According to the preliminary results of the implementation of the state program of financial support for activities in the agro-industrial complex by reducing the cost of loans in 2020, almost UAH 1.05 billion out of UAH 1.2 billion planned for 2020 was compensated to agrarians, the Ministry of Economic Development, Trade and Agriculture said in a statement, published on its website on Tuesday.
“This year, under the program on reducing the cost of loans in the agricultural sector, UAH 24.8 billion were attracted. During the reporting period, more than 4,200 agricultural enterprises took advantage of the program. Due to this additional funding, they were able to update lines for the production and processing of agricultural products, build storages for vegetables, fruits and berries, and cover other production costs,” Minister of Economic Development, Trade and Agriculture Ihor Petrashko said.
According to the ministry, the top five regions in terms of loan compensation included Odesa (UAH 91.6 million), Kharkiv (UAH 71 million), Ternopil (UAH 68.9 million), Vinnytsia (UAH 66.5 million) and Cherkasy (UAH 65.4 million).
The Economy Ministry said that in October this year, the parliament adopted in the second reading bill No. 3295, which allows farmers to receive partial compensation for loans raised to replenish working capital. In pursuance of this law, the Economy Ministry is preparing appropriate amendments in the procedure for the use of funds (resolution of the Cabinet of Ministers No. 300).
As reported, under the budget program of financial support for agricultural producers in the direction of financial support for activities in the agro-industrial complex by reducing the cost of loans in 2020, some UAH 1.2 billion are provided.
Of the total number of authorized banks that signed a memorandum on general principles of cooperation with the Economy Ministry (36 banks), some 33 banks participate in providing compensation for loans.
Ukrainian President Volodymyr Zelensky has said he will do his best to provide domestic businesses with cheap loans.
The president’s press service reported that on Friday the head of state met with farmers in Kherson region and the latter again complained about high interest rates for loans.
“The interest rates have been reduced to 8-10% per annum, but this is not enough to do business in a normal way. We understand everything and we will tackle the issue. At least the national banks will work for domestic entrepreneurs,” Zelensky said.
He recalled that the Affordable Loans at 5-7-9% program has already been launched and it will be improved.
“We are doing the utmost to provide [interest rates at the level of] 5-7-9%. I came from business, we took [loans] at 18-25% and that was terrible. The figures I am speaking about – we are doing our best to ensure these figures. And we will win,” the president said.
The entrepreneurs also touched upon the issue of cutting the VAT rate for a range of farming products, including livestock products.
Winemakers suggested the head of state to develop a comprehensive development program for winemaking.
Head of Kherson Regional State Administration Yuriy Husiev asked the entrepreneurs to collect their proposals and send them to the government so that it can develop a support program.
“We will consider the issue. Let’s send them [the proposals] to the government and the President’s Office – we’ll consider them simultaneously,” Zelensky said.
TAScombank and Raiffeisen Bank Aval (both are located in Kyiv) signed an agreement with the Entrepreneurship Development Fund on Thursday, May 14, on participation in the Affordable Loans 5-7-9% government program to support small and medium-sized businesses, Director of the Entrepreneurship Development Fund Ruslan Hashev has said.
“Today we sign agreement with two new banks. These are TAScombank under 5-7-9% rates and Raiffeisen Bank Aval as participants,” he said during a roundtable conference of the Financial club on Thursday.
Hashev said that as of May 14, due to frequent refusals from banks, just 452 loans were issued under the Affordable Loans 5-7-9% program. The main reasons for the refusals were the non-compliance of the borrowers with the criteria of the program or the requirements of banks, as well as the previous ban on combining different types of support.
Ukrainian banks in the fourth quarter of 2019 reduced interest rates on hryvnia loans for businesses by 2.4 percentage points (p.p.), to 15.7% per annum, following a reduction in the refinancing rate by the National Bank of Ukraine (NBU). According to the banking sector survey posted on the National Bank’s website, the reduction in the cost of hryvnia loans for individuals was less noticeable: in the fourth quarter of 2019 the rates fell by 0.5 percentage points, to 33.6% per annum.
At the same time, according to the document, the rates on foreign currency loans to business entities are at a historically low level of 4.6% in December 2019.
The report also notes that the rates on deposits of individuals began to decline only in December, following the reduction in rates by state banks.
“During the year, state banks kept deposit rates at a high level due to inertia in the management of liabilities and assets and legal risks of PrivatBank,” the document says.
So, according to the report, the value of 12-month hryvnia deposits of individuals in the fourth quarter of 2019 decreased by 0.7 percentage points, to 15.1% per annum, in January 2020 it continued to decline by 1.1 percentage points, and in the first week of February by another 1 percentage point, to 13% per annum.
At the same time, the value of 12-month household deposits in U.S. dollars for the fourth quarter of 2019 decreased by 0.6 percentage points, to 2.6% per annum, and in 2020 by another 0.7 percentage points.
In addition, according to the document, the cost of hryvnia funds of corporations during the fourth quarter of 2019 fell by 2.7 percentage points, to 10.3% per annum.
The volume of non-performing loans (NPL) in state-owned banks fell by UAH 22 billion in January-June 2019, and their share of the loan portfolio decreased to 65%, according to a second report of the Finance Ministry on the state of work with NPL published within a regular and detailed report on operations of state-owned banks.
“Compared to January 1, 2019, the volume of NPLs in state-owned banks decreased by UAH 22 billion, to UAH 415 billion, and their share of the loan portfolio decreased by 2.5 percentage points, to 65%,” the ministry said in the report.
According to the results of the first half of the year, public sector banks reduced overdue debts by UAH 3.5 billion and carried out restructuring for UAH 10.6 billion.
Banks of the public sector restructured a total of about UAH 11 billion, of which 47% (UAH 5 billion) under the law on financial restructuring. In the first half of the year, Oschadbank successfully completed the financial restructuring procedures with TMM Firm LLC, Imperovo Foods LLC, PJSC Avangard agroholding, and PJSC Rise-Maksymko. Two cases of financial restructuring for companies of the WOG group have been opened. In addition, Ukreximbank opened its first financial restructuring case with Office Construction Agency LLC, which has become one of the largest in terms of debt to be restructured.
The share of the NPL of the banking system as of July 1, 2019 was 51%, or UAH 581 billion.
The share of companies planning to attract loans in the next 12 months has reached 41.5% in the second quarter of 2019 compared to 38.2% a quarter earlier, according to the results of a regular survey of enterprises’ business expectations announced by the National Bank of Ukraine (NBU). The largest share of such companies accounted for the manufacturing industry, those of energy and water supply, the document says.
According to the survey, enterprises, as before, prefer loans in the national currency: their share increased to 79.1% in the second quarter compared to 78.1% in the first quarter.
The National Bank noted that large enterprises, as well as those companies that conduct export-import operations are more inclined to attract loans in foreign currency.
At the same time, the share of respondents planning to attract foreign loans rose in the market up to 10.4% in the second quarter compared to 9.7% in the previous quarter.