SLOVAK/GRAIN RECEIPT PROGRAM - FRAMEWORK

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The programme will introduce a new financing system, which will provide secured lending for the seasonal working capital needs of farmers by using warehouse receipts. The creation of secure collateral for banks will mobilise credit for the agribusiness sector. The project aims to demonstrate the viability in the Slovak Republic of a system of financing working capital in the agribusiness sector using grain receipts, bringing in foreign commercial funds, reducing financing costs and increasing the options available for farmers. The programme will contribute to competitive market interactions in the grain sector by introducing a new financing instrument to banks and farmers. It simplifies the administration of loans and reinforces the legal surety of all parties involved in credit transactions. It will also improve the functioning of markets by giving the farmers the freedom to choose whether to sell their grain at harvest or to store it and borrow against it. The project can be replicated in other EBRD countries of operations. The final borrowers under this programme are agricultural producers and processors, who will borrow against grain stored in licensed warehouses. The programme will be managed by a local bank, Pol’nobanka, which will provide 50 per cent of the financing needed. It will also act as an agent on behalf of the EBRD. During a first phase the EBRD’s financing will be provided through the State Fund for Market Regulation, an entity related to the Slovak Ministry of Agriculture. DM 50 million (ECU 25 million) loan, 50 per cent of which will be syndicated to commercial banks. DM 100 million (ECU 50 million). This intermediated financing operation has no direct impact on the environment. Trade involving goods/activities listed on the EBRD's trade-related Environmental Exclusion List are excluded from financing under this facility. Borrowers under this facility will be required to comply with national laws and regulations for environment, health and safety. TC funding was provided to carry out a review of the system by specialised consultants.