Ukraine and the World Bank signed a $200 million loan deal on Friday for modernizing its power transmission system, according to Budapest Business Journal.

According to the agreement signed by Ukraine’s Fuel and Energy Minister Yuriy Boiko and director of the World Bank in Ukraine, Belarus and Moldova Paul Birmingham, the loan term is set for 17 years with a four-year grace period. In addition, the eastern European country should pay 0.25% of the loan in a one-time commission. The first part of the loan is expected to deliver in 2008. Boo said that the deal is important for Ukraine economically, as well as politically. Birmingham pointed out that Ukraine has become the first country to sign a deal with the World Bank since the latter lowered its loan interest rates. He said the funds would help Ukraine in modernizing its electricity transmission system. As reported, the direct recipient of the loan is the Ukrainian national energy company Ukrenergo.