The U.S. International Development Finance Corporation will provide $89 million in loans for Ukraine’s energy and real estate sectors, according to a statement by the U.S. federal finance institution on Sept. 9.
The institution’s board of directors approved investments to advance energy independence and spur economic activity in Ukraine, according to the statement. The funds are part of a $3.6 billion finance package, which will be used for development projects in Africa, Latin America, and other lower- and middle-income economies such as Ukraine.
DFC is a development bank that works with the private sector to invest in energy, infrastructure, finance, healthcare and other critical industries in the developing world to support emerging markets. It was established in 2019, a year after U.S. President Donald J. Trump signed into law the Better Utilization of Investments Leading to Development act which consolidated the Development Credit Authority of the U.S. Agency for International Development and the Overseas Private Investment Corporation.
To diversify Ukrainian gas imports and reduce the country’s reliance on Russia, $62 million in political risk insurance will be provided for the development of Energy Resources of Ukraine Trading (ERU), a private trading company. Another $27 million will be given in loans to support the construction and operation of the capital’s Sheraton hotel. According to the statement, these companies will create new jobs, expand local supply chains and encourage economic growth.
ERU is a group of companies with foreign investments that focus on developing Ukraine’s energy sector through the implementation of innovative and modern projects within the country, according to the trading company’s website. The group sells, stores, and imports nearly 10 percent of the country’s annual gas needs, according to DFC’s press statement.
Back in 2017, the Overseas Private Investment Corporation provided $38 million in political risk insurance to ERU hoping to expand trading business in Ukraine. Now ERU has an extended 20-year contract, with $100 million in political risk insurance.
Since DFC’s establishment, the corporation invested nearly $555 million into Ukraine’s energy, finance, and real estate sectors. For example, in 2019 Bank Lviv received over $4 million to finance Ukraine’s agriculture and energy efficiency sectors. Bank Vostok received nearly $8 million to increase its lending to small and medium enterprises, with at least 25% of the loans having to be made to women-owned or women-managed businesses. The Ukrainian Catholic University has received more than $6 million in loans from DFC for the construction of a new academic building and student residence halls.
