KYIV, October 4, 2011 - The Loan Agreement for an Additional Financing loan for the Second Export Development Project (EDP2) was signed today by Mr. Mykola Udovychenko, Chairman of the Board of JSC Ukreximbank and Mr. Martin Raiser, World Bank Country Director for Ukraine, Belarus and Moldova.
World Bank’s Board of Executive Directors approved the Additional Financing loan to Ukraine in the amount of US$150 million for the Second Export Development Project on August 25, 2011. The project supports export and real sector growth in Ukraine by providing medium and long-term investment and working capital finance to Ukrainian private exporting enterprises. The project also aims to further improve the ability of the Ukrainian banking sector to intermediate financial resources to the enterprise sector by providing a wider variety of better quality lending products.
“As the global outlook has become more clouded, this project is timely support for Ukraine’s exporters. We hope that with access to financing assured, Ukraine’s exporters can contribute to sustain the recovery,” said Martin Raiser, World Bank Country Director for Ukraine, Belarus and Moldova.
The Additional Financing loan will supplement the existing EDP2 credit line to the total amount of US$ 304.5 million and will extend the EDP2 project implementation till the end of 2014. EDP2 provided an important source of financing during the 2008-2009 global economic and financial crisis. Of the total amount, over US$40 million were approved and disbursed during the peak of the crisis - which constituted about half of the overall increase in banking system lending to corporate customers during the same period.
EDP 2, approved in 2006, is a successor to the previously successful EDP 1 project of US$ 70 million equivalent (1996-2004). The State Export-Import Bank of Ukraine (Ukreximbank) remains the borrower and the main implementation agency of the project. Of the US$ 150 million Additional Financing loan provided by the World Bank, US$ 45 million will be used by Ukreximbank for direct financing of exporting enterprises, while US$ 105 million will be lent by Ukreximbank to other eligible banks for their further on-lending to Ukrainian exporters.
“It is hard to overestimate the importance of the Project for Ukraine since the Agreement envisages the obtaining of long term financial resources by Ukraine’s economy and its real sector. It also creates possibilities for Ukrainian exporters to modernize production facilities, aimed at maximizing value added,” said Mykola Udovychenko, Chairman of the Board of JSC Ukreximbank.
The loan will be provided to Ukreximbank as a LIBOR-based flexible variable spread loan repayable in 30 years, including a 6-year grace period, and will be provided a state guarantee by Ukraine.
Since Ukraine joined the World Bank in 1992, World Bank commitments to the country total about US$ 7 billion for 39 projects and programs.