Ukraine to gain USD 3 bln loan for irrigation projects from China

Макроэкономика 02.10.2013 Ukraine is close to attracting a USD 3 bln loan from the Export-Import Bank of China to finance the recovery of irrigation systems in the southern regions of Ukraine, Ukraine’s Agrarian Minister Mykola Prysiazhniuk announced at an October 1 press conference. The loan will be given to the government at a 6.5% interest rate, for 15 years with a five-year grace period, according to the minister. Ukraine will receive half of the loan in cash and the other half in equipment. The minister estimates the loan will be enough to recover irrigation systems covering 1.2-1.4 mln hectares of land. Alexander Paraschiy: While such a loan seems encouraging for the Ukrainian economy, the deal has yet to be concluded, and so far we do not know the details of how the government will invest the attracted funds into Ukraine’s irrigation systems. The loan looks encouraging for those agricultural companies that can potentially receive cheap financing for irrigation projects, including KSG Agro (KSG PW) and Sintal Agro (SNPS AV), but the benefit clearly won’t be reaped in the short term. The only possible short-term consequence of the possible deal is speculative growth in land prices (leasing rights) in Ukraine’s southern regions.