The European Bank for Reconstruction and Development (EBRD) has announced that it will lend €200m (Hrv7.93bn) to Ukrainian Railways (UZ) to upgrade the country’s railway links with the EU to its west. This follows €150m of emergency liquidity finance to UZ last year to help Ukraine keep its trains running.
Since Russia’s invasion of Ukraine in February 2022, uncertainty about sea routes that traditionally carry most of the country’s imports and exports – including exports of grain vital for global food security – has prompted improvements to rail, road and river links with other countries.
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This sovereign loan – €100m for emergency finance and €100m for working capital support – will mitigate the impact of the war by facilitating the expansion of cross-border capacity and improving railway connectivity with the EU. It will allow UZ to continue to provide vital services to people and businesses as well as to rehabilitate key rail corridors on its border with the EU and buy rolling stock.
The EBRD shares risks on its Ukraine investments with donors and shareholders. This loan is to be supported by guarantees of up to 50%, with €60m ($64.73m) coming from the US and €40m from the Netherlands. France and the EU, through its European Fund for Sustainable Development, provided guarantees for the EBRD’s earlier finance for UZ.
Despite the impact of the war, UZ has maintained cargo and passenger transportation operations, albeit at a reduced capacity. The EBRD has been working with UZ since before the war and has stood firmly by the rail company since Russia’s invasion.
Loans to UZ form part of the EBRD’s five-pronged approach to supporting Ukraine’s real economy, which focuses on vital infrastructure, energy and food security, trade finance and support for the private sector. The EBRD, Ukraine’s largest institutional investor, has pledged €3bn of investments in the country for 2022–23, and in 2022 deployed €1.7bn and mobilised a further €200m through partner financial institutions.
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