MIGA and EBRD Partner to Support Trade in Ukraine and Other Emerging Economies
LONDON, February 21, 2023 – The Multilateral Investment Guarantee Agency of the World Bank Group (MIGA) and the European Bank for Reconstruction and Development (EBRD) today announced a landmark agreement in which MIGA will issue up to $200 million in trade finance guarantees to EBRD to support trade transactions conducted through state-owned banks in emerging market and developing economies, with Ukraine being the first country to benefit from this support.
The MIGA guarantees, which will be issued over a period of up to six years, will serve to increase EBRD capacity in select markets by covering the risk of non-payment by state-owned banks. MIGA is working with EBRD’s Trade Facilitation Programme (TFP) which seeks to facilitate international trade to, from, and within Central and Eastern Europe, the Commonwealth of Independent States (CIS), and the Southern and Eastern Mediterranean region. Under the TFP, guarantees are provided to international commercial banks to cover the political and commercial payment risk of transactions undertaken by issuing banks in the EBRD’s countries of operations.
A primary beneficiary of the agreement will be Ukraine, where an initial MIGA guarantee for the EBRD’s TFP will be used immediately to support trade finance at a time when war has severely disrupted trade flows and supply chains, as well as significantly reduced the availability of trade finance by foreign commercial banks. MIGA Executive Vice President Hiroshi Matano and EBRD President Odile Renaud-Basso signed the agreement today in London.
“This agreement launches a new era of cooperation between MIGA and EBRD,” Matano said. “The MIGA-EBRD partnership will facilitate needed trade finance in Ukraine and other MIGA and EBRD-supported countries at a time of rising economic pressure and heightened geopolitical risk affecting trade, supply chains, and critical imports.”
In Ukraine, the imports enabled by the new MIGA-EBRD partnership will serve humanitarian needs and help keep industries like agriculture going while providing critical imports needed for production. Imported fuel and natural gas will be important for power generation and transportation – which is not only needed by the general population but also is essential for companies, factories, and farms.
“These guarantees will have an important impact, helping us to increase our trade finance business in Ukraine, which is one of our strategic priorities for work in the country,” said Renaud-Basso.
Since February 2022, EBRD’s TFP has supported over €400 million in trade transactions for crucial goods for the Ukrainian economy. More than 100 issuing banks in 26 countries participate in the TFP, working with over 800 confirming banks and their subsidiaries throughout the world.
The EBRD is a multilateral bank that promotes the development of the private sector and entrepreneurial initiative in 36 economies across three continents. The Bank is owned by 71 countries as well as the EU and the EIB. EBRD investments are aimed at making the economies in its regions competitive, well-governed, green, inclusive, resilient, and integrated.
As Ukraine’s biggest institutional investor, the EBRD has pledged to invest €3 billion in the country in 2022-23. In 2022, it deployed €1.7 billion, mobilizing €200 million more through partner banks and €1.4 billion through donors.
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war & civil disturbance; and offering credit enhancement to private investors and lenders.
Since its creation, MIGA has issued nearly $70 billion in guarantees across 122 developing countries in support of nearly 1,000 projects.
Elizabeth Howton, (202) 458-5922, firstname.lastname@example.org
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