European Parliament, EU Council reach tentative agreement on Ukraine Facility
The European Parliament and the Council of the EU have reached a preliminary agreement on a new support mechanism for Ukraine through the creation of the Ukrainian Facility worth EUR 50 billion in the EU budget for the next four years.
The relevant report appeared on the website of the European Council overnight Tuesday, Ukrinform saw.
"Today, the Council and Parliament reached a provisional agreement on setting up a new single dedicated instrument to support Ukraine's recovery, reconstruction and modernisation, while supporting its efforts to carry out reforms as part of its accession path to the EU. The Ukraine Facility will have a total budget of €50 billion," the statement reads.
As noted, the Ukrainian Facility will pool the EU’s budget support to Ukraine into one single instrument, providing coherent, predictable and flexible support for the period 2024-2027 to Ukraine, adapted to the unprecedented challenges of supporting a country at war.
"The EU is prepared to support Ukraine as long as needed. The Ukraine Facility will allow us to channel consistent and predictable support to Ukraine to help its people rebuild their country in the midst of the unprecedented challenges brought by Russia’s war of aggression. At the same time the support will help Ukraine take forward the reforms and modernisation efforts needed for it to advance on its path towards future EU membership," said Vincent van Peteghem, Minister of Finance of the EU-presiding Belgium.
The Ukrainian Facility will structurally consist of three main pillars.
Pillar 1: the Cabinet of Ministers will design a "Ukraine plan", setting out its intentions for the recovery, reconstruction and modernization of the country and the reforms it plans to undertake as part of its EU accession process. Financial support in the form of grants and loans to the state of Ukraine would be provided based on the implementation of the Ukraine Plan, which will be underpinned by a set of conditions and a timeline for disbursements
Pillar 2: under the Ukraine investment Framework, the EU will provide support in the form of budgetary guarantees and a blend of grants and loans from public and private institutions. A Ukraine Guarantee would cover the risks of loans, guarantees, capital market instruments and other forms of funding supporting the objectives of the Facility
Pillar 3: EU accession assistance and other support measures that will help Ukraine bring its legislation into line with EU laws, as well as carry out structural reforms on the way to future EU membership.
As noted in the report, the preliminary agreement reached between the European Parliament and the Council of the EU defines the financial aspects in the context of the creation of the Ukraine Facility.
The fund's total budget of EUR 50 billion will be divided into EUR 33 billion in loans and EUR 17 billion in grants.
Grants will be mobilized through a new special instrument, proposed in the context of the Multiannual Financial Framework (MFF) mid-term review. The loans will be guaranteed through the own resources headroom, similar to the current financing under the Macro Financial Assistance 'Plus' (MFA+).
Ukraine may request, as part of the Ukraine Plan, a pre-financing payment of an amount of up to 7% of Facility.
A significant share of the investment part of the Ukraine Plan and the Ukraine investment Framework will be earmarked for green investments and a part in the Ukraine investment Framework will be reserved for SMEs. The Plan will also be geared towards supporting national authorities.
The text provides for possible bridge financing in order to make sure that funds reach Ukraine as soon as possible.
There will be some flexibility regarding in the budget management given that Ukraine is a country at war.
A precondition for the support to Ukraine under the Facility will be 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, including the rights of persons belonging to minorities.
Furthermore, the regulation will ensure that the Ukrainian Parliament and civil society organisations in Ukraine are duly informed and consulted on the design and implementation of the Ukraine Plan.
A Ukraine Facility Dialogue will give the opportunity for the European Parliament to invite the Commission to discuss at least every four months the implementation of the Plan.
In order to evaluate the implementation of the plan, the regulation will include a scoreboard that will help to easily monitor progress of various qualitative and quantitative steps, including an overview of the social, economic and environmental elements in the Ukraine Plan.