The European Commission has tabled a proposal for a new emergency macro-financial assistance (MFA) programme for Ukraine of up to €1.2 billion. This proposal follows an earlier request from the Ukrainian authorities and direct discussions between Commission President Ursula von der Leyen and Ukraine’s President Volodymyr Zelenskyy.
MFA funds will be made available to Ukraine in the form of long-term loans on highly favourable terms. They will contribute to enhancing Ukraine’s macroeconomic stability and overall resilience in the context created by the sharp increase in geopolitical uncertainty and its impact on the economic situation.
A swift adoption of this proposal by the Council and the European Parliament will allow the Commission to immediately disburse a first tranche of €600 million to Ukraine. The second tranche will be disbursed following a positive assessment of progress made by the Ukrainian authorities with the implementation of a limited number of agreed short-term policy measures.
The EU has already provided significant assistance to Ukraine in recent years. Since 2014, the EU and European financial institutions have allocated over €17 billion in grants and loans to the country. This figure includes the provision of €5.6 billion to Ukraine through five MFA programmes to support the implementation of a broad reform agenda in areas such as the fight against corruption, an independent judicial system, the rule of law, and improving the business climate. The Commission will soon begin work on an additional, longer-term MFA programme to further support Ukraine’s modernisation efforts.
In parallel to today’s proposal, the Commission has also decided to significantly increase the bilateral assistance it provides Ukraine in grants in 2022. This support will help to strengthen Ukraine’s state-building and resilience efforts, thus complementing the MFA in helping underpin the country’s overall stability.
Members of the College said:
President Ursula von der Leyen said: “The EU stands by the Ukrainian people in these difficult times. Today the Commission is moving forward on the €1.2 billion assistance package I announced last week. This package will help Ukraine to address its financing needs due to the economic and political challenges the country is experiencing, also strengthening Ukraine’s state-building and resilience efforts.”
Valdis Dombrovskis, Executive Vice-President for An Economy that Works for People said: “The EU has been a steadfast supporter of Ukraine and we are today stepping up our assistance for the country and its people. Our new macro-financial assistance package will help Ukraine to address its financing needs due to this very challenging time. I am grateful for the opportunity of announcing this support during my visit to Kyiv, where I have reiterated the EU’s pledge of standing by Ukraine. The EU has already provided significant assistance to Ukraine to support its resilience and modernisation, and specifically to fight the COVID-19 pandemic. Since 2014, the EU and its financial institutions have allocated more than €17 billion in grants and loans to Ukraine, to which the EU continues to provide political, financial and technical support.”
Paolo Gentiloni, Commissioner for Economy, said: “In this period of deep uncertainty, the European Commission today sends a strong signal of solidarity with the Ukrainian people. We are putting on the table a further €1.2 billion in macro-financial assistance, of which the first €600 million can be made available as soon as the Council and European Parliament have given their green light to this proposal. We are determined to help Ukraine navigate these turbulent waters.”
Macro-financial assistance (MFA) operations are part of the EU’s wider engagement with neighbouring countries and are intended as an exceptional EU crisis response instrument. They are available to EU neighbourhood countries experiencing severe balance-of-payments problems. In addition to MFA, the EU supports Ukraine through several other instruments, including humanitarian aid, budget support, thematic programmes, and technical assistance and blending facilities to support investment.