The European Commission has proposed a new €1 billion macro-financial assistance (MFA) operation for Ukraine as the first 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 proposal is part of the extraordinary effort by the EU, alongside the international community, to help Ukraine to address its immediate financial needs following the unprovoked and unjustified aggression by Russia. It will complement the support already provided by the EU, including a €1.2 billion emergency MFA loan paid out in the first half of the year. Taken together, the two strands of the program would bring the total MFA support to Ukraine since the beginning of the war to €2.2 billion and could reach up to €10 billion once the full package of exceptional MFA to Ukraine becomes operational.
President Ursula von der Leyen said: ”The EU continues standing by Ukraine and its brave people. Today, we propose a €1 billion tranche of the new macro-financial assistance package for Ukraine. This first part of the assistance announced in May will allow us to give an immediate answer to the urgent needs of Ukraine. The EU will keep on providing relief to Ukraine and in the longer-term support its reconstruction as a democratic and prosperous country”.
Under the proposal, MFA funds will be made available to Ukraine in the form of long-term loans on favorable terms. The assistance will support Ukraine’s macroeconomic stability and overall resilience in the context of Russia’s military aggression and the ensuing economic challenges. In a further expression of solidarity, the EU budget will cover the interest costs on this loan. As for all previous MFA loans, the Commission will borrow funds on international capital markets and transfer the proceeds on the same terms to Ukraine. This loan to Ukraine will be backed for 70% of the value by amounts set aside from the EU budget.
Josep Borrell, High Representative/Vice-President for a Stronger Europe in the World said: “Putin’s unjustified war against Ukraine is putting massive economic pressure on the Ukrainian people. The European Union is acting with great speed to support Ukraine’s financial stability and assist it in rebuilding its future within the European family. With this emergency package, we are sending a strong message: The European Union continues to stand with Ukraine and its people.”
As soon as the European Parliament and the Council approve the proposal and the corresponding Memorandum of Understanding and Loan Agreement with the Ukrainian authorities are signed, the Commission will swiftly make available the amount of €1 billion to Ukraine.
This financial assistance comes in addition to the unprecedented support provided by the EU to date, notably humanitarian, development, and defense assistance, 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.
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