The European Bank for Reconstruction and Development invested a record 1.2 billion euro in Ukraine last year when most other investors were sitting out the war-induced crisis or even taking out money.
Cumulative foreign direct investment in Ukraine fell by 20 percent, to €41 billion, last year.
Praising the reform efforts of the Ukrainian government, EBRD President Suma Chakrabarti called for more international support of Ukraine at the Ukrainian-Canadian Congress in Toronto on June 9.
“We need to give credit where credit is due,” Chakrabarti said. “Ukraine is doing its bit. So must all of those, like EBRD, who believe in the cause of transition.”
Chakrabarti praised the Ukrainian government’s professionalism and said it was the most reform-oriented Ukraine has known.
EBRD has invested €10.4 billion in Ukraine, making it the country’s largest investor.
In 2014, €250 million was invested in agribusiness, accounting for 21 percent of European Bank for Reconstruction and Development’s portfolio, with a similar disbursement planned for this year.
The bank is planning to maintain last year’s investment level, while financial conditions have not been revised despite high country risk and Russia’s war in Ukraine’s east.
EBRD’s activities were not significantly affected by Russia’s aggression so far.
“There’s no new business in the (separatist-controlled) parts of the country,” Anton Usov, spokesperson for EBRD Ukraine, told the Kyiv Post. “As for existing clients, we are trying to look at them on a case-by-case basis…trying to restructure the existing loans whenever possible.”
The bank’s involvement in Crimea was minimal, not exceeding €30 million, while almost all of its partners were able to move their operations to mainland Ukraine and avoid critical losses.
The bank forecasts Ukraine’s economy will contract by 7.5 percent this year, while the International Monetary Fund has it at 9 percent.
Sevki Acuner, EBRD country director for Ukraine, says the project pipeline for 2015 is steady in the energy, transport, logistics, pharmacy and information technology industries. Agriculture is the cornerstone of the bank’s strategy in Ukraine, he said.
In 2014, the London-based bank invested €250 million, accounting for 21 percent of its portfolio, in agribusiness, with a similar disbursement planned for 2015.
Grain grower Nibulon, sugar producer Astarta and meat and sugar producer Agri Europe are among its clients. Last year, the financial institution lent $60 million Brooklyn-Kiev, a private stevedoring company, to develop a grain shipment terminal as part of its strategy to develop the country’s infrastructure.
Foreign investment so far this year has been comparatively low. Many are waiting for the International Monetary Fund bailout to move forward. When the first IMF installment of $5 billion came in March, “this is now opened up and you will see a very quick and strong pick-up in the volume (of investments)… in the second half of the year,” Acuner said.
The EBRD also plans to issue hryvnia bonds in autumn to enable domestic investments, but details will depend on market conditions that are not yet known. In particular, small and medium enterprises and utility companies are in need of loans in national currency, according to Francis Malige, managing director of EBRD in eastern Europe and the Caucasus.
But continuing EBRD involvement is contingent upon the strength and success of promised reforms for which the business community has been waiting with increasing impatience.
“If the reforms are right and the projects are right, EBRD is here to invest,” Paul Vlaanderen, head of the EBRD delegation to Ukraine, said on June 5 as the bank’s board of directors finished their visit to Ukraine.
“We urge the Ukrainian government to be yet bolder. To grasp the nettle of difficult reforms still more firmly,” Chakrabarti said.
Kyiv Post staff writer OlenaGordiienko can be reached at [email protected]
