IFC as an implementing entity of the Economic Resilience Action (ERA) Program for Ukraine – supported by the Swiss Confederation acting through the State Secretariat for Economic Affairs (SECO) - is providing a first loss guarantee of up to US$9.25 million or 37% of IFC’s risk participation amount (“blended concessional finance co-investment”). Given the high country risk IFC will not be able to participate in the RSF without the de-risking support from blended finance. The RSF is expected to enable up to US$80 million of financing support to SMEs, including agri-SMEs. Similar concessional support would be extended to other partner financial institution that would be willing to participate and meet the RSF criteria.

The level of concessionality (i.e., “subsidy”) provided by the blended concessional finance co-investment is estimated to be about 12.4% of the total project cost of US$50 million. This estimate is based on the difference between (i) a “reference price” (either a market price if available; the price calculated using IFC’s pricing model, which comprises three main elements: risk, cost and profit; or a negotiated price) and (ii) the “concessional price” being charged by the blended concessional finance co-investment. As is the case with all of IFC’s blended concessional finance co-investments, this Project has been assessed against the Enhanced Blended Concessional Finance Principles for DFI Private Sector Operations adopted by IFC and more than 20 other DFIs in 2017. Further information on these Enhanced Principles, IFC’s blended finance approach and governance, and historical information on estimated subsidy levels in IFC’s blended finance portfolio can be found at: www.ifc.org/blended finance.

The Project has been categorized as FI-2 according to IFC’s Sustainability Policy. The expected portfolio to form the RSF will comprise low to medium environmental and social (E&S) risk investments with potentially limited adverse environmental or social risks or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures. The Project will not support any activities on the IFC Exclusion List, coal, and/or higher-risk business activities, that may include a) involuntary resettlement, b) risk of adverse impacts on indigenous peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, d) significant retrenchment, and/or e) significant occupational health and safety risks. For this Project, IFC's applicable E&S requirements will be the IFC Exclusion List, the applicable environmental and social national laws and regulations, and screening out higher E&S risk transactions as contemplated in the Performance Standards. The Bank will additionally be required to be in line with the life and fire safety requirements of the Performance Standard 4, and requirements of IFC’s Performance Standard 2 on Labor and Working Conditions. The main E&S risks and impacts of this investment relate to the Bank having adequate systems and capacity in place to manage the operations being financed in line with the IFC’s applicable E&S requirements.