EBRD and MIGA join forces in covering trade finance risk in Ukraine and other EBRD countries
The European Bank for Reconstruction and Development (EBRD) and the Multilateral Investment Guarantee Agency (MIGA) have signed the first co-financing agreement under which MIGA will provide up to US$200 million in trade finance guarantees to the EBRD. In this way, MIGA will assume part of the EBRD’s risk under its Trade Facilitation Programme (TFP). The first country to benefit from this agreement will be Ukraine.
“This guarantee will have an important impact, helping us to increase our trade finance business in Ukraine, which is one of our strategic priorities for work in the country,” said EBRD President Odile Renaud-Basso.
According to the EBRD, since the war on Ukraine started in February 2022, trade flows and supply chains in Ukraine have been severely disrupted. This includes the agriculture sector, which accounts for 11 per cent of the country’s GDP, nearly 20 per cent of its labour force, and nearly 40 per cent of total exports.
On top of this, foreign commercial banks have stopped taking any direct risk on Ukrainian trade finance transactions. To tackle this, the EBRD’s TFP has significantly increased its headroom for Ukrainian banks and stepped in to cover part of the higher demand. Since February 2022 the TFP has supported over €400 million in trade transactions for crucial goods for the Ukrainian economy.
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