Council supports €1.2 billion assistance to Ukraine
EU ambassadors today endorsed the Commission’s proposal to provide €1.2 billion of additional macro-financial assistance to Ukraine. This means that the proposal could be fast-tracked at the European Parliament with the aim of adopting the text as soon as possible. It intends to provide swift support in a situation of acute crisis and to strengthen Ukraine’s resilience.
The text needs to be adopted by the European Parliament and the Council before it can enter into force.
The current geopolitical tensions are having a detrimental effect on Ukraine’s economic and financial stability. Persistent security threats have already triggered a substantial outflow of capital. Ukraine is losing access to international capital markets due to the heightened geopolitical uncertainty and its impact on the economic situation.
“The EU stands by Ukraine, also economically. The current geopolitical tensions are having a severe economic impact on Ukraine. Member states are ready to provide €1.2 billion macro-financial assistance. I am happy to announce that we decided to support the Commission’s proposal today, so that the financial help can reach Ukraine without delay.” – Bruno Le Maire, French Minister for Economic Affairs, Finance and Recovery
This emergency macro-financial assistance is set to have a duration of 12 months and it would consist of two disbursements:
- The release of the first tranche, subject to the political precondition and a satisfactory implementation of the IMF programme, would occur swiftly after the approval of this proposal, upon entry into force of the Memorandum of Understanding (MoU) on specific structural policy measures, to be agreed between the European Commission on behalf of the EU and Ukraine.
- The disbursement of the second tranche would be linked to the continuous satisfactory implementation of both an IMF programme and the policy measures agreed in the MoU. The MoU underpinning this emergency macro-financial assistance operation is likely to focus on a limited number of feasible, short-term policy actions in the most urgent priority areas, such as strengthening economic resilience and stability, governance and rule of law, and energy.
Background
The EU-Ukraine Association Agreement, which entered into force on 1 September 2017, brings the Ukraine and the EU closer together. In addition to promoting deeper political ties, stronger economic links and the respect for common values, the agreement has provided a framework for pursuing an ambitious reform agenda, focused on the fight against corruption, an independent judicial system, the rule of law, and a better business climate. The EU has shown continuous support for these reforms, which are crucial for attracting investments, boosting productivity and lifting the standards of living in the medium term.
Among other support instruments, between 2014 and 2021 the EU supported Ukraine through five consecutive Macro-Financial Assistance (MFA) operations that totalled EUR 5 billion of loans.
The current geopolitical tensions are having a detrimental effect on Ukraine’s already precarious economic and financial stability. Persistent security threats have triggered a substantial outflow of capital.
On 1 February 2022, against the backdrop of the loss of access to international capital markets due to the heightened geopolitical uncertainty and its impact on the economic situation in Ukraine, the Commission submitted a proposal to provide a new MFA of 1.2 billion in the form of loans to foster stability in Ukraine.
