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EBRD ECU 100 million credit line for Ukraine targets small businesses
An ECU 100 million credit line, specifically designed to assist small and medium-sized businesses (SMEs) and guaranteed by Ukraine, has been signed today during the visit of the Minister of Finance of Ukraine to the European Bank for Reconstruction and Development (EBRD).
Signing on behalf of the EBRD, President Jacques de Larosière said: "This credit line represents a substantial commitment from the Bank and boosts significantly the amount of financing we are putting into Ukraine. Implementing the credit line will help strengthen the country's financial infrastructure by supporting development of the most promising private banks and provide much needed assistance for the burgeoning private sector. It helps create the right environment for further EBRD investment in 1995."
The Minister of Finance, Petro Hermanchuk, was equally positive in his outlook for further cooperation between the Bank and Ukraine. He said: "This financing agreement is of the highest priority for the government and lies at the heart of the reform process in Ukraine."
The funds, to be provided in four tranches to the National Bank of Ukraine, will be on-lent to Ukrainian companies by eligible participating banks. Six banks are currently being considered for the first phase of the programme among them are Gradobank and West Ukrainian Commercial Bank. An autonomous project monitoring unit is to be set up within the National Bank to monitor the loans. By participating in this programme, which has additional technical cooperation funds, the Ukrainian banks should become fully creditworthy according to international standards.
The SMEs eligible for financial assistance are those seeking hard currency denominated financing for investment and export/import activities. An initial technical cooperation component of ECU 2.2 million will assist the participating banks with institutional development programmes and in strengthening credit assessment skills. Further parallel technical assistance will fund business advisory services for the SMEs, such as preparing business plans and creating accounting systems.
The credit line complements the current activities of the EBRD in Ukraine. The Bank is a shareholder in the Ukraine Fund, which was set up in 1992 and provides venture capital finance to private companies.
The Bank has approved six projects in Ukraine, with a total value of ECU 164 million.
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