Oschad is ready to finance the private sector of the defense industry under the state portfolio guarantee program

After the government adopted the relevant amendments to Resolution No. 723 of the Cabinet of Ministers of Ukraine at the end of April, Oschadbank was able to finance private defense industry producers through the state portfolio guarantee program.

This was stated by Yuriy Katsion, Deputy Chairman of the Board of Oschad, responsible for corporate business, during an expert discussion on the Ukrainian defense industry “EP Chat” in the studio of the Ekonomichna Pravda publication.

“Previously, defense companies were not able to receive state portfolio guarantees. Now, private companies with revenues of up to 50 million euros per year already have support from the state and can receive bank financing through the mechanism of state portfolio guarantees. The lack of collateral for private companies was one of the main barriers to accessing bank financing. Now it has been partially removed,” said Yuriy Katsion.

Under the terms of the program, private companies in the defense industry can attract financing of up to UAH 100 million, covering up to 80% of the loan agreement.

The next mechanism to stimulate the development of the defense industry could be a program to reduce the cost of lending through interest rate compensation. Such a program is currently being developed by the relevant agencies.

“We have submitted our proposals to the Ministry of Strategic Industries and the Ministry of Defense to extend the mechanism of supporting state-owned companies to the private defense sector through the provision of state guarantees and the introduction of interest rate compensation. However, reducing the cost of lending is not as problematic as the lack of collateral and the inability to use state guarantees. This is because interest is included in the cost of production and is compensated to the producer through the price,” said the Deputy Chairman of the Board of Oschadbank.

Another important mechanism to stimulate the development of the defense industry, according to Yuriy Katsion, should be to expand the range of customers for such products.

“Today, the production capabilities of companies in this industry make it possible to manufacture almost twice as many products as the amount of state funding allows. At the same time, municipalities could become additional customers for arms, given their current practice of purchasing dual-use goods. This would contribute to a significant increase in the size of the domestic market. It's good that the government, defense industry producers, and banks all speak the same language. Everyone clearly understands the issues and what needs to be done to ensure financing for the industry,” said the Deputy Chairman of the Board of Oschadbank.

Original https://www.epravda.com.ua/cdn/cd1/2024/opk_balansuie_mozhlyvosti/