The EU has begun striking deals under a pioneering risk-sharing scheme for the export credit sector, agreeing to backstop Danish exports to Ukraine and unveiling plans to support a dozen more member states.
Earlier today, the Export and Investment Fund of Denmark (EIFO) announced it had become the first export credit agency (ECA) to utilise a €300mn initiative aimed at encouraging European exports to Ukraine.
Amid ongoing war risks, ECAs are often constrained in their ability to guarantee or insure exports to Ukraine and typically require state intervention to bypass their usual underwriting processes. EIFO has already allocated a significant portion of a DKr2.8bn (€375mn) pot from the Danish government.
Under the risk-sharing scheme, EIFO will now be able to tap the European Investment Fund (EIF) for guarantees worth up to €20mn when covering Danish SME and mid-cap exports to Ukrainian buyers.
The deal is expected to benefit up to 40 Danish exporters and enables Ukraine to access “essential goods, technologies and services – from machinery and clean energy to pharmaceuticals”, says a joint statement from the EIF, EIFO and the European Commission.
The EU has long deliberated over a risk-sharing tool for the export credit industry, first identifying a need to bolster support for ECAs in 2021 amid rising competition from countries such as China.
In late 2023, the Commission touted plans to establish a pilot scheme aimed at boosting exports to Ukraine. Within months, several ECAs, including those from Finland, Austria, and the Netherlands, registered their interest.
The deal with EIFO is the first of 13 agreements, with the others currently being prepared by the European Investment Bank Group, European Commission and national ECAs, the joint statement says.
The €300mn facility was oversubscribed “within weeks” of being launched in July 2024, the organisations add.
The partnerships represent a “significant step forward in further integrating the EU and Ukrainian economies, which is a crucial element of Ukraine’s accession process”, says Valdis Dombrovskis, European Commissioner for economy and productivity.
“We look forward to other member states using the facility and contributing to the success of this important initiative,” he adds.
EIFO has been a major backer of short-term trade and also longer-term projects in Ukraine, supporting Kyiv’s efforts to kickstart a rebuild that will cost upwards of US$520bn, according to World Bank estimates.
“Denmark stands behind Ukraine and the upcoming reconstruction after the tragic war. We have already financed 18 unique projects in Ukraine and are ready for more. This agreement marks the beginning of Europe’s reconstruction efforts for Ukraine, which we can scale up late,” says Peder Lundquist, CEO of EIFO.
