EBRD allocates EUR 1 bln emergency package to support businesses in response to COVID-19 pandemic

The European Bank for Reconstruction and Development (EBRD) will provide EUR 1 billion to companies to overcome the effects of the coronavirus pandemic, DW reports.

It is noted that this is the initial response, and the bank stands ready to do more if necessary. According to the bank, the decision was approved by the bank’s shareholders and will help EBRD clients who have solid business foundations and are experiencing temporary credit difficulties.

According to EBRD President Suma Chakrabarti, the COVID‐19 pandemic and its economic consequences present an unprecedented challenge to the EBRD and its countries of operations.

“This is a first step. The Bank stands ready to further scale up its response, and is taking active and urgent steps to review, adjust and expand its financing instruments, in partnership with its countries of operations, partner IFIs and the international community,” the EBRD President emphasized.

The planned measures will include an expansion of trade finance and the provision the short-term financing of up to two years through financial institutions, especially in support of small and medium sized enterprises.

In addition, the bank will assess the need for restructuring of existing loans, including the possibility of extending repayment terms and changing other conditions.

The EBRD’s economists are expecting economic output to be affected right across its regions of operations, with growth seen slowing especially in Central Asia and also in Eastern Europe and the Caucasus, Russia and south eastern Europe.

At the same time, countries that are highly integrated into global supply chains, and in particular have direct dependencies on China and Europe, are likely to suffer most from the virus. The tourism industry is likely to be affected in many of the EBRD’s countries.

The EBRD also expects a negative effect on oil-producing countries as a result of the recent decline in oil prices and a slowdown of the flow of remittances from labor migrants to their countries.

Economic pullback: Analysts urge government to prevent default in Ukraine.