EU Council approves additional EUR 1B assistance for Ukraine

The Council of the European Union has announced today the decision to allocate an additional EUR 1 billion of additional macro-financial assistance to Ukraine, as a matter of urgency, which will be directed to the country's priority needs.

According to Ukrinform, the relevant document was published on the European Council’s website.

“The Council today decided to provide €1 billion of additional macro-financial assistance (MFA) to Ukraine, as a matter of urgency. Together with the emergency MFA of € 1.2 billion disbursed earlier this year, the total macro-financial support from the EU to Ukraine since the start of the war now reaches € 2.2 billion and it is expected to increase further in the coming months,” the document reads.

It is noted that this financial assistance complements other EU support to Ukraine in the humanitarian, development, customs and defence fields.

This MFA aims to address the immediate and most urgent funding needs of Ukraine, and to ensure the Ukrainian state can continue to perform its most critical functions. It takes the form of a highly concessional long-term loan. It will have an availability period of one year and will be disbursed as a single instalment, which may be split into one or more tranches.

“This new MFA operation is part of the extraordinary international effort by bilateral donors and international financial institutions to support Ukraine at this critical juncture. The release of the instalment and the assistance will take place once a memorandum of understanding is agreed with the Ukrainian authorities. It will include enhanced transparency and reporting on the use of funds and will define the setting-up of reporting requirements to which this MFA will be linked,” the  document reads.

In view of the extremely challenging situation Ukraine is facing, the EU budget will exceptionally cover the interest rate costs arising from the MFA, in the form of a loan, thereby limiting the impact on the fiscal sustainability of the country.

As reported, the EU-Ukraine Association Agreement, which entered into force on September 1, 2017, brings Ukraine and the EU closer together. The EU consistently provides support to Ukraine in development projects and in the implementation of key reforms, including administrative and judicial reforms, the fight against corruption, etc. Among other support instruments, between 2014 and 2021 the EU supported Ukraine through five consecutive MFA operations that totalled EUR 5 billion of loans.

iy