Financing SMEs in Ukraine: a first
An SME loan of EUR 100m was signed by the EIB in Ukraine at the end of 2009. It comes under the SME facility decided at the Eastern Partnership Summit in May 2009 and forms part of the Joint IFI Action Plan concluded last year between the EIB, the EBRD and the World Bank Group. For the EIB, it is the first loan for SMEs in Ukraine. The Bank has signed loans in Ukraine for a total of EUR 465m since it started its operations in the country in 2006.
The Bank's mandate in the Eastern Partner Countries has until recently been limited to projects of significant interest to the EU in transport, energy, telecommunications and environmental infrastructure. Concerning the SME sector, the EIB has been able to offer its SME loans product only to banks within the European Union, the Western Balkans and the Pre-Accession countries. But last autumn the Commission and later the EIB's Board of Directors expanded the geographic coverage of loans for SMEs to Eastern Partnership Countries following a request made at the EU's Eastern Partnership Summit held in Prague in May 2009.
Supporting Ukraine at a time of global economic retrenchment
The Framework Agreement between the Bank and Ukraine was signed in 2005 and ratified in 2006. To date, the Bank has financed roads, water/wastewater and power transmission projects. The EIB's involvement in supporting the SME sector is expected to generate positive effects in terms of availability of long-term funding for SMEs and also in terms of overall financing costs.
To achieve this target, the EIB closely cooperates with local financial institutions which have market expertise, particularly in providing services to small and medium-sized entrepreneurs and public entities through a well-developed network.
In 2009, two credit lines amounting to a total of EUR 200m with Ukreximbank, a state-owned development bank, and Forumbank, a privately-owned commercial bank, were approved by the EIB Board of Directors. The Forumbank loan was signed at the end of 2009, while the Ukreximbank loan is expected to be signed shortly.
SMEs - a key component of the post-crisis economy
The main characteristics of these loans are a long maturity made available on advantageous terms and the possibility of being provided in parallel with, and in complement to, other international financing institutions' support and programmes.
Through both the Ukreximbank and Forumbank loans, SMEs from all sectors will benefit from at least 70% of the EIB loan, while small and medium-sized energy and environment projects implemented by mid-cap companies or public entities will receive up to 30% of the loan.
It is expected that coordinated action among the international financing institutions will support the banking sector and lending to the real economy in the region.