The European Bank for Reconstruction and Development (EBRD) deployed EUR 1.7 billion (US$1.85 billion) in Ukraine in 2022 and mobilised a further EUR 200 million via partner banks.

Trade finance, which includes the multinational development bank's pioneering letter of credit (L/C) oriented Trade Facilitation Programme (TFP), made up around a quarter of the amount deployed by the bank in 2022, and is expected to play a major role again in the bank's support for Ukraine in 2023.

The EBRD now says it is on track to deliver on its commitment to invest EUR 3 billion for Ukraine by the end of 2023, with the exceptional support of shareholders and donors who share part of the risk of the investments the EBRD has taken on its own book.

Essential trade finance

The EBRD provided Ukraine with a total trade finance turnover of EUR 459 million during 2022 as a major plank in its strategy to support the real economy in Ukraine through investments in vital infrastructure, energy and food security, trade and support for the private sector.

The bank raised EUR 1.4 billion of donor funds in 2022, including unfunded guarantees, which are dedicated to Ukraine and other countries most affected by Russia's invasion of its neighbour.

L/C case study

One example of how EBRD supported L/C business last year is its support for a Ukrainian agricultural equipment distributor that needed to import machinery from France.

With the war on Ukraine, many farmers in the country struggled to plant new crops to harvest in autumn 2022, but EBRD's support helped businesses in southern and central parts of the country to keep operations running.

They needed machinery such as tractors and sprayers. To help a Ukrainian agricultural equipment distributor import machinery and spare parts from a French company, a Ukrainian bank issued a standby L/C for EUR 345,000. An Austrian bank confirmed the L/C and the EBRD covered 100 per cent of the political and commercial payment risk.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.