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government program. Ukrainians who do not have a home or less than 52.5 square meters for a family of one person and an additional 21 square meters for each subsequent family member can apply for a mortgage. There are also restrictions placed on who is eligible: veterans and members of their families, persons with disabilities due to the war, families of deceased veterans and Defenders of Ukraine, and internally displaced persons. It is noted that the main conditions are as follows: the fixed annual rate in hryvnia is 7%, a 20% downpayment is required, and the credit term is up to 20 years. As well, participants can only buy an apartment in a building under construction or one not older than three years.
8.1.4 Bank news
The EBRD expands cooperation with Ukraine’s KredoBank. The EBRD is supporting food security and other critical industries in wartime Ukraine with a new risk-sharing agreement for KredoBank and opening a TFP limit for guarantees and cash advances to enhance the Ukrainian bank’s product offerings. The EBRD will provide a €25M unfunded risk-sharing instrument, which covers 50% of the credit risk of newly originated financing provided by KredoBank up to a total value of €100M, subject to a portfolio cap of 50%. The risk-sharing facility will help KredoBank provide finance access for Ukrainian companies operating in critical industries such as primary agriculture and agricultural services, food processing, transport and logistics, retail, and pharmaceuticals. In addition, €15M of the total €100M covered portfolio will be available to finance long-term investment by micro-, small- and medium-sized enterprises (MSMEs) in technologies and updating equipment to EU standards, including investment in sustainable and green technologies.
8.2 Central Bank policy rate
The Board of the National Bank of Ukraine has decided to cut the key policy rate from 25% to 22% effective 28 July 2023. Rapid disinflation and sustained FX market conditions enabled the central bank to start the cycle of key policy rate cuts.
The NBU has kept the key policy rate unchanged at 25% since June 2022, but the faster than expected fall in inflation in recent months will force the central bank to cut rates sooner than expected. Consumer inflation in Ukraine has experienced a significant slowdown, dropping to 12.8% in June, the National Bank of Ukraine (NBU) reported.
So far, a rapid deceleration in consumer prices has not been enough for the NBU to formally start a monetary policy easing cycle. Yet, while keeping the key policy rate unchanged, the central bank considerably changed the operational design of monetary policy, whereby the rate on overnight CDs was lowered in April 2023 to 20% from 23%. Since then, the NBU also started offering three-month CDs, which yield the key policy rate. Banks can only invest deposits with an original maturity of over three months into this three-month instrument. The change in the monetary-policy design effectively led to an easing of the monetary stance, as an average rate on the mix of all CDs has slipped to below 22% from 23% since April.
49 UKRAINE Country Report August 2023 www.intellinews.com