Ukraine’s state-owned export-import bank, Ukreximbank, is set to receive a loan of €50mn from the European Bank for Reconstruction and Development (EBRD) to finance corporates affected by Russia’s invasion of the country.

The loan, signed last week in London, will be directed at Ukreximbank clients in agribusiness and food security, energy, transport and manufacturing.

It will “both reinforce Ukreximbank’s lending capacity, helping it to secure and diversify its funding base, and provide financing support to private businesses”, the EBRD says.

“Keeping finance flowing through trusted partner financial institutions such as Ukreximbank, despite the war – so the private sector and municipalities can continue to operate and provide services and support the economy – is central to the EBRD’s mission in the country,” says Matteo Patrone, the EBRD’s managing director for Eastern Europe and the Caucasus.

Half of the loan’s risk will be covered by first loss risk cover funded by the EBRD crisis response special fund.

“In wartime as well as during the post-war recovery it is fundamental for Ukreximbank clients in priority sectors to have access to investments, commercial funds and war-risk coverage. New financing from the EBRD will definitely strengthen the resilience and adaptability of Ukraine’s economy,” adds Oleksandr Shchur, a member of Ukreximbank’s management board.

The medium-term financing will also be used to support municipalities disrupted by the war, particularly those in western Ukraine, where many companies moved when eastern parts of the country were hit hard by the conflict.

“Municipalities need to expand infrastructure for internally displaced people as well as business activities,” the EBRD says, adding that they also require “liquidity to compensate for temporary revenue losses and additional war-related expenses”.

According to the EBRD, Ukraine’s economy is expected to have shrunk by 30% in 2022 and is forecast to grow by 1% in 2023.

The organisation earmarked extra trade finance support for Ukraine following Russia’s invasion in February 2022, and has committed to investing €3bn in Ukraine by the end of 2023.

It deployed €1.7bn in 2022, alongside €200mn via partner financial institutions. The EBRD says it provided Ukraine with a total trade finance turnover of €459mn last year.

In October 2022, Ukraine’s export credit agency (ECA) called for help from ECAs worldwide to help finance its exports after the central bank banned overseas payments.

This month, however, the National Bank of Ukraine removed restrictions on domestic firms’ repayments on loans by foreign export credit agencies in a bid to attract external investment.

UK Export Finance’s recent announcement that it will back a £26.3mn loan from Citi to the Ukrainian government to allow it to reopen supply routes near Kyiv also represents one of the first examples of commercial bank financing to support the country’s reconstruction.