The European Investment Bank (EIB) Group is planning new loans totaling EUR450 million for Ukrainian energy investments, including the reconstruction of hydroelectric power plants and power grid infrastructure damaged by Russian attacks, as well as the restoration of district heating networks in Ukrainian cities.
According to a press release on the bank’s website, another EUR 86 million will go to Ukraine’s national power grid operator, NPC Ukrenergo, to build drone shelters for power plants.
“We are stepping up our support to help protect and repair Ukraine’s infrastructure before winter,” the release quotes EIB President Nadezhda Calvigno as saying, “On July 22, she briefed EU foreign ministers on these measures and held a regular video conference with Ukrainian Finance Minister Sergii Marchenko to discuss progress on ongoing projects, especially in energy infrastructure.
According to her, the bank will also expand its support for Ukraine’s economy by facilitating access to finance for businesses and promoting trade with the EU.
In the business finance component of the latest support package, the EIB Group approved three partial portfolio guarantees, which are expected to lead to more than EUR 110 million in new lending to Ukrainian micro, small and medium-sized enterprises through three Ukrainian banks. It is specified that the guarantees are to be signed in the second half of 2024 with the respective banks and will support 550 Ukrainian companies, preserving about 8,250 jobs.
In addition, the EIB Group intends to provide partial portfolio guarantees to five more banks in Ukraine by the end of the year under the EU4Business Guarantee Facility, the release said.
According to the release, this week the EIB is also joining forces with Ukrsibbank, the Ukrainian subsidiary of BNP Paribas Group and one of Ukraine’s largest banks, to launch a revolving credit line of at least EUR150 million in Ukrainian hryvnia to support businesses affected by the war. The local currency facility is expected to be operational by the end of 2024. This is the EIB’s second initiative to stimulate local currency lending in Ukraine, following a partnership with Citibank Ukraine for between $50 million and $100 million in Ukrainian hryvnia.
In addition, the release notes, by the end of this month and following the signing of an agreement with the European Commission in June, the European Investment Fund (EIF) will start accepting applications under a EUR300 million export credit guarantee facility to support EU companies trading with Ukraine. The initiative will offer guarantees to export credit agencies in EU member states, as well as Norway and Iceland, that want to help export to Ukraine.
Following a videoconference on July 22, the Ministry of Finance of Ukraine announced that it expects the EIB to approve a EUR250 million package of support for Ukraine’s energy sector in the near future.
In general, according to the Ukrainian side, the volume of EIB initiatives in the public sector is 26 projects worth EUR 5.3 billion, and the volume of the portfolio of joint projects in the public and private sectors is the largest for all years of cooperation and exceeds EUR 7 billion, including about EUR 2 billion of EIB investments in all areas since the beginning of the full-scale war.
Regarding current initiatives, the parties also discussed preparations for the signing of a financial agreement between Ukraine and the EIB on the project “Implementation of the Emergency Assistance System for the Population by a Single Number 112”, as well as potential joint projects, in particular, aimed at providing housing for Ukrainian citizens.
As reported, in 2024, Ukraine and the EIB signed a Memorandum of Understanding on cooperation in the public and private sectors of Ukraine’s economy. The Memorandum identifies priority areas of cooperation for the next 10 years.
JSC OTP BANK, as part of a joint program with the European Bank for Reconstruction and Development (EBRD), offers small and medium-sized enterprises (SMEs) investment loans to support their business in times of war with the possibility of compensation for part of the costs financed by the Bank’s credit facilities. The parties have recently signed a new cooperation agreement that will allow OTP Bank to provide EUR 120 million of financing to the Ukrainian private sector with the participation of the EBRD through a 50% credit risk coverage instrument on a portfolio basis.
“This program is, in fact, a successful expansion of the previous cooperation with the EBRD, which was in great demand among our clients, and is aimed at supporting such critical industries as agriculture, production and trade of essential goods, logistics services and others. Thanks to this lending instrument, companies are able to continue their operations, develop and ensure the availability of goods and services to the population,” said Natalia Kondratchuk, Head of Corporate Finance Department of OTP Bank.
“Such loans under portfolio guarantees can be used to support long-term investments of SMEs in green technologies (modern agricultural machinery and other energy-efficient equipment, solar panels for power plants to meet their own needs) that meet the standards of the European Union and will help increase the competitiveness of enterprises in domestic and foreign markets. After the investment project financing is implemented, SME borrowers will be able to apply for investment incentives (cash compensation, cashback) provided by the EU under the EU4Business initiative.
The amount of compensation depends on the type of assets acquired and the complexity of the project and can be up to 15% of the amount of loan funds received. Reimbursement is made in euros after documentary evidence of the intended use of funds by the SME borrower and verification of documents by the European Bank for Reconstruction and Development.
The signed agreement is a continuation of the cooperation between the EBRD and OTP Bank in supporting Ukrainian business, which began in 2022. One of the components of this cooperation is the implementation of a program to increase the competitiveness of small and medium-sized enterprises in the EU’s Eastern Partnership countries. Since the beginning of the full-scale war, the total amount of new financing from Ukrainian banks, supported by similar EBRD guarantees, reached about EUR 900 million as of the end of 2023.
The government and PJSC “Ukrainian Financial Housing Company” (Ukrfinjitlo) have significantly increased the financing of the program “eOsela”, thanks to which the monthly issuance of loans will increase from 0.7-0.8 billion UAH to 2 billion UAH, and a minimum of 10 thousand families will be able to get a preferential mortgage by the end of the year.
“We have seen how great demand for this program is among people. They want to build their lives in Ukraine despite the war. Therefore, the government with Ukrfinzhytl found opportunities and attracted additional funds for the program – both on the open financial market and credit,” the Economy Ministry release on Wednesday quoted First Deputy Prime Minister and Economy Minister Yulia Sviridenko as saying.
The release specifies that “those who were rejected for lack of financing can reapply to Dia.”
As reported, from January to the end of May, due to lack of funds, the implementation of the program “eOsela” was suspended.
“There are funds to finance 10 thousand families until the end of this year. This is about 11.9 billion UAH, as envisaged by the financial plan. Of these already for 2.8 billion UAH issued affordable mortgages from the beginning of 2023”, – specified to the agency “Interfax-Ukraine” in the press service of Ukrfinzhitlo.
As reported, the program of affordable mortgage lending “єOselia” has worked in Ukraine since October 2022. On a preferential mortgage at 3% per annum for up to 20 years with a down payment of 20% of the cost of housing can qualify for contract servicemen of the AFU, security and defense sector workers, medical workers, teachers, researchers. Since its launch in 2022, partner banks have already issued more than UAH 3.4 billion in loans to more than 2.4 thousand participants.
Since August 1, to apply for participation in the program “єOsela” at 7% can be war veterans, combatants, IDPs and citizens who do not have their own housing more than the standard area.
Chairman of the Board of Ukrfinzhitlo Eugene Metzger emphasized that for a mortgage at 7% borrowers can choose an apartment in a house not older than three years at the time of the contract, or under construction. “We focus specifically on the primary real estate market. It is important that “eOselia” can give the economy a positive multiplier effect, and this is possible only thanks to the push of construction”, – says Eugene Metzger.
Six partner banks take part in the program “eOselia”: Oschadbank, Privatbank, Ukrgasbank, Globus Bank, Sky Bank and Ukreximbank. You can apply for participation in the program in the mobile application “Diya”.
At the end of 2022, the government additional capitalized Ukrfinzhytlo by UAH 30 billion through the issue of internal state loan bonds (ISLBs). According to Deputy Prime Minister and Minister of Economy Yulia Sviridenko, such financing is enough to issue 12-15 thousand mortgage loans in 2023.
At the end of April, the Ministry of Economy, as the single shareholder of Ukrfinzhytlo, approved repo operations with these government bonds for up to a year in the amount of UAH 15 billion. Later it was reported that the rate on these transactions could be up to 20% per annum, while the government bonds themselves were issued for up to 5 years at 19.5% per annum.
In addition, on August 3, Ukrfinzhytlo’s supervisory board approved an increase in PrivatBank’s loan secured by the company’s government bonds to UAH 1.5bn.
Ukrainians have already received 1 thousand loans totaling 1.3 billion UAH under the state program of affordable mortgages “єОsela”, said Deputy Minister of Economy Alexander Griban.
“Already 1 thousand loans for 1.3 billion UAH have been issued. It’s not much in principle, but it’s a start,” he said at the Architecture and Construction Business Forum in Kiev on Thursday.
As the coordinator of the program the company “Ukrfinjitlo” in a press release said 835 of the 1017 soft loans were given to servicemen and security forces, 93 – to doctors, 78 – teachers, 11 – academics.
According to her, since the beginning of May the partner banks issued 57 loans worth UAH 83.5 million.
The program of affordable mortgages “єOsela” has been working since October of last year. Concessional mortgage at 3% per annum is available for military servicemen, security and defense employees, medical workers, teachers and research workers.
According to the Ministry of Economy, this year there are plans to increase the list of categories of people who can receive a loan for their own homes. They will be able to take credit for the purchase of housing at 7% per annum. The government expects to make this program permanent.
The coordinator of the state program of affordable mortgage lending for citizens “єOsel” is the state “Ukrainian Housing Finance Company” (“Ukrfinjitlo”).
The International Monetary Fund’s four-year extended EFF financing program for Ukraine also envisions the country receiving $80 billion from multilateral and bilateral donors during this period, including $20 billion in grants and $60 billion in concessional loans, as well as another $20 billion in debt flow relief, said Gavin Gray, head of the Fund mission.
At a press conference on Friday, after announcing the decision to approve the $15.6 billion EFF program, he recalled two announcements made last week: from a group of official Ukrainian creditors about their willingness to defer the country’s debt payments for the program period and about Ukraine’s intention to agree the same with the holders of Eurobonds and other external commercial debts.
Ukrainian agricultural producers in 2022 attracted 43.65 thousand loans totaling 95.47 billion UAH under the program “Affordable credits 5-7-9”, according to the website of the Ministry of Agrarian Policy and Food of Ukraine on Monday.
It says that from the middle of March to May 31, 2022 a special program of concessional lending for the sowing season, under which farmers could borrow up to 60 million hryvnia at 0% per annum, and the state guaranteed 80% of funding. During the period of its operation the agrarian entrepreneurs received 24,72 billion UAH of credits. From June 1, 2022, the usual program “5-7-9” was applied for loans to agricultural sector.
The leaders in terms of credit amounts during this period were the Kiev region – 15,5 billion UAH, Vinnitsa region – 10,2 billion UAH, Kirovograd region – 8,6 billion UAH, Dnepropetrovsk region – 6,8 billion UAH and Odessa region – 6 billion UAH.
PrivatBank, Raiffeisen Bank, Ukrgasbank, Oschadbank, Ukreximbank, Credit Agricole and PUMB granted the most loans to agrarians.
The agency also recalled that the Ukrainian government has decided to provide financial support to micro, small and medium enterprises to restore partially or completely destroyed as a result of military operations of production facilities. Agribusinesses can also count on such support.
Besides, banks credit business for energy supply: purchase and installation of equipment ensuring uninterrupted work of business energy systems. Lending for such investments is made at an interest rate of 0% per annum.
