Ukraine Plan: Council greenlights regular payments under the Ukraine Facility
The Council today adopted an implementing decision giving a positive assessment to the ‘Ukraine Plan’, which sets out the intentions of the government of Ukraine regarding the recovery, reconstruction and modernisation of the country, and the reforms it plans to undertake as part of its EU accession process in the next four years.
The Council considered in particular that thanks to this plan, Ukraine fulfils the precondition for support under the Ukraine Facility (up to €50 billion), and that now regular payments can start to flow.
An important step has been made to deliver much-needed, regular and predictable financial support to Ukraine’s recovery, reconstruction, and modernisation over the next four years. The EU has once more confirmed its commitment to Ukraine’s stability and growth.
Vincent van Peteghem, Belgian Minister of Finance and President of the Council
Payments to Ukraine will be disbursed by the EU subject to the implementation of the agreed reform and investments in the form of the qualitative and quantitative steps set out in the annex of the Council implementing decision. The reforms and investments foreseen have a significant potential to enhance growth, sustain macroeconomic stability, improve the fiscal situation and to support Ukraine’s further integration with EU.
Today’s decision provides further details on the arrangements and timetable for its implementation, including the envisaged timetable for disbursement of the support and its payment schedule. The final qualitative and quantitative steps are to be completed by the end of 2027.
In addition, financial support under the ‘Ukraine Plan’ will be made available under the precondition that Ukraine continues to uphold and respect effective democratic mechanisms, including a multi-party parliamentary system and the rule of law, and to guarantee respect for human rights. Financial support is also dependent on strengthening of the rule of law, upholding the independence of the judiciary, strengthening the public administration reform, and fighting corruption – in particular high-level corruption – and money laundering.
Today’s decision will enable the Commission to disburse up to €1.89 billion in pre-financing until regular disbursements tied to the implementation of reform and investment indicators under the Ukraine Plan will start.
Background
The Ukraine Facility, which entered into force on 1 March 2024, foresees up to €50 billion of stable financing, in grants and loans, to support Ukraine’s recovery, reconstruction, and modernisation for the period 2024 to 2027. Of this, up to €32 billion of the Ukraine Facility is indicatively earmarked to support reforms and investments set out in the ‘Ukraine Plan’, whereby disbursements will be conditioned to the delivery of identified indicators. Since its entry into force, the Ukraine Facility already disbursed €6 billion by way of bridge financing, after fulfilment of agreed policy conditions.
In the ‘Ukraine Plan’ submitted on 20 March 2024, Ukraine outlined its vision for reconstruction, modernisation and the reforms it intends to undertake as part of its EU accession process. The plan emphasizes structural reforms and investments in the sectors with the largest growth potential. It addresses improvements in public administration, emphasising good governance, adherence to the rule of law and the fight against corruption and fraud.
In its assessment dated 15 April 2024, the Commission confirmed that the ‘Ukraine Plan’ meets the criteria established by the Ukraine Facility Regulation. According to the Commission, the ‘Ukraine Plan’ constitutes a targeted and well-balanced response to the objectives of the Ukraine Facility, addresses the challenges of Ukraine’s accession path, and responds to reconstruction and modernisation needs. In its positive assessment of the plan, the Commission presented an in-depth and extensive analysis covering the impact of the war of aggression of Russia on Ukraine, the macroeconomic outlook for the country, and challenges linked to Ukraine’s recovery, reconstruction and modernisation, including the need for external funding, increased labour force, government’s capacity to implement reforms as well as transparency and accountability at all stages. If all proposed reforms and investments are fully implemented, the estimate is that Ukraine’s GDP could increase by 6.2% by 2027 and by 14.2% by 2040 and could also lead to a reduction of the debt by about 10 percentage points of GDP by 2033.