The Council of the EU gives green light to first payment of EUR 4.2 billion in macro-financial assistance to Ukraine under the Ukraine Facility

The Council of the European Union has approved the allocation of macro-financial assistance to Ukraine in the form of grants and loans worth EUR 4.2 billion under the Ukraine Facility financial instrument. This was reported by the press service of the EU Council and the Ministry of Finance of Ukraine.

The Council of the European Union has approved the allocation of macro-financial assistance to Ukraine in the form of grants and loans worth EUR 4.2 billion under the Ukraine Facility financial instrument. This was reported by the press service of the EU Council and the Ministry of Finance of Ukraine.

In its decision, the EU Council concluded that Ukraine had implemented all the measures set out in the Ukraine Plan by the end of the second quarter, which in turn opened up the possibility of receiving the corresponding tranche under the instrument. Ukraine’s Plan contained nine indicators by the end of June 2024. Relevant reforms cover public financial management, management of state-owned enterprises, business environment, energy, and demining.

The funds will be used for priority social and humanitarian expenditures of the state budget.

Under the Ukraine Facility, the State Budget of Ukraine has already received €7.9 billion. The EU budget support is expected to reach EUR 16 billion in 2024.

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The Ukraine Facility, which entered into force on 1 March 2024, foresees up to €50 billion of stable financing, in grants and loans, to support Ukraine’s recovery, reconstruction, and modernisation for the period 2024 to 2027. Of this, up to €32 billion is indicatively earmarked to support reforms and investments set out in the Ukraine Plan, whereby disbursements will be conditioned to the delivery of identified indicators. Since its entry into force, the Ukraine Facility has already disbursed €6 billion by way of bridge financing and €1.89 billion in pre-financing, after fulfilment of agreed policy conditions.

In the Ukraine Plan submitted on 20 March 2024, Ukraine outlined its vision for reconstruction, modernisation and the reforms it intends to undertake as part of its EU accession process. The plan emphasizes structural reforms and investments in the sectors with the largest growth potential. It addresses improvements in public administration, emphasising good governance, adherence to the rule of law and the fight against corruption and fraud.

In its assessment dated 15 April 2024, the Commission confirmed that the Ukraine Plan meets the criteria established by the Ukraine Facility Regulation, and presented an in-depth and extensive analysis covering the impact of the war of aggression of Russia on Ukraine, the macroeconomic outlook for the country, and challenges linked to Ukraine’s recovery, reconstruction and modernisation, including the need for external funding, increased labour force, government’s capacity to implement reforms as well as transparency and accountability at all stages. If all proposed reforms and investments are fully implemented, the estimate is that Ukraine’s GDP could increase by 6.2% by 2027 and by 14.2% by 2040 and could also lead to a reduction of the debt by about 10 percentage points of GDP by 2033.