EU Bank works towards supporting the agri-food sector in the Ukraine
The European Investment Bank (EIB) and Ukraine have signed a Declaration of Intent to start a new initiative in the field of financing projects in the agri-food sector, to help the country benefit from the opportunities offered by the Deep and Comprehensive Free Trade Area (“DCFTA”) established by the Association Agreement with the European Union.
The EIB will co-operate with Ukraine in order to establish a facility providing financing for selected value chains in the local agri-food sector. Such a facility would finance investments that strengthen the competitiveness of these value chains, in particular in the context of the DCFTA. The EIB would thus provide a sovereign loan to Ukraine that would further be on-lent by the government of Ukraine, via local financial institutions or directly, to support private and public entities within the selected value chains.
The project is expected to be supported further by the EU through grants made available by its Neighbourhood Investment Facility for blending and capacity building purposes.
EIB Director of the Neighbouring Countries Department, Heinz Olbers, stated: “The agri-food sector is of strategic importance for Ukraine and improving its resource efficiency and the quality of its products is vital for the economic recovery and sustainable development of this country. The EIB expects to support the entire selected agri-food value chains of cereals, oil seeds and aquaculture, addressing the financing needs of both private and public sector investors. This will help better satisfy domestic demand for quality produce and increase the competitiveness of the sector and its exports to the EU and global markets, in line with the trade liberalisation and standards harmonisation commitments made by both sides of the EU-Ukraine DCFTA.”
Ukraine’s Minister of Agrarian Policy and Food, Oleksiy Pavlenko commented: “These funds are expected to help modernise selected key value chains in the agri-food sector, increase production and unlock Ukraine’s huge potential in terms of export capacity, thus allowing the country to benefit from the free trade area with the EU”.
The EIB has significantly stepped up its lending activity in the Eastern Partnership countries during the last four years to reach a record level of EUR 1.2 billion in 2014. To date, EIB lending commitments amount to some EUR 3.1 billion in Ukraine.