MIGA to give EBRD up to $200 mln in guarantees to cover trade finance risks in Ukraine, other countries

MOSCOW. Feb 22 (Interfax) - The European Bank for Reconstruction and Development (EBRD) and the Multilateral Investment Guarantee Agency (MIGA) have signed a landmark first co-financing agreement, under which MIGA will issue up to $200 million in trade finance guarantees to the EBRD to take part of the EBRD's risk under its Trade Facilitation Program (TFP).

"The first country to benefit from this agreement will be Ukraine. [...] The guarantee will cover EBRD trade finance in selected state-owned banks, firstly in Ukraine," Ukrainian media said, citing an EBRD press release.

The MIGA guarantee was signed during a visit to EBRD President Odile Renaud-Basso by MIGA's Executive Vice-President Hiroshi Matano.

The EBRD disbursed 1.7 billion euros to Ukraine in 2022, pledging to bring its investments in Ukraine to 3 billion euros in 2023. The bank also has marshalled further international partnerships and finance with shareholders and donors.

"The MIGA-EBRD partnership will facilitate needed trade finance in Ukraine and other MIGA and EBRD-supported countries at a time of rising economic pressure and heightened geopolitical risk affecting trade, supply chains, and critical imports," the press release quoted Matano as saying.

"This guarantee will have an important impact, helping us to increase our trade finance business in Ukraine, which is one of our strategic priorities for work in the country," Renaud-Basso said.

The EBRD developed its Trade Facilitation Program to promote and facilitate international trade with Central and Eastern Europe, the Commonwealth of Independent States and the Southern and Eastern Mediterranean region. Under the TFP, guarantees are provided to international commercial banks to cover the political and commercial payment risk of transactions undertaken by issuing banks in the EBRD's countries of operations.

More than 100 issuing banks in 26 countries participate in the TFP, working with over 800 confirming banks and their subsidiaries throughout the world.

Since the start of the program in 1999, the TFP has supported more than 30,000 trade finance transactions with a total amount of more than 30 billion euros, including 3,000 foreign trade transactions of Ukraine for a total of more 4 billion euros.