The European Bank for Reconstruction and Development (EBRD) is expanding its opportunities to increase lending to Ukrainian companies in the national currency. This became possible due to the signing of an agreement between the National Bank of Ukraine and the European Bank for Reconstruction and Development (EBRD) setting up a US$ 500 million swap facility to increase the availability of Ukrainian hryvnias (UAH) to local businesses.
According to the announcement on the official EBRD website, the agreement is concluded for two years with the possibility of extension. The minimum amount of one tranche under the agreement is US$ 25 million, while the minimum term of the tranche is up to 3 months with the possibility of a rollover.
The resource will be used to support companies urgent liquidity, short-term working capital and trade finance needs. Businesses will receive a loan from the EBRD in hryvnia, thus not bearing the risks associated with currency exchange.
At the same time, the purchase of foreign currency by the National Bank from the EBRD on a swap basis will contribute to the growth of Ukraine's international reserves, which will strengthen macro-financial stability, as well as have a positive impact on the mood of financial market participants.
The parties are expecting to make the first swap transaction in the next few weeks.
The EBRD is one of the largest institutional investors in Ukraine. As of the beginning of May 2020, the total amount of financing allocated to Ukraine by the Bank is EUR 14.82 billion within 464 projects, of which 28 (to the tune of EUR 2.52 billion and USD 1 billion) are public sector economy projects. As of 01.05.2020, 7 joint projects with the EBRD with a total amount of EUR 1,552.0 million are being implemented at the public level. The volume of use of EBRD loans funding for these projects as of 01.05.2020 – EUR 890.83 million (57.4% of the total amount of loans), including in 2019 – EUR 200.5 million.
Ukraine has been a member of the EBRD since August 13, 1992. The Minister of Finance is the EBRD Governor of Ukraine, a member of the EBRD Board of Governors.