Treasury backs £3 billion export finance package to support Ukraine defence and rebuild

Thu 4 Aug 2022
Posted by: Phillip Adnett
Trade News

Ukranian support package announced

Treasury backs £3 billion export finance package to support Ukraine defence and rebuild

Chancellor Nadhim Zahawi is backing a new £3 billion financial support package for Ukraine, according to Sky News.

Government sources revealed to Sky News that Zahawi has written a letter to international trade secretary Anne-Marie Trevelyan telling her that the Treasury is backing the request from UK Export Finance (UKEF).

The Telegraph reports that £2.3 billion was requested for military contracts with £700 million earmarked for reconstruction projects after the war.

UKEF

UKEF, the government's export credit agency, provides financial support in the form of insurance or guarantees to UK companies.

The government has previously emphasised the importance of UK companies helping the Ukraine rebuild, with Trevelyan signing a Memorandum of Understanding with the Ukrainian government (17 June) on future cooperation on reconstruction.

International trade minister Ranil Jayawardena told Parliament in June that "since February 2022, the Export Support Services has supported over 400 business and individuals wishing to export to Ukraine."

‘Essential’ support

In the letter – which was also sent to 10 Downing Street, the Ministry of Defence and the Foreign Commonwealth and Development Office – Zahawi said he considered it "essential that we can continue supporting the government  of Ukraine in any way we can."

The Chancellor acknowledged the “high-risk” nature of the Ukrainian market, stating that "the risk of losses is significant" and that all individual contracts needed approval from the Treasury.

His backing is also dependent on the resolution of legal questions related to restrictions on state aid.

The EU have announced their own financial aid package, including support for reconstruction, according to the Irish Times.

Grain deal

The news comes as the first ship carrying grain from Ukraine to world markets has passed its first inspection in Istanbul, according to Forbes.

In a deal brokered by Turkey and the UN last month, a Russian naval blockade was lifted to allow wheat and other grain to leave Ukraine’s ports, with provisions for a monitoring station in Istanbul.

The ship's passage, occurring amidst a worsening global food crisis, was called "a day of relief for the world" by Ukrainian foreign minister Dmytro Kuleba, as reported by the Independent.

Reuters cites Turkish officials as claiming that up to three vessels a day could leave Ukrainian ports.