Poland grants Ukraine a loan of EUR 100 ml with preferential terms meant to improve border infrastructure

9/10/15

On September 9 Ukraine signed an agreement with Poland to receive a preferential loan amounting EUR 100 ml meant to improve the infrastructure on the Ukrainian-Polish border.

The Ministry of Finance of Ukraine is striving to receive funding necessary to implement reforms and to bring forward the European integration of the country. The border between Ukraine and Poland is the most intensively crossed Eastern border of the EU. For the implementation of the free trade agreement between Ukraine and the EU it is of crucial importance to secure the effective function of the infrastructure at this border. The preferential long-term loan from the Polish Government will help use the transit potential of Ukraine and will contribute to simpler and more transparent customs procedures for cars and trucks by automating the processes and improving the motorways in the border area. That will help reduce waiting times for customs clearance and improve the service quality. The overall goal of the loan provided by the Polish Government is to activate bilateral trade between Ukraine and the EU and to make border crossing easier and more comfortable for Ukrainian citizens as well as for vehicles.

The loan will be used to refurbish the motorways in Lviv and Volyn regions approaching the border-crossing points «Hrushiv», «Ugryniv», «Smilnytsya», «Nizhankovychi» and «Krakivets». Border-crossing point “Yagodyn” in Volyn region as well as “Rava-Russka”, “Krakivets” and“Shchegyni” in Lviv region shall be modernized and equipped with vehicle scanners and smart CCTV-systems. That will help strengthen control of cargo flows, reduce opportunities for offences and corruption as well as speed up customs clearance.

Most works under the loan agreement are to be carried out by a Polish contractor which shall be jointly elected in an open tender by the Ukrainian and Polish Governments.

Key data of the loan:

- the interest rate is merely 0,15% per year. Just to compare, the average interest rate for loans taken by the previous Government of Ukraine and then included in the debt-restructuring deal was 8%;
- the loan is to be repaid in 30 years (loans takes by the previous government had the average maturity of 7 years);
- the grace period is 5 years;
- the loan is tied, i.e., at least 60% of the loan are to be spent for goods and services of Polish origin.

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