By KYIV. Nov 14 (Interfax-Ukraine) – The share of the Affordable Loans 5-7-9% state program in the borrowing market should be reduced, and its place should gradually be taken by recovering credit banking products, said Andrey Hapon, executive director of the Entrepreneurship Development Fund (EDF), at a discussion of the Center for Economic Strategy (CES).
“Our program should not be so large and constitute the main product for banks. I am very glad to hear now that banks are already … creating products that do not involve the 5-7-9 program, and I believe that strategically from 2024 the 5-7-9 program will narrow slightly – gradually, as required by the Ukrainian economy,” he said.
According to him, this year large enterprises will no longer receive loans under the program, which is in line with the recommendations of the International Monetary Fund (IMF).
“Large enterprises will no longer be financed within the framework of 5-7-9. We are returning to the small and medium-sized businesses system, which will greatly reduce budget expenses for the program,” said the executive director of the fund.
He added that raising the working capital financing rate to 13% per annum also narrowed the circle of interested parties and allowed banking products to compete with it.
Hapon emphasized that thanks to the reduction in the refinancing rate, financial institutions can attract funds cheaper and offer their credit products on terms that are much more competitive with 5-7-9 than before.
According to him, the main problem of the state program is the portfolio of loans at 0% per annum, which were issued during the COVID-19 pandemic in 2021-2022.
“If we take the first half of 2023 into account, then 95% of the total budget was spent on financing loans concluded in 2020-2022,”he informed.
He clarified that contracts concluded in previous years remain at the same rates as they were at the time of conclusion.
The expert said that in 2024, three-year contracts for replenishing working capital expire, which will free up about UAH 3.5 billion by the end of the year.
According to CES statistics, as of September of this year, a third of hryvnia loans to legal entities were issued under the 5-7-9 state program, with the main users being agricultural enterprises (50%), wholesale trade (25%) and industry (14%), and among the regions the capital and Kyiv region lead (17%).
