OREANDA-NEWS. February 28, 2013. Today over 100 banks of Ukraine deal with crediting enterprises of agroindustrial complex. However, the cost of loans remains rather high. So, to reduce the burden laid on agricultural producers in the process of payment interests for the use of loans, the state annually allocates funds for reduction of interest rates.

Though, it does not satisfy needs of agrarians in the compensation funds in full amount. That’s why the Government has approved a decision to create the State Land Bank. The financial insitution will enable agrarians to take loans at 10-12% annual rates.

Over a hundred of Ukraine’s banks give loans to agroindustrial enterprises, exceptionally for short terms on different conditions and at different interest rates. So, these rates in 2012, in average around Ukraine, amounted 22-24% of annual rates.

Targeting creating favorable conditions for agriculture producers in drawing credits there was open a national market of banking services for foreign banks. The mentioned financial institutions could give cheap loans, including for agrarians. However, the cost of loans of foreign banks appears by only 2 points lower than in national banks.

The annual need in compensation funds for cheap credits being drawn the current year and transition credits drawn previous years makes up UAH 1.5 billion. But the need in compensation funds is satisfied only 30%.

So, taking into account experience of world countries concerning search of possible ways of lowering credit rates for agrarians, the Government adopted a decision to set up the mentioned Land Bank. The financial institution has to provide loans for national agricultural producers at 10-12% annual rates and also fulfill the function of a special institution in the process of mortgage loans secured by land.

The process of creating the financial institution is underway. Notably, funds of the state budget to the tune of UAH 120 million have been already transferred to a temporary account in the National Bank of Ukraine. Also a package of documents for Ukreximbank concerning registration and servicing securities of the State Land Bank was prepared.