Access to insurance tightened for Polish exporters to Russia and Ukraine
Polish businesses exporting to Russia and Ukraine will have credit requirements for insurance tightened.
Export Credit Insurance Corporation (KUKE), a state body that insures Polish export transactions to high-risk markets, has considerably tightened credit requirements for insurance due to the continuing political and economic crisis in the Ukraine, Polish media reported May 13, 2014.
“Rising debt among Ukrainian firms is very worrying, according to Polish experts,” Dariusz Poniewierka, the current CEO of KUKE, told Polish daily Puls Biznesu. “Our portfolio clearly shows that in the aftermath of the events that occurred in Ukraine in the recent months, the overall payment morality on this market has considerably deteriorated. Due to the increased risk we limited the scope with which we insure these transactions and are attentively observing how the situation develops.”
One of the companies directly affected by the recent changes in KUKE’s policy is the Krakow-based construction company, Budostal 3, which was refused a loan guarantee on a contract worth EUR 35 mln. The contract involved the construction of the largest duck farm in Ukraine (five mln ducks per year) for one of the market’s leaders – Creative Group. Although KUKE originally approved the project, cover was eventually declined three weeks ago.
The decisive vote in investments surpassing EUR 20 mln belongs to KUKE’s committee comprised of five public clerks, including at least one from the Ministry of Economy, one from the Ministry of Finance and one from the Ministry of Foreign Affairs. The final negative answer came after riots on the Maidan Square in Kiev, where more than 100 people were killed.
The tense political situation in Ukraine, as well as the resulting tensions between Moscow and Brussels, have also affected the value of export of goods from Poland to the Ukraine and to Russia. Despite the overall promising export results (the value of exported goods in Poland between January and March 2014 rose by 7 percent y/y), the value of exported goods to Ukraine fell by more than 20 percent, and to Russia – by 7 percent y/y, according to the Central Statistical Office of Poland.
