German Ukrainian Fund (GUF) and Germany's KfW bank on April 6, 2017 signed a currency risk hedging agreement, according to a posting on the Ukrainian government's website.

According to the report, Deputy Finance Minister of Ukraine for European integration Yuriy Butsa, GUF Executive Director Oleh Strynzha and KfW Office Director in Ukraine Lutz Horn-Haacke signed the agreement.

GUF credits small and medium-sized enterprises (SME) via partner banks. The funds of GUF to provide loans to banks are formed mainly thanks to long-term loans pegged to euros issued by the German government via KfW. During conversion of the currency-pegged loans into hryvnias for crediting partner banks and SME GUF would face currency risks.

"The European Union, understanding the importance of stirring up crediting of SME in Ukraine, has proposed took a part of the currency risk of GUF in the amount of EUR 5.2 million under the EU4Business programme. According to the signed agreement, the European Commission is ready to refund up to 30% of the loss to GUF via KfW that could appear due to the unfavorable chance of the hryvnia exchange rate to the euro under the GUF credit programs for the amount of up to EUR 17 million," reads the report.

KfW acts as an agent of the European Commission introducing the hedging scheme for GUF.

In April 2017, GUF starts crediting under the new programme: thanks to a loan raised from the German government via KfW in the amount of EUR 10 million. GUF will provide long-term loans in hryvnias to banks, which would stimulate the speeding up of SME crediting.