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FT: EBRD shareholders back €4 bn capital increase for Ukraine

EBRD shareholders approve €4 billion capital increase enabling bank to double annual lending to Ukraine to €3 billion, supporting critical infrastructure and exports during war.
EBRD President Odile Renaud-Basso. File photo:
FT: EBRD shareholders back €4 bn capital increase for Ukraine

The European Bank for Reconstruction and Development (EBRD) has approved a €4 billion capital increase that will enable it to double lending to Ukraine amid Russia’s invasion, Financial Times reports. EBRD shareholders backed the boost, signalling continued support for Ukraine’s economic revival plans.

EBRD is going to announce on 19 December that the capital increase will allow the bank to scale annual lending to Ukraine to €3 billion once reconstruction efforts are entirely underway. Ukraine is set to receive a fifth of the bank’s total lending portfolio. EBRD President Odile Renaud-Basso told FT the bank focuses on sustaining Ukraine’s economy during this “critical time.”

Thus far, the EBRD has provided around €3.7 billion in loans to Ukraine since Russia’s full-scale invasion began last February. Much of the financing has gone towards propping up critical infrastructure like the energy grid and building export-enabling rail infrastructure.

The EBRD provides financial support to state-owned enterprises like Ukraine’s electricity grid operator, Ukrenergo, and the national railway, Ukrzaliznytsia, which would otherwise rely on government funding.

The EBRD, supported by EU states, the UK, and the US, doesn’t provide direct budgetary aid. The capital increase won’t fill Ukraine’s funding gap from stalled $60 billion US and €50 billion EU aid. However, Renaud-Basso stressed the need for consistent foreign aid to maintain Ukraine’s domestic demand.

With the increase in capital, the EBRD will continue supporting Ukraine’s economy by financing critical infrastructure and exports throughout the duration of the conflict. This backing is intended to facilitate economic growth and make Ukraine less dependent on foreign aid, which was a “weakness,” according to Renaud-Basso.

Renaud-Basso stressed that maintaining international assistance for Ukraine is essential so that it can keep meeting basic governance needs during this period.

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