Ukraine will borrow EUR 400 million from the EIB for agriculture / Photo from wikipedia.org
Ukrainian Prime Minister Arseniy Yatsenyuk signed a financial agreement (Ukraine Agri-Food Apex Loan) between Ukraine and the European Investment Bank (EIB) on Monday, December 28, according to a posting on the government website.
The implementation of the agreement will help Ukraine attract EUR 400 million for 12 years with a 4-year grace period to support the agricultural sector in Ukraine, according to the report.
The funds will support projects in the field of growing grain and oilseeds, as well as the upgrade of the fish sector and aquaculture in Ukraine.
The EIB will act as the lender in the framework of the project, while Ukraine will be the borrower of resources through the Finance Ministry, which jointly with the Ministry of Agriculture and Food and in cooperation with JSC Ukreximbank will select projects, as well as monitor their implementation, according to the report.
The EIB loan funds can cover up to 50% of the identified projects. The rest will be financed by own funds of participating banks or by final beneficiaries. Therefore, the project aims to accumulate financial resources to the tune of at least EUR 800 million.
The important issue for agricultural business in Ukraine, according to the report, is access to finance and lending. The EIB loan will enable the country to get access to European funds and use them to support agricultural producers, Agrarian Policy Minister Oleksiy Pavlenko said.
"These funds will help finance the modernization of production and create new production capacities, develop infrastructure and logistics. From a macroeconomic point of view and in the long-term perspective this will provide an opportunity to increase tax revenues to the national budget, will positively impact business climate and create conditions for investment activity," said Vladyslava Rutytska, the Deputy Minister of Agricultural Policy and Food of Ukraine on European Integration, who chaired the delegation on the development of the project.
The implementation of the project is aimed at delivering the following results, namely attraction of medium- and long-term financial resources into the agricultural sector; support for small and medium-sized enterprises; introduction of measures to modernize existing facilities and create new ones; development of infrastructure and logistics.
It will also help Ukraine improve of the balance of payments due to boosting the country's export potential (grains and oilseeds) and reducing imports (fisheries and aquaculture); increase tax revenues to the national budget; make the business climate better, and create conditions for investment activity.