The World Bank’s Board of Executive Directors today approved a US$ 154.5 million loan for the Second Export Development Project (EDP2), according to a press-release, forwarded to UNIAN. The project will support export and real sector growth in Ukraine by providing medium and longterm working capital and investment finance to Ukrainian private exporting enterprises. The project also aims to further improve the ability of the Ukrainian banking sector to provide financial resources to the enterprise sector through additional development of financial intermediation by providing a wider variety of better quality lending products.
“Ukrainian exports have been the primary engine of economic growth in the last several years, and continued growth of Ukrainian exports is a national priority of the Ukrainian government. There is therefore the need to continue to enhance and sustain the export competitiveness of Ukrainian enterprises”, said World Bank Director for Ukraine, Belarus and Moldova Paul Bermingham.
Wider availability of sufficient long-term finance would be an essential input for such growth to take place in the future on a sustainable basis. Apart from the availability of finance, there is a widely perceived need for a dedicated Ukrainian Export Credit and Guarantee Agency able to provide specific export credits, credit insurance and guarantee products to all Ukrainian exporters. The EDP2 will assist in achieving both of these objectives.
EDP 2 will be a successor to the previously successful EDP 1 project (1996-2003). The borrower and the main implementation agency would be the State Export-Import Bank of Ukraine (UkrEximbank). The World Bank will provide a line of credit to Ukreximbank, which Ukreximbank will on-lend to eligible private banks. The private banks will in turn make medium term working capital or long term investment loans to eligible private exporters to increase their export potential.
Thus, while EDP1 was a retail export intermediation loan directly from Ukeximbank to exporters, the main emphasis of the new project will be on Ukreximbank operating as wholesale export finance and guarantee institution, and a wholesale line of credit.
The loan will be provided to Ukreximbank at the Bank`s standard interest rate for LIBOR-based, single currency dollar loans, repayable in 20 years, including a 5-year grace period, and will be guaranteed by the Ukrainian government. Since Ukraine joined the World Bank in 1992, Bank commitments to the country total about US$ 5 billion for 36 projects and programs.