(Government of Ukraine, Kiev, 16 September 2024) The Export Credit Agency (ECA) has signed the first war risk insurance contract for an investment loan. This was announced by First Deputy Prime Minister and Minister of Economy of Ukraine Yuliia Svyrydenko during the event “Economic Policy of Ukraine. Recovery During the War” in Kyiv on 16 September.
Ukraine
EU launches export credit facility for Ukraine
(Global Trade Review, London, 2 August 2024) The European Union has launched an inaugural risk-sharing facility for the export credit industry, with an initial €300mn pilot aimed at boosting SME exports to buyers in war-torn Ukraine. The move comes after years of discussions in Brussels over a potential EU export credit facility with the Commission first floating the idea of such an instrument in 2021, citing “harsh competition” in key markets. The facility will extend guarantees to export credit agencies (ECAs) for transactions involving European SMEs and small mid-caps looking to export goods and services to buyers in the Ukrainian market. It is hoped the export credit facility will drive an uptick in European exports to Ukraine and support Kyiv’s reconstruction plan, forecast by the World Bank to cost US$486bn over the next decade.
Ukraine’s State Property Fund Plans ECA War Risk insurance
(Ukraine Business News, Kyiv, 26 August 2024) The State Property Fund of Ukraine (SPFU) is actively seeking opportunities to expand export insurance instruments to cover war risks for privatization objects, said the head of SPFU, Vitaliy Koval. The SPFU is also appealing to international insurance companies with a proposal to expand export insurance instruments and involve them in covering war risks. This will help demonstrate to international insurers such as Czech EGAP, Japanese JICA, export credit agencies from Germany (Euler Hermes), France (Bpifrance Assurance Export), Italy (SACE), British (UK Export Finance), and Swedish (EKN) the presence of real demand for such services and will contribute to the activation of their work in Ukraine,” said Koval.
Ukraine and UK sign defence export finance and nuclear supply deals
(Global Trade Review, London, 24 July 2024) The UK and Ukraine have signed an expanded defence pact and an export credit deal for the Ukrainian nuclear energy operator. A Defence Export Support Treaty, signed last week during a visit to London by Ukrainian President Volodymyr Zelenskyy, will allow Kyiv to use part of UK Export Finance’s (UKEF) £3.5bn capacity for Ukraine coverage to purchase military goods and services. The treaty expands on a similar agreement signed in 2021 covering exports to Ukraine’s navy. The text of the document has not been published and it still requires ratification by the UK parliament.
EU adopts sanctions against Russia including billions of ECA support for Ukraine
(EU-Neighbours-East, Brussels, 24 June 2024) The Council of the European Union today adopted a 14th package of economic and individual restrictive measures against Russia, “dealing a further blow to Putin’s regime and those who perpetuate his illegal, unprovoked and unjustified war of aggression against Ukraine”. These measures are designed to target high-value sectors of the Russian economy, like energy, finance and trade, and make it ever more difficult to circumvent EU sanctions. Since the Russian aggression started, the EU and its financial institutions have mobilised €50 billion to support Ukraine’s overall economic, social and financial resilience in the form of macro-financial assistance, budget support, emergency assistance, crisis response and humanitarian aid. the Executive Vice President of the European Commission Valdis Dombrovskis announced the Ukraine Facility budget which will be 33 billion euros in loans and 17 billion euros in grants. Of the total amount, 38.27 billion euros will support the budget, 6.97 billion euros will go to the investment fund and 4.76 billion euros will be for technical and administrative support. [ECA Watch note: This month’s news review for What’s New turned up many articles announcing a €300 million export credit guarantee facility under the EU flagship investment programme InvestEU.]
Ukranian ECA helped exporting companies raise UAH 99.8 mln
(Open 4 Business, Kyiv, 20 April 2024) As of April 1, 2024, the Export Credit Agency (ECA) supported Ukrainian exports by UAH 627 million (US$15.8m), which allowed the country’s exporters to attract UAH 99.8 million (US$2.5m) in financing from partner banks in cooperation with the agency, said Taras Kachka, Deputy Minister of Economy and Trade Representative of Ukraine. “Supporting and developing processing companies that export their products to other countries is one of the priorities of the Made in Ukraine state policy.”
Brodies Guides On War Risk Insurance For Ukrainian Exports
(USA Herald, New York, 12 January 2024) In a groundbreaking move, Scottish law firm Brodies LLP has steered Ukraine’s Export Credit Agency through uncharted territory, unveiling a novel war risk insurance process to safeguard shipowners and vessel charterers amidst the ongoing conflict with Russia. In a daring legal maneuver, Brodies LLP has strategically advised Ukraine’s Export Credit Agency, paving the way for a groundbreaking war risk insurance process. The initiative aims to fortify shipowners and vessel charterers, allowing uninterrupted goods shipments across the tumultuous Black Sea during the persisting conflict with Russia. Brodies unveiled the revolutionary insurance arrangement, orchestrating a financial ballet that channels funds to accounts at two Ukrainian state banks, Ukrgasbank and Ukreximbank. These financial powerhouses are then empowered to issue irrevocable letters of credit, each confirmed and guaranteed by Germany’s DZ Bank AG.
Ukraine strikes deal to get 2 Royal Navy minehunters from UK with UKEF support
(Politico, Brussels, 11 December 2023) Britain will hand over two Royal Navy minehunter ships to Ukraine as the war-torn country grapples with a continued blockage of the Black Sea by Russia. U.K. Defense Secretary Grant Shapps will on Monday announce Ukraine’s armed forces have “procured” the Sandown Class vessels from Britain’s Royal Navy, although the details of the transfer are still being arranged through U.K. Export Finance, London’s export credit agency. The move is part of a new Maritime Capability Coalition, set up with Norway, to help bolster Ukraine’s maritime training, equipment and infrastructure. Norwegian Defense Minister Bjørn Arild Gram will be in London on Monday to launch the initiative. The new coalition wants to help Ukraine transform its navy to make it “more compatible with Western allies, more interoperable with NATO, and bolstering security in the Black Sea,” the Defense Ministry said.
Russian export credit claims soar
(Global Trade Review, London, 7 September 2023) The export credit insurance market saw claims jump by more than 700% in Russia last year, as the industry grappled with the fallout of the Ukraine crisis and western sanctions, Berne Union research shows. Short-term export credit claims involving obligors in Russia and the Commonwealth of Independent States (CIS) region increased by US$229mn from a year earlier, the union’s State of the Industry report for 2022 finds. Payouts in Europe also rose by US$118mn year-on-year as businesses felt the indirect impact of Russia’s full-scale invasion, which disrupted supply chains for critical inputs and drove up commodities prices. The data reveals how export credit agencies (ECAs) and trade credit insurers were stung by the Ukraine war, despite efforts to swiftly cut cover for Russian firms in the early weeks of the crisis due to financial and reputational risks. The analysis by the Berne Union, a global association representing ECAs and private insurers, shows new short-term export credit business in Russia and CIS fell from US$34bn to US$16bn – by more than 70% – as insurers pulled back. Arrears – or overdue payments by borrowers in the medium to long-term segment – rose by 11% or nearly US$8bn. On a brighter note for the industry, overall claims paid out by ECAs and insurers on their policies fell to US$7.7bn – a decline of about US$1bn – following a 33% drop in claims in the transportation sector, the data shows.
Spillover effects of the Ukraine crisis: political risk insurance in times of brinkmanship
(Berne Union, London, 7 September 2023) A Berne Union report investigates how political risk insurance can be approached amid the ongoing effects of the pandemic, geopolitics and the evolving Russia/Ukraine crisis. The search for new, diversified suppliers of strategic materials to support the energy and technological transition may result in fresh investment flows for countries with both limited stability and little capacity in order to handle the amount of investment and operations required. Apart from China and Russia, several of the sovereigns that are likely to emerge as incremental suppliers were rated B or lower, even before the current crisis, and/or possess a country risk category that could make the cost of financing excessive or further complicate their fiscal position in the short- to medium-term.
