The European Bank for Reconstruction and Development (EBRD) is significantly increasing its public sector lending in Ukraine as it joins in the response of the international community to support the Ukrainian economy.
In a project financed together with the European Investment Bank, the EBRD is providing a €200 million loan to finance the modernisation of Ukraine’s road transport sector.
The resumption of sovereign lending by the EBRD was agreed by the Bank’s Board of Directors on 25 March as part of the EBRD’s operational response to Ukraine that will increase and broaden the scope of its investments.
The EBRD expects to be able to invest around €1 billion a year, an increase from 2013 and significantly more than had been envisaged at the start of 2014.
This higher level of financing will be reinforced with additional technical assistance and intensive policy dialogue to help to drive forward much-needed economic reforms.
The decision to go ahead with the road financing was contingent on an International Monetary Fund programme for Ukraine which was approved on 30 April.
Modernisation of Ukraine’s transport infrastructure is one of the EBRD’s key priorities in the country, helping to improve and extend commercial links both within Ukraine itself and with its neighbours. This latest €200 million loan is the second tranche of an EBRD investment programme in the road sector.
The funding will allow completion of the rehabilitation of road approaches to the Ukrainian capital, including sections of roads between Kiev and Odessa and from Kiev to Chernigiv, which form part of the key Pan European Corridor IX.
The first €250 million tranche of this project, signed in 2010, supported the successful modernisation of the final stretch of the motorway between Kiev and Zhytomyr, which is part of the Pan European Corridors III and V, and a section of highway between Kiev and Kovel, which links Ukraine with EU countries.
The EBRD is the largest financial investor in Ukraine. As of 1 April 2014 the Bank had committed €8.9 billion (US$ 12.2 billion) through 326 projects in the country.