredobank is one of the leading banks in western Ukraine and as of the beginning of June it ranks 14th (UAH 46.85 bln) out of 65 operating banks in Ukraine in terms of assets. Kredobank is fully owned by PKO Bank Polski SA, the largest systemically important bank in Poland, whose shares are listed on the Warsaw Stock Exchange.
Ukraine will receive a $1.5 billion loan from the World Bank (WB) under the guarantees of the Japanese government, Ukrainian Prime Minister Denis Shmygal said.
“Only the relevant agreement was signed by the World Bank and the Ministry of Finance during our meeting with World Bank Vice President Antonella Bassani,” Shmygal wrote in Telegram on Thursday.
According to him, the funds are envisaged to strengthen social protection, help people during the war and restore the economy.
The head of the Ukrainian government said that in total, the WB group together with partners mobilized $34 billion to help Ukraine, of which more than $22 billion has already entered the budget.
“We are especially grateful for PEACE in Ukraine, the largest investment project in the Bank’s history, which helps finance social payments and pensions. We appreciate our close cooperation and look forward to further joint projects for the reconstruction and development of Ukraine,” Shmygal wrote.
State-owned “Ukrgasbank” provided “Karpaty” Experimental Mechanical Plant (OMZ) wagon building enterprise (Lviv region) with a two-year loan to the amount of UAH 170 mln, including UAH 60 mln granted under the state program “Available loans 5-7-9%”, as press-service of the bank informed.
According to a press release on Monday, such support from Ukrgasbank allowed the company to provide itself with orders, maintain its staff (more than 600 employees) and stable tax revenues to the budget.
“Since the beginning of the war, Ukrgasbank continues to support the national railcar industry by providing financing for the working capital of OMZ Karpaty LLC,” the statement said.
According to the bank, since the beginning of 2023, OMZ Karpaty has built 392 cars, including 291 grain cars, 35 gondola cars, 64 cement cars and two platforms. The company is also developing a new direction – repair of diesel locomotives.
Besides, the production is diversified in the direction of press-compactors production, which are exported to the EU.
The main activities of OMZ Karpaty LLC are construction of freight cars, repair of rolling stock, production of tank containers, tanks, metal structures and hydraulic elevators.
According to the resource opendatabot, in 2022 the company’s income increased by 2.9 times against 2021, to 1 billion 231.5 million UAH, net profit was 13.4 million UAH against a loss of 2.67 million UAH a year earlier.
According to the NBU on May 1, 2023, Ukrgasbank with assets of UAH 164.38 billion ranked 5th among the 65 operating banks in the country.
The European Bank for Reconstruction and Development (EBRD) is lending EUR10.6 million to the municipal enterprise (CE) Electrotrans (Khmelnitsky) to finance the purchase of new trolleybuses, as well as equipment for maintenance and diagnostics, according to a press release from the bank.
The EBRD loan is part of a financing package that also includes investment grants from the EU Neighbourhood Investment Platform of up to EUR2.75 million and up to EUR1.7 million from the EBRD’s Special Crisis Response Fund, which receives a contribution from the U.S. government, according to the statement Friday.
The loan and grants will be used to purchase new trolleybuses with remote monitoring systems, spare parts and service equipment.
In turn, the city will cover the cost of installing surveillance cameras inside the trolleybuses and upgrading the trolleybus stops, traction substations and trolleybus depot in the amount of EUR1.5 million.
The press release reminds us that the project is part of the EBRD’s Green Cities program, which Khmelnitsky joined in 2019. The first project, signed in October 2020, concerned improving solid waste management.
“Both projects are extremely important to the residents of Khmelnitsky: the ongoing project – to improve solid waste management – and the project to purchase new trolleybuses. We are glad that we can implement them exactly with the EBRD, our long-term partner, despite the war caused by Russian aggression,” the press service quotes Khmelnitsky Mayor Alexander Simchyshyn, who represented the city in Warsaw at the signing of the agreement with EBRD Managing Director for Sustainable Infrastructure Development Nandita Parshad.
As reported, earlier Simchyshyn noted that up to 45 low-floor trolleybuses are planned to buy with EBRD funds and grants, but at the same time, their number will depend on the cost of trolleybuses, which has increased.
The EBRD press service states that after the full-scale invasion of Ukraine by Russia, Khmelnytskyi faced a large flow of internally displaced persons (IDPs), which put a strain on city services.
The EBRD resumed work with Khmelnitsky in June, adding an IDP needs assessment to the Green City Action Plan, with funding provided by the Swedish government.
The EBRD’s Green Cities program was founded in 2016. Since then, it has helped more than 50 cities on three continents, with more than EUR5 billion spent on its support.
In Ukraine, Lviv, Kiev, Kryvyi Rig, Dnipro, Khmelnitsky joined it, among others.
As it was reported, the EBRD together with donors undertook to provide financing in the amount of EUR3 billion for support of functioning of business and economy in Ukraine in 2022-2023. In 2022, the bank allocated EUR1.7bn to support Ukraine and attracted EUR200m from partner financial institutions.
In February 2023 Ukrainian banks issued 126 mortgage loans totaling UAH 169.8 million, which is five times less than in February 2022 by number of such loans and by 69% – by volume, according to results of a monthly survey of the National Bank of Ukraine (NBU).
According to it, four banks reported on the issuance of mortgages. Loans were mainly issued under state programs to support lending exclusively in the secondary market of real estate.
The weighted average effective rate on mortgages in February was 8.3%, while in January it was 7.5%.
According to the survey, the most loans were granted in Kiev and the region – 51 contracts totaling 77.5 million UAH (46% of the total amount), in Rivne – 10 contracts for 12.5 million UAH (7%) and in Vinnitsa region – seven contracts for 9.8 million UAH (6%).
