UFK budget financing Ukraine (Deposit Protection Fund)

completed

In August last year, Federal Chancellor Angela Merkel promised a guarantee framework of EUR 500 million for the reconstruction of eastern Ukraine (political UFK, untied financial loan). This will enable the Ukrainian Finance Ministry to be provided with FC promotional loans with 100% federal cover. A partial amount of up to EUR 200 million is to be earmarked as budget support for the Ukrainian Deposit Guarantee Fund (ESF). For this purpose, an FC promotional loan of up to EUR 200 million is to be granted to the Republic of Ukraine. In terms of content, the KfW loan is based on the World Bank's Financial Sector Development Policy Loan of USD 500 million. This calls for, among other things: adequate financial resources for the deposit protection fund (including overdraft facility) from the state budget, improved legal framework conditions for the restructuring of insolvent banks and faster processing of deposit refunds to small savers. The ESF protects the bank deposits of small savers at insolvent banks. Savers receive their entire savings refunded by the ESF up to a bank balance of 200,000 UAH (as of April 2015, just under 8 thousand euros). In this way, KfW's support of the ESF contributes to the economic development and asset protection of the poorer and middle classes of the population.