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Japan Bank for International Cooperation (JBIC) has signed a bank-to-bank loan agreement totalling up to US$28.5mn with the State Export-Import Bank of Ukraine (Ukreximbank). The loan is cofinanced with Bank of Tokyo-Mitsubishi.

This loan is provided as a credit line to Ukreximbank to support Japanese exports to Ukraine, with Ukreximbank financing Ukrainian firms with medium-and long-term funds as they import machinery and equipment from Japanese exporters. The loan, which is denominated in both the US dollar and the Japanese yen, is highly convenient for Ukrainian firms because it allows them to select suitable currency depending on their projects. The loan is thus expected to assist Ukrainian firms in procuring machinery and services from Japan and help expand exports by Japanese firms.

After gaining independence from the Soviet Union in 1991, the Ukrainian economy suffered a major downfall. In recent years, however, it has registered remarkable growth driven by, among other things, increased exports in the iron and steel industry as well as recovery in the agricultural sector. (In 2004, its GDP grew by 12%.) Japanese businesses are laying their eyes on the country as a possible destination of their exports and investments.

This loan was made possible by the MOU signed during the visit of President Yushchenko to Japan in July 2005.

This is the first loan to Ukraine that relies solely on Ukreximbank’s creditworthiness without being covered by a guarantee from the Ukrainian government.

As the only export credit agency wholly owned by the Ukrainian government, Ukreximbank has been extensively providing funds to domestic firms in Ukraine, supporting their trade transactions.

JBIC has provided knowledge assistance for Ukreximbank together with the World Bank since 1997 to improve the bank’s overall operations, through credit analysis capacity enhancement and increasing operational efficiency. Aside from this loan, JBIC also provided its first ODA loan to Ukraine in March 2005 to support the expansion of the Boryspil State International Airport, the country’s largest airport. JBIC will support sustainable growth in Ukraine through cooperation in developing infrastructure and promoting Ukrainian trade transactions.