EIB and World Bank join forces with new agreement to support Ukraine
The European Investment Bank (EIB) and World Bank (WB) today signed an agreement under EU guarantee that aims to facilitate the purchase of gas by Ukraine’s national gas company, NJSC Naftogaz.
The agreement was signed today by EIB President Werner Hoyer and World Bank Group President Jim Yong Kim. The EIB will guarantee up to USD 520 million of selected World Bank loans in Ukraine, which will enable the World Bank to guarantee letter of credit facilities for gas purchases by Naftogaz. Today’s agreement was facilitated by a counter-guarantee of the European Union granting comprehensive cover to the EIB linked to risks of these selected WB loans in Ukraine.
EIB President Werner Hoyer commented: «European and global institutions are committed to helping Ukraine avert a potentially severe energy crisis as winter approaches. The guarantee agreement we signed today will facilitate Ukraine’s purchase of gas at a critical time. The deal reflects the EIB’s enduring support for Ukraine as part of EU cooperation with the country and the Union’s Eastern Neighbourhood region.»
«The new agreement is part of our broad support to the restructuring of the gas sector in Ukraine and it will contribute to adequate gas supplies for the next three years,» said Jim Yong Kim. «The World Bank Group is committed to continue supporting Ukraine’s ambitious reform program and we are pleased to work jointly with the EIB.»
The new agreement is part of the support for Ukraine by the European Union and international financial institutions, under which the EIB guarantees World Bank investment development projects in Ukraine. The EIB guarantee is structured under the 2014–2020 External Lending Mandate and benefits from the EU comprehensive guarantee.
Background information:
The EIB — the European Union’s bank — finances projects in Ukraine on the basis of the EU External Lending Mandate, including also Eastern Neighbourhood countries comprising Ukraine. The mandate provides EIB with a guarantee covered by EU Budget for projects of significant interest to the EU and its Eastern Neighbours in the areas of local private sector development, social and economic infrastructure and climate change.
In March 2014, the European Commission announced an EU support package amounting to EUR 11 billion for 2014–2016 for Ukraine in grants and lending. For its part, the EIB is contributing to this package by lending up to EUR 3 billion during 2014–2016, should political and operational conditions allow. The EU bank will focus on energy and infrastructure investment as well as access to finance for SMEs. Since the beginning of 2014 and by mid-October 2015, the EIB has already contributed EUR 1.8 billion, supporting a series of high priority projects in Ukraine.
The World Bank Group has provided in the last 18 months more than US$4.1 billion to Ukraine in budget support, investment operations and private sector financing, including US$3.875 billion from IBRD, of which US$2.25 billion in fast-disbursing budget support, and US$250 million from IFC.
The World Bank is also supporting Ukraine through policy advice and technical assistance in formulating and implementing comprehensive structural reforms. These include, among others, reforms to: improve public sector governance and efficiency in the use of public resources and fight corruption; restore fiscal and external account balances; stabilize the banking sector; enhance the investment climate; restructure the energy sector; and strengthen the social safety net system to target assistance to the poor and most vulnerable.
