European Commission giving Ukraine EUR 5B in macro-financial aid

That’s according to European Commission President Ursula von der Leyen, who broke the news via Twitter.

"The situation in Ukraine requires our full support. Today the EU Commission proposes an additional €5 billion in macro-financial assistance for the country. This is on top of the €10 billion the EU already provided in financial, humanitarian and military aid," the EC President wrote.

The European Commission's press service elaborated on the decision, saying it "proposed a further €5 billion in macro-financial assistance (MFA) loans to Ukraine as the second part of the exceptional MFA package of up to €9 billion announced in the Commission's communication of 18 May 2022 and endorsed by the European Council of 23-24 June 2022. The Commission disbursed the first €1 billion of this MFA package in early August. The remaining up to €3 billion will be provided as soon as possible."

The Commission notes that is a key element of the overall short-term liquidity relief measures as announced in May 2022 and makes a "sizeable contribution" to close the outstanding funding gap for the fourth quarter to ensure maintained stability.

The proposal will complement the support already provided by the EU, including a EUR 1.2 billion emergency MFA loan paid out in the first half of the year. Taken together, the two strands of the programme would bring the total MFA support to Ukraine since the beginning of the war to EUR 7.2 billion, and could reach up to EUR 10 billion once the full package of exceptional MFA to Ukraine becomes operational this year.

Under the proposal, MFA funds will be made available to Ukraine in the form of long-term loans on favorable terms, to be disbursed in a small number of installments.

"In a further expression of solidarity, the EU budget will cover the interest costs and administrative fee payments linked to the loans. As for all previous MFA loans, the Commission will borrow the funds on international capital markets and transfer the proceeds on the same terms to Ukraine," the statement says.

The loans to Ukraine will be backed by guarantees provided by Member States which will complement the provisioning available from the EU budget. Between the EU budgetary provisions and the Member State guarantees, the loans will be fully secured for 70% of their value.

As soon as the European Parliament and the Council approve theproposal and the corresponding Memorandum of Understanding and Loan Agreement with the Ukrainian authorities are signed, the Commission will swiftly make available the EUR 5 billion.

"This financial assistance comes in addition to the unprecedented support provided by the EU to date, notably humanitarian and development assistance from the EU budget, and military assistance through the European Peace Facility, the suspension of all import duties on Ukrainian exports for one year or other solidarity initiatives, e.g. to address transport bottlenecks so that exports, in particular of grains, could be ensured," the European Commission said.

As reported, Ukraine’s government delegation led by Prime Minister Denys Shmyhal took part in the 8th Meeting of the EU-Ukraine Association Council on Monday.