23 Jun 2023 10:33

IFC to raise trade financing for Ukraine by $100 mln, to guarantee Ukrainian banks' new loans for $200 mln

MOSCOW. June 23 (Interfax) - British International Investment (BII), the U.S. International Development Finance Corporation (DFC) and the Multilateral Investment Guarantee Agency (MIGA) will risk-share the International Finance Corporation's (IFC) trade finance exposure, thus increasing the capacity of the IFC's Global Trade Finance Program in Ukraine from $200 million to almost $300 million.

"With this support, IFC and its partners will be in a position to facilitate as much as $1 billion of imports and exports over the next three years," Ukrainian media said, citing an IFC statement following the Ukraine Recovery Conference in London.

BII and DFC intend to provide $25 million and $50 million, respectively, to support trade flows of critical goods, including food. In addition, MIGA has approved $20 million to support trade finance guarantees, the statement said.

Furthermore, IFC and the European Commission have announced a partnership aimed at de-risking and enabling up to 200 million euros in financing from Ukraine's financial institutions to small businesses, with a focus on agribusiness and women-owned enterprises.

IFC and the European Commission are also joining with the Kremenchuk City Council to help renovate municipal buildings to accommodate hundreds of internally displaced people. IFC will channel part of the EU funds in grants, helping the city cover the costs of building renovations and provide temporary accommodation to displaced people, it said.

The agreements also mark the first financial contributions from the United Kingdom and the United States to the program, IFC said. IFC's $2 billion Economic Resilience Action (ERA) program, launched in December 2022, includes financing from IFC's own account alongside guarantees, concessional loans and grants from donor governments.

Ukraine's private sector, the share of which in the country's GDP reached 60-70% in 2021, could cover at least $140 billion of the country's reconstruction costs over the next ten years, which stands at one-third of all reconstruction needs according to the Rapid Damage and Needs Assessment, IFC said.

"Ukraine's reconstruction will cost far more than the government and donors can muster alone. The private sector can play a key role in this. Ukrainian businesses are also desperately short of financing and need immediate help to ensure the economy stays afloat," IFC's Managing Director Makhtar Diop said.

Since February 2022, IFC has disbursed $264 million to private companies and financial institutions, including $179 million under IFC's Global Trade Finance Program, IFC said.