The member states of the Organization of Petroleum Exporting Countries (OPEC), through the International Development Fund of the OFID, are ready to provide financial support to Ukraine as a developing country.
The support will be provided through public sector lending, private sector investment, trade financing and grant support.
The agreement will be in force for 10 years and will continue to be in force if its action is not terminated at the request of one of the parties to the agreement.
OFID develops and supports a variety of projects, using 4 main funding mechanisms: public sector lending, direct private sector investments, trade finance and grant support.
Financing of state projects is carried out with the help of lending programs, which are developed individually for each country. The rates for such loans are low, the terms of their return are long and depend on the financial state of the recipient country.
Investing in the private sector involves financing projects from all sectors of the economy. However, small and medium-sized businesses remain a priority in the fund.
At the same time, trade finance is available to governments, private companies, regional financial institutions in the form of loans, revolving lines of credit, structured raw material financing, risk sharing and guarantees, and includes, inter alia, oil, cotton, steel, strategic food, clothing, and equipment.
Grant funding of the OFID is provided to non-governmental organizations (international, national, intergovernmental) that work on regional development programs, poverty alleviation, assistance to victims of natural disasters, education, knowledge sharing, etc.
The Agreement provides for a number of guarantees given by Ukraine to the OFID in respect to its investments, in particular:
guarantee of protection against expropriation;
guarantees concerning the free transfer of payments;
tax carve-outs; and
settlement of disputes between the OFID and Ukraine in respect to the investments by international arbitration.
By ratifying the Agreement, the Verkhovna Rada has made yet another step in a series of recent moves to secure growth in the inflow of capital. It is expected that such attempts will result in the increase of foreign direct investments in key industries of Ukraine’s economy.