The European Commission on Wednesday offered an additional €5 billion in macro-financial assistance (MFA) loans to Ukraine, according to a European Commission press release. This is the second part of the exceptional AMF envelope of up to €9 billion announced in the Commission’s communication of May 18, 2022 and approved by the European Council on June 23 and 24, 2022.
The Commission disbursed the first billion euros of this AMF package at the beginning of August. The rest, up to 3 billion euros, will be provided as soon as possible. According to the press release, the proposal is part of the extraordinary effort by the EU and the international community to help Ukraine meet its growing financial needs following “Russia’s unprovoked and unjustified aggression”. .
The proposal will complement support already provided by the EU, including an emergency MFA loan of €1.2 billion disbursed in the first half of the year. Taken together, the two strands of the program would bring total AMF support to Ukraine since the start of the war to €7.2 billion, and could reach up to €10 billion once the MFA’s comprehensive package outstanding to Ukraine will be 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 tranches. In another expression of solidarity, the EU budget will cover the interest and administrative costs linked to the loans.
As with all previous MFA loans, the Commission will borrow the funds on the international capital markets and transfer the proceeds on the same terms to Ukraine. Loans to Ukraine will be backed by guarantees provided by Member States which will complement the provisioning available from the EU budget. Between EU budget provisions and member state guarantees, the loans will be fully guaranteed up to 70% of their value. “As soon as the European Parliament and the Council have approved today’s proposal and the corresponding Memorandum of Understanding and loan agreement with the Ukrainian authorities are signed, the Commission will rapidly make available the EUR 5 billion euro,” he added.
This financial assistance comes on top of the unprecedented support provided by the EU to date, including humanitarian and development aid from the EU budget, military aid through the European Peace Facility , the suspension of all import duties on Ukrainian exports for one year or other solidarity initiatives, for example to address transport bottlenecks so that exports, especially of cereals, can be ensured . President Ursula von der Leyen said: “The EU’s support for Ukraine is unwavering. We support its brave people with our hearts, minds and deeds. Today the Commission presents a proposal for 5 billion additional euros in financial aid to help Ukraine meet its immediate financial needs caused by Russia’s brutal invasion Ukraine must win this war: it must regain the freedom and independence for which it stood beats so bravely. The EU will continue to do its part to make this happen – solidarity will prevail and peace will come.”
Additionally, Valdis Dombrovskis, Executive Vice President for An Economy that Works for People, said: “Ukraine is a war economy, with immense costs just to keep functioning on a daily basis due to the war in prolonged Russian aggression. Ukraine urgently needs long-term funding to maintain essential public services and achieve some economic and financial stability. By providing an additional €5 billion in exceptional macro-financial assistance, the EU demonstrates once again its commitment to support Ukraine. We call on EU Member States to quickly provide additional guarantees. This will be the second part of the €9 billion global package of exceptional macro-financial assistance announced by the European Commission.” “Today’s unprecedented disbursement of macro-financial assistance is another example clear that the EU stands with the Ukrainian people and their institutions against Russian aggression. With this additional support, the EU continues to contribute to building a modern, democratic and independent Ukraine,” said Josep Borrell, High Representative/Vice-President for a Stronger Europe in the World.
The EU has already provided significant assistance to Ukraine in recent years under its MFA programme. Since 2014, the EU has provided over €5 billion to Ukraine through five MFA programs to support the implementation of a broad reform agenda in areas such as the fight against corruption, an independent judiciary, the rule of law and improving the business climate. . In addition, earlier this year the Commission provided an emergency MFA loan of €1.2 billion, for which the Commission raised funds in two private placements in the first half of 2022.
On 18 May, the Commission presented in a Communication the EU’s immediate response plans to close Ukraine’s financing gap, including through an exceptional package of MFAs of up to €9 billion , as well as the longer-term reconstruction framework. The first billion euros of the AMF’s exceptional envelope was disbursed in two equal tranches on August 1 and 2, according to the press release. Macro-financial assistance (MFA) operations are part of a broader EU engagement with neighboring countries and are designed as an exceptional EU crisis response instrument. They are available for countries neighboring the EU with serious balance of payments problems. In addition to the MFA, the EU supports Ukraine through several other instruments, including humanitarian aid, budget support, thematic programmes, technical assistance and blending facilities to support investment. (ANI)
(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)