The Cabinet of Ministers changed the rules governing the provision of financial state support to businesses. The changes concern the programs "Affordable loans 5-7-9%", "Affordable financial leasing 5-7-9%" and "Affordable factoring".
This was reported by the press service of the Ministry of Finance.
Now, at the request of the International Monetary Fund (IMF), the "5-7-9%" program will be focused exclusively on micro, small and medium-sized enterprises.
The government also lifted restrictions on receiving state support for entrepreneurs:
- who have re-registered on the controlled territory of Ukraine, but are unable to relocate their business, but timely fulfill their obligations under credit agreements and pay taxes, fees and mandatory payments to the state budget of Ukraine;
- which are registered, in particular, in the territories of Kherson (including the city of Kherson), Mykolaiv and Dnipropetrovsk regions, for which the date of the end of hostilities and temporary occupation has already been determined, but the date has not yet been entered into the List of territories of active hostilities, where state electronic information resources.
Why is this important?
"Available loans 5-7-9%" is a program that gives small, medium and large businesses simplified access to bank lending. They can get loans at a reduced interest rate. According to the Ministry of Finance, since the start of the "5-7-9% Available Loans" program, entrepreneurs have received 78,303 loans from authorized banks for a total amount of UAH 263.1 billion (as of December 25, 2023).
During the period of martial law in Ukraine, 43,481 credit agreements for a total amount of 173.5 billion hryvnias were concluded within the framework of the "Affordable Credits 5-7-9%" program, in particular, public sector banks concluded 32,537 loans for the amount of 88 billion hryvnias).
The "5-7-9%" program gradually became too large, which caused concern among Western creditors. "If in 2020, 5% of all new loans were issued through the program, now it is more than 26%," explained Vladyslav Rashkovan, Deputy Managing Director of the IMF for Ukraine, in an interview with Forbes.
Ukraineʼs international creditors were worried about the amount of state subsidization of loans.
Aid from the IMF
On December 11, the Board of Directors of the International Monetary Fund approved the second review of the Extended Fund Facility (EFF) for Ukraine. This means almost $900 million in direct budget funding.
The IMF approved the four-year extended financing program of Ukraine (Extended Fund Facility) in the amount of $15.6 billion in March. The program is included in the general package of support to Ukraine by international partners in the amount of $115 billion.
But at the end of 2023, Ukraine faced the risk of not receiving part of the aid from this package. In particular, political disputes in the United States are hampering the allocation of $11 billion in aid in 2024. The lack of American money included in the program with the IMF may call into question the entire program with the Fund, Ukrainian officials noted.