The Cabinet of Ministers of Ukraine has approved the list of military and political risks, as well as the terms and conditions of insurance (reinsurance) of military and political risks during the activities of Export Credit Agency (ECA). The relevant decision was adopted at a meeting of the Government on 9 April 2024.

“Increasing the instruments of insurance of military and political risks during the war in Ukraine should contribute to the attraction of investments in the Ukrainian economy already now. The adoption of the Government resolution is aimed at this. It will allow improving the legal regulation of the list of military and political risks, conditions and procedures for insurance or reinsurance of military and political risks in the implementation of activities of Export Credit Agency. ECA will be able to insure and reinsure investment loans of Ukrainian banks against military and/or political risks for Ukrainian exporters, as well as direct investments. This will provide support for Ukraine’s economy, stimulate the recovery of industrial production, create new jobs, fill budgets at all levels with funds from tax payments and strengthen the state’s defence capabilities,” Deputy Minister of Economy of Ukraine Volodymyr Kuzyo explained.

This mechanism will make it possible to eliminate the gaps that limit the possibility of insuring domestic ECA investments, including in the conditions of hostilities and post-war reconstruction.

In particular, the following insurance risks, which are widespread in international practice and may arise in the territory of Ukraine, were classified as military risks:

• military conflict, including war or armed conflict, armed aggression, hostilities, mass riots;
• violent change or overthrow of the constitutional system or seizure of state power;
• terrorist acts and/or sabotage;
• occupation, annexation.

The following insurance risks are classified as political risks:

• forced alienation of property/expropriation of property of a business entity carried out by the state authorities of Ukraine (deprivation of property ownership);
• groundless (illegal) revocation of the license by the market regulator or forced termination (suspension) of the business entity’s activity by state authorities, which is established by a court decision that has entered into force, except for cases when such termination of activity is caused by the business entity’s failure to comply with the requirements of the law;
• non-fulfilment or refusal of the state to fulfil obligations defined by legislation, strategic or programme documents approved in accordance with the procedure established by law, and/or an investment agreement, provided that the economic entity has the right to demand the fulfilment of such obligations;
• introduction by the state of bans (payment embargoes, moratoriums) on making settlements;
• impossibility of currency conversion or currency transfer abroad by a business entity, except for cases provided for by law.

Background:

PrJSC Export Credit Agency was founded in 2018. The sole founder and shareholder of ECA is the state represented by the Cabinet of Ministers of Ukraine. The management of corporate rights belonging to the state in the authorized capital of ECA is carried out by the Cabinet of Ministers of Ukraine through its authorized management body – the Ministry of Economy of Ukraine.

The main goal of the agency’s activity is to support and stimulate the large-scale expansion of the export of goods (works, services) of Ukrainian origin. The institution protects Ukrainian exporters from the risk of non-payments and financial losses associated with the execution of foreign exchange contracts, and also provides a wide range of services that allow Ukrainian exporters to strengthen their credit policy and effectively manage their financial flows.

At the end of last year, the Verkhovna Rada adopted a law allowing Export Credit Agency to insure investments of Ukrainian and foreign companies in Ukraine against war risks.