EU launches EUR 9.5 mln finance programme FinancEast to support SMEs in Ukraine’s east
December 21, 2019.
On December 19, 2019, the German-Ukrainian Fund and three Ukrainian banks – OTP Leasing, Oschadbank, Ukrgasbank – signed subsidy agreements on the implementation of FinancEast programme as part of the EU’s EU4Business initiative. This programme is aimed at restarting financing of SMEs in government-controlled areas of Donetsk and Luhansk regions, economic recovery of Donbas and improving its investment attractiveness.
The FinancEast programme is funded by the European Union, which provided EUR 9.5 million of grant funds through the German Development Bank KfW. It will be implemented by the German-Ukrainian Fund.
“Through this grant the European Union hopes relaunching sustainable lending and leasing operations in a region where banks were almost not operational anymore since 2014, supporting sustainable economic and social recovery and thereby contributing to peace and reconciliation in Eastern Ukraine" said Frederik Coene, First Counsellor, Head of Operations "Local and Human Development”, Delegation of the European Union to Ukraine.
Grant resources will be channeled to SMEs as a subsidy of up to 50% of the investment costs funded by OTP Leasing, Oschadbank, Ukrgasbank. Investment projects will be financed through leasing or loans to purchase agricultural machinery, equipment and vehicles, installation, construction or reconstruction of production assets etc. Starting December 20, entrepreneurs can apply for a leasing or a loan at the regional branches of financial partner institutions.
“Today we start implementing the active phase of the FinancEast program, which will give Donbas entrepreneurs access to a variety of financial instruments, including lending. I am sure, this will improve the financial health of their companies, increase their ability to grow, develop and delight their customers with high-quality goods and services”, said Yuriy Heletiy, Deputy Minister of Finance of Ukraine.
“The National Bank supports programs helping to restart lending to the Ukrainian economy and businesses in the eastern regions. We are currently witnessing a surge in lending, especially in the small and medium enterprise segment. Demand for loans from SMEs is increasing every year, while the quality of their debt servicing is significantly higher than in other business segments. We believe that this segment will be a driving force in restarting lending and economic development of the country”, said Kateryna Rozhkova, First Deputy Governor of the National Bank.
More details about the program can be found at website.
The German-Ukrainian Fund is established by the German State Development Bank KfW, the Cabinet of Ministers of Ukraine, and the National Bank of Ukraine.
The EU4Business is an EU initiative that supports a private sector in the Eastern Partnership countries, including Ukraine. It aims to improve a business climate through offering professional advice and access to financing for small and medium-sized businesses. Support under the EU4Business initiative is provided jointly with other organisations. The initiative promotes economic growth and job creation.
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