A "bank of banks" will be created in Ukraine: Rada adopts law on National Development Institution
Photos: Verkhovna Rada

The Verkhovna Rada has adopted a law on the establishment of the National Development Institution (NDI). About it reports the press service of the parliament.

Draft law №11238 on Wednesday, October 8, was generally supported in the second reading by 280 MPs.

The National Development Institution is a specialized state institution with the status of a "bank of banks". Its main mission is to implement lending programs to rebuild the country, explained chairman of the relevant committee of the Board Danylo Hetmantsev.

The creation of the NSD is based on the global practice of development banks and development institutions in particular, on the experience of the German KfW which became a systemic pillar of economic recovery after World War II.

The NSD will work on a similar principle: it will not compete with commercial banks, but will help where the market fails, taking on some of the risks and making loans for important areas cheaper.

The explanation states that the NSD will combine the existing business support programs of the Entrepreneurship Development Fund and expand them. In particular, this includes the ability to accumulate funds from IFIs and private investors and channel them through partner banks to targeted segments of the economy, from production to innovation and critical infrastructure.

The law provides:

→ overcoming problems with financing relocated businesses, businesses in frontline regions, businesses of internally displaced persons, and high-risk projects;
→ attracting funds from private investors and channeling them to economic recovery through various financial instruments;
→ support primarily for small and medium-sized enterprises that have found themselves in difficult circumstances but have the potential for recovery and development.

Separate provisions are made to support other categories of persons (including individuals) who do not have access to financing on adequate terms or who have difficulty accessing it due to the crisis, imperfect market mechanisms, or other circumstances.

It is planned to expand the Export Credit Agency's (ECA) ability to insure and reinsure (in particular against military and/or political risks) loans related to investments in the creation of facilities and infrastructure necessary for the development of the processing industry and exports of goods of Ukrainian origin.

In addition, the ECA will be able to participate in state war risk insurance programs and compensation programs in case of damage caused by military operations.

The Verkhovna Rada preliminarily supported the document in the first reading in June 2024, after which it was finalized by the relevant committee.