February 5 2003, 09:26 Interfax-Ukraine

Ukrainian banks want farm loans guaranties from local authorities

Provision by local powers of guaranties for return of credits that banks provide to agricultural producers could significantly improve financing of agriculture. This opinion was expressed by managers of Ukrainian banks at their recent meeting in NBU, devoted to the issues of crediting the agro-industrial complex.

"Today ministry of agrarian policy and local authorities are just protecting the debtors", Head of Managerial Board of PrivatBank Olexandr Dubilet has said.

His colleague - the President of Bank "Nadra" Ihor Hylenko - has criticised the law of state budget 2003, stipulating ban to provide guaranties.

He informed that Bank "Nadra" had concluded agreement with US Agency for International Development (USAID) about provision of 50 percent guaranties for crediting farmers. "It's easier to get guaranties from over the ocean than in Ukraine", he said.

Olexandr Dubilet has called on ministry of agrarian policy to better the system of distributing budget compensation for interest rate to farmers in regions. He said it was a common practice when in order to get budget funds, the farms were set a condition to buy machinery, chemicals and other goods from affiliated with local powers companies, at unprofitable prices. "Our bank just bans to credit such regions", Mr. Dubilet said.

In 2002 volume of crediting farming sector increased by approximately 60 percent - to 5.786 billion hryvnias ($1.085 billion). However, representatives of the largest banks have already declared deceleration of growth in this segment, because of worsening solvency of agrarians and increase of bad debts.