Treasury backs £3 billion export financing package for war-torn Ukraine | Business newsletter
The Prime Minister is putting his weight behind a new £3 billion export financing package aimed at strengthening Ukraine’s military defenses against Russia and rebuilding the country in the future.
Sky News has learned that Nadhim Zahawi has told International Trade Secretary, Anne-Marie Trevelyan, that he supports the request for credits provided by the UK’s Export Finance Organization (UKEF). .
In a letter sent to Ms Trevelyan and copied to the Department of Defense, the Foreign Office and 10 Downing Street, Mr Zahawi said he considers it essential to continue to support the Ukrainian government in any way possible. and demonstrate our faith in the future of Ukraine”.
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A Whitehall source said the prime minister had played an active role in progressing the deal since taking office a few weeks ago.
UKEF’s credit facilities include £2.3 billion to fund military contracts identified by the Ukrainian government, the remaining £700 million for reconstruction projects.
Insiders surmise that companies such as BAE Systems and Babcock International are likely among those signing individual contracts with UKEF.
According to Mr Zahawi’s letter, which was seen by Sky News, his support for the deal depends on resolving legal questions regarding the “compatibility of these facilities with regulatory obligations”. control our international subsidies”.
“Obviously Ukraine is a high-risk market to do business with, and we have to admit the risk of loss is huge,” he wrote.
“Therefore, UKEF must also continue to minimize Exchequer losses as much as possible.”
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The Prime Minister added that all individual contracts would also require Treasury approval.
In March, Ms Trevelyan wrote to Louis Taylor, chief executive of UKEF, instructing the agency to maintain a £3.5 billion “market cap” for the country.
While the £3 billion aid is modest given Ukraine’s military and reconstruction needs, it underscores the central role Britain plays in providing international support to the country.
A source close to the UKEF says it has provided Ukraine with £23 million in financial security, including support for a commercial shipment of COVID-19 tests to the country’s Ministry of Health ahead of the Russian invasion. .
The Treasury and UKEF both declined to comment on the new credits.
