The Multilateral Investment Guarantee Agency (Miga) has agreed a “landmark” co-financing deal with the European Bank for Reconstruction and Development (EBRD), enabling it to boost its trade finance activity.

Ukraine is set to be the first recipient of support, with an initial guarantee of up to US$10mn earmarked for the country’s state-owned banks.

The agreement, signed in London on February 21, will see Miga take part of the European multilateral financer’s risk under the EBRD Trade Facilitation Programme (TFP) via the issuance of up to US$200mn in trade finance guarantees.

The guarantees will be issued over a period of up to six years, with an initial three-year term.

“This agreement launches a new era of co-operation between Miga and the EBRD,” says Miga executive vice president Hiroshi Matano. “The Miga-EBRD partnership will facilitate needed trade finance in Ukraine and other Miga and EBRD-supported countries at a time of rising economic pressure and heightened geopolitical risk affecting trade, supply chains, and critical imports.”

EBRD president Odile Renaud-Basso says that the guarantee will help the bank increase its trade finance business in Ukraine, one of its “strategic priorities for work in the country”.

The deal will enable imports that “serve humanitarian needs and help keep industries like agriculture going while providing critical imports needed for production”, Miga says in a statement.

Since the outbreak of war in Ukraine a year ago, foreign commercial banks have stopped taking any direct risk on Ukrainian trade finance transactions, the EBRD says. To tackle this, the lender has “significantly increased” its headroom for Ukrainian banks, supporting over €400mn in trade transactions for goods critical to the Ukrainian economy since February 2022.

The EBRD mobilised an overall €1.7bn in support for Ukrainian businesses affected by the war in 2022 and has pledged a further €3bn in 2022 to 2023.