Government of Germany to provide EUR 500 million loan to rehabilitate infrastructure of eastern Ukraine

A ceremony of signing a Memorandum of understanding between the Government of Ukraine and the Government of the Federal Republic of Germany on a non-binding financial loan and a Framework agreement between the Government of Ukraine and KFW Bankengruppe on individual loans worth up to EUR 500 million took place in Berlin on Wednesday, April 1.

Vice Prime Minister of Ukraine, Minister of Regional Development, Construction, Housing and Communal Services of Ukraine Hennadii Zubko and State Secretary at the Federal Ministry for Economic Affairs and Energy Matthias Machnig inked relevant documents during the 8th meeting of the Ukrainian-German high-level group on economic cooperation.

Hennadii Zubko noted that signing of the Memorandum and the Framework agreements became a successful outcome of the negotiations launched in in August of 2014 by President of Ukraine Petro Poroshenko and German Chancellor Angela Merkel. The Vice Prime Minister of Ukraine expressed gratitude on behalf of the Government of Ukraine to the leadership of the Federal Republic of Germany "for the support of Ukraine at a time of unprecedented ordeals in our history".

According to him, the Ukrainian Government is resolute to engage in the implementation of projects to obtain the non-binding financial loan.

The head stressed that these funds will be used for restoration and modernization of the Eastern part of Ukraine, including new construction, reconstruction, capital repair and modernization of the infrastructure of any form of ownership in the fields of transport, energy and heat, energy efficiency, water supply, sanitation, social infrastructure, rehabilitation and construction of housing. "These funds will support for Ukraine - both in the East and the West," he said.

Hennadii Zubko emphasized these funds would be spent to restore and modernize the infrastructure of eastern Ukraine, including new construction, reconstruction, capital repair and modernization of the infrastructure of any kind of property in transport, energy, heat supplies, energy efficiency, water supply, sanitation, social infrastructure, rebuilidng and construction of housing facilities. "These funds will become the needed support for the entire Ukraine - both in the eastern and western parts," he said.

Pursuant to the signed documents, individual loans will be used to finance projects in the territories of Donetsk, Luhansk, Dnipropetrovsk, Zaporizhia and Kharkiv regions as well as other regions of Ukraine, those with large amount of officially registered internally displaced persons.

Additional financial resource might be allocated by the KfW in June 2015. The maturity of the loan is up to 15 years with a grace period of 5 years.

Moreover, the Vice Prime Minister of Ukraine informed the participants of the meeting about the implementation of the Humanitarian Response Plan and invited the German party to take part in the International conference to support reforms in Ukraine, due in April in Kiev. "The aim of this conference is to join efforts of the international community to support core reforms in Ukraine with taking simultaneous measures to restore the infratsructure of Donbass", he added.