Italy and Japan have become the latest nations to announce export credit backing for Ukraine, pledging billions of dollars in support even as Kyiv struggles to secure a wider aid package from the US.

This week, the Ukrainian government announced that Italy’s export credit agency (ECA) Sace would allocate €1.5bn towards supporting exports and investments in the war-torn country with a focus on healthcare and infrastructure-linked transactions.

As well as covering Italian exporters for risks, the agency will back companies investing into Ukraine and provide export loans, preferential lending and direct investment.

Meanwhile, following meetings between Japanese and Ukrainian officials, Japan’s Nippon Export and Investment Insurance (Nexi) has also committed credit lines worth ¥200bn for the purpose of “supporting the recovery and reconstruction of Ukraine”.

The package includes ¥150bn (US$1bn) aimed at driving Japanese investments into the country over a five-year period, as well as ¥50bn (US$333mn) over the next two years backing imports of goods and services.

The announcements provide a further boost to Kyiv’s modern-day Marshall Plan, which, according to the World Bank, could cost upwards of US$411bn and will require sizeable foreign support.

In the months following Russia’s invasion in early 2022, an initial group of ECAs from Poland, the US, Canada and the UK reinstated cover for Ukrainian borrowers – even as other agencies opted to stay off-cover as Ukraine fell into the OECD’s highest risk grouping.

Last year, several European countries, including Denmark, France, the Netherlands, Belgium, Sweden and Finland, followed suit and together pledged hundreds of millions of dollars in extra capacity.

Alvina Seliutina, analytics lead at Advantage Ukraine, an investment initiative set up by the Ukrainian government, says over a dozen ECAs have introduced insurance conditions enabling them to support exports to Ukraine – while five are “working on their implementation”.

“Advantage Ukraine continues to actively negotiate with ECAs on behalf of companies interested in doing business in Ukraine to secure credit guarantees and war risk insurance,” she tells GTR.

ECA pledges are being translated into real-world funding, with more than 35 projects having been supported by foreign agencies to date. This includes support from Germany’s Euler Hermes as well as the Danish agency, Export and Investment Fund of Denmark (EIFO) – which is considering 21 deals under a €140mn scheme.

To encourage greater ECA activity, the European Union is readying a €300mn risk-sharing instrument for the export credit sector aimed at boosting SME exports to Ukraine.

The scheme, which will involve the European Investment Fund, is expected to launch at some stage in 2024.

“It is quite a new thing for the EU to think of using the European Investment Fund in this way,” Eeva-Maija Pietikäinen, head of trade finance and country risk management at Finnvera, told GTR last month.

Japan and Italy’s financing support comes amid a darkening picture in the war and funding strains.

In early February, EU leaders agreed a €50bn (US$54bn) aid package for Ukraine, after persuading Hungary’s Prime Minister, Viktor Orban, to drop his opposition to the funds.

Yet the Republic-controlled US House of Representatives is stalling on a vote for a US$95bn aid package which includes funds for Ukraine. The Senate signed off on the bill earlier this month.

On February 17, Ukraine withdrew its troops from the key eastern town of Avdiivka, handing Russia its first major victory for months. Ukraine’s President Volodymyr Zelensky blamed the loss on a delay in arms deliveries from its western allies.

With little sign of commercial insurers returning to the Ukrainian market soon, ECAs are expected to play a key part in Kyiv’s rebuild efforts by helping exporters supply goods for a range of projects, not least roads, bridges and factories.