EU to send 1.2 billion euros in aid to Ukraine – Eurasia Review
The EU will provide a €1.2 billion emergency macro-financial assistance operation in the form of loans to promote stability Ukraine. It aims to provide rapid support in an acute crisis situation and to strengthen Ukraine’s resilience.
The Council finalized the adoption on Tuesday, just 21 days after the Commission presented its proposal.
The EU has accelerated this economic assistance to Ukraine, as the current geopolitical tensions have a detrimental effect on Ukraine’s economic and financial stability. Persistent security threats have already triggered a major outflow of capital. Ukraine is losing access to international capital markets due to increased geopolitical uncertainty and its impact on the economic situation.
“The EU acted swiftly and decisively to help Ukraine. In 21 days, we have completed the necessary work, which means that €1.2 billion in macro-financial assistance can now reach Ukraine,” said Bruno Le Maire, French Minister of Economy, Finance and Recovery.
This emergency macro-financial assistance will have a duration of 12 months and will consist of two disbursements:
- The release of the first tranche, subject to the political condition precedent and satisfactory implementation of the IMF program, would take place shortly 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.
- Disbursement of the second tranche would be linked to the continued and satisfactory implementation of an IMF program and the policy measures agreed in the Memorandum of Understanding. The Memorandum of Understanding underlying this emergency macro-financial assistance operation is likely to focus on a limited number of feasible policy actions in the short term in the most pressing priority areas, such as building resilience and economic stability, governance and rule of law, and energy.
The EU-Ukraine Association Agreement, which entered into force on 1 September 2017, brings Ukraine and the EU closer together. In addition to promoting deeper political ties, stronger economic ties and respect for common values, the agreement provided a framework for the pursuit of an ambitious reform program, focused on the fight against corruption, a system independent judiciary, the rule of law and a better business climate. The EU has provided continued support for these reforms, which are essential to attract investment, boost productivity and raise living standards in the medium term.
Among other support instruments, between 2014 and 2021 the EU supported Ukraine through five consecutive macro-financial assistance (MFA) operations totaling EUR 5 billion in loans.
Current geopolitical tensions are having a detrimental effect on Ukraine’s already precarious economic and financial stability. Persistent security threats triggered a major outflow of capital.
On 1 February 2022, against the background of the loss of access to international capital markets due to increased geopolitical uncertainty and its impact on the economic situation in Ukraine, the Commission presented a proposal to provide a new MFA 1.2 billion in the form of loans to promote stability in Ukraine.