The European Bank for Reconstruction and Development (EBRD) has unveiled fresh trade finance support for businesses affected by Russia’s invasion of Ukraine, both in the war-ravaged country and neighbouring nations.

As the conflict approaches its fourth week, the EBRD has announced a €2bn resilience package and says various forms of financial aid will be made “rapidly available” to Ukrainian businesses.

These include payment deferrals, emergency liquidity finance, trade finance, and potentially even help for companies looking to relocate.

An EBRD spokesperson tells GTR there is no specific amount earmarked for trade finance purposes, but the lender will weigh up demand from partner banks and the “obviously the level of risk of each proposed transaction”.

They add the new trade finance lines will boost imports of fuel, medicine and other important goods, with financing disbursed through Ukrainian commercial banks who will on-lend to their clients.

The move follows a proposal by the EBRD board of directors on March 1 to suspend access to its financing and expertise by Russia and its ally, Belarus, “open-endedly”. The bank’s governors were given 30 days to vote on the proposal.

Beyond the human costs of the conflict in Ukraine, which has laid waste to its cities and forced millions of citizens to flee, economists say the war will have a sizeable economic impact.

According to a recent report from the International Monetary Fund (IMF), destruction of critical infrastructure, trade disruptions and plunging consumption will lead to a minimum 10% fall in gross domestic product this year.

Should Russia’s invasion of Ukraine be drawn out for a lengthy period of time, Ukraine’s economy could shrink by up to 35%, the IMF warns.

The EBRD has vowed to also support Ukraine’s “reconstruction” once conditions allow, and will extend fresh funding to neighbouring nations directly affected by inflows of Ukrainian refugees.

The UN estimates nearly three million people have fled Ukraine since the war escalated last month.

In neighbouring countries, the EBRD says resilience measures will concentrate on four key areas, including energy security, trade finance, extra liquidity for small and medium-sized enterprises (SMEs), as well as municipal services and livelihoods for displaced persons.

On the issue of energy security, the EBRD says it can back emergency purchases in nations currently relying on oil, gas and coal imports from Russia and Belarus.

European countries are hugely dependent on Russia in particular for their energy needs, with the US government’s Energy Information Administration estimating OECD Europe accounted for nearly half of Russia’s crude oil exports in 2021, as well as 75% of Moscow’s total natural gas sales.

“Our shareholders have given their full support to this package, and our staff are already working on the ground to implement these steps. We are facing an unparalleled crisis, but throughout our history, we have been a bank that rises to the challenge. The people of Ukraine have our complete backing,” says EBRD president Odile Renaud-Basso.

Ukraine is one of the EBRD’s biggest countries of operations, with cumulative lending of more than €16bn in 511 projects since the EBRD started work, including more than €1bn in 2021.