The chancellor is throwing his weight behind a new £3bn export finance package aimed at bolstering the Ukrainian military’s defence against Russia, and the country’s future reconstruction.
Sky News has learnt that Nadhim Zahawi has told the international trade secretary, Anne-Marie Trevelyan, that he supports a request for credit facilities provided by UK Export Finance (UKEF).
In a letter to Ms Trevelyan and copied to the Ministry of Defence, Foreign Office and 10 Downing Street, Mr Zahawi said he considered it “essential that we continue supporting the government of Ukraine in any way we can and demonstrating our faith in the future of Ukraine”.
Live updates: Russia accuses US of direct involvement in war for first time
A Whitehall source said the chancellor had played an active role in progressing the deal since taking up his post a few weeks ago.
The UKEF credit facilities comprise up to £2.3bn for the financing of military contracts identified by the Ukrainian government, with the remaining £700m earmarked for reconstruction projects.
Insiders speculated that companies such as BAE Systems and Babcock International were likely to be among those signing individual contracts with UKEF.
According to Mr Zahawi’s letter, which has been seen by Sky News, his backing for the deal is contingent upon the resolution of legal questions relating to “the compatibility of these facilities with our international subsidy control obligations”.
“Clearly Ukraine is a high-risk market in which to operate commercially, and we must acknowledge the risk of losses is significant,” he wrote.
“UKEF must also therefore continue to mitigate against Exchequer losses as far as is reasonably possible.”
Read more:
First grain ship leaves port city since Ukraine war began
Mothers and wives of missing Russian servicemen face relentless fight for answers
Follow the Daily podcast on Apple Podcasts, Google Podcasts, Spotify, or Spreaker
The chancellor added that all individual contracts would also require Treasury approval.
In March, Ms Trevelyan wrote to Louis Taylor, UKEF chief executive, instructing the agency to maintain its £3.5bn “market limit” for the country.
Although the £3bn support is modest in the context of Ukraine’s military and reconstruction needs, it underlines Britain’s central role in providing internationally support to the country.
A source close to UKEF said it had so far provided £23m in financial guarantees to Ukraine, including support for a commercial shipment of COVID-19 tests to the country’s Ministry of Health before the Russian invasion
The Treasury and UKEF both declined to comment on the new credit facilities.
For all the latest business News Click Here
