July 14 2003, 09:53 UNIAN

NBU will support banks crediting the largest traders for grain purchases abroad

National Bank of Ukraine is ready to support the banks, which are crediting large Ukrainian grain traders for purchases of food grain abroad, NBU Head Serhiy Tyhypko said to a press-conference.

"We have an agreement that we will support large traders, if they have a joint programme with Ukrainian commercial banks. We are ready to support 50 percent of refinancing (about $ 150 to 200 million) under obligations of commercial banks, in order that it was possible to import about 2 million tonnes of milling grain", Tyhypko said.

He said that refinancing would be short-term. "We suppose that some three months will be enough to bring the grain and to make its turnover", the chief banker said.

He said the purchase of grain would create no problems for stability of hryvnia.

"Those $300 or 400 million which might be bought at the currency exchange will not produce any special influence on the situation", he said.

The Head of NBU also said that the Bank was going to support the farming sector by re-structuring the credits of agricultural producers, who had been unable to settle their banking debts on time. At the same time, he said, the banks themselves would be choosing whether or not to start the restructuring.

Tyhypko explained that the essence of restructuring the farming loans would be prolongation of credit agreements for a year, with payment of interest in advance by government. The restructuring will be performed on a condition that the interest rate on the prolonged credits does not exceed 18 percent a year. The prepayment of interest by government will be made at the level of 16 percent.

According to Tyhypko, such conditions of restructuring will prevent from bankruptcy the recently re-formed agricultural enterprises and might encourage significant reduction of banking rates for crediting the farming complex in the next year.

"If the agreements are re-concluded, they will be at no more than 18 percent, and this will already be a significant reduction of interest rate in crediting agriculture. And this will be inevitably knocking down [the interest rates at] the following credits. Also, prepayment of interest starts at once at 16 percent. That means the banks will receive 16 percent of interest a year in advance", Tyhypko said.