European Commission proposes unprecedented support package for Ukraine – up to €18 billion for 2023
The European Commission today proposed an unprecedented support package for Ukraine of up to €18 billion for 2023. These funds will be provided in the form of highly concessional loans to be repaid in regular instalments starting in 2033.
“This stable, regular and predictable financial assistance – averaging €1.5 billion per month – will help cover a significant part of Ukraine’s short-term funding needs for 2023, which the Ukrainian authorities and the International Monetary Fund estimate at €3 to €4 billion per month,” says a press release from the European Commission.
Thanks to this package, Ukraine will be able to keep on paying wages and pensions and keep essential public services running, such as hospitals, schools, and housing for relocated people. It will also allow Ukraine to ensure macroeconomic stability, and restore critical infrastructure destroyed by Russia in its war of aggression, such as energy infrastructure, water systems, transport networks, roads and bridges.
The funds will be provided through highly concessional loans, to be repaid in the course of maximum 35 years, starting in 2033. The EU also proposes to cover Ukraine’s interest rate costs, through additional targeted payments by Member States into the EU budget.
EU Member States and third countries will also be able to add more funds to the instrument, to be used as grants, should they wish to do so. The funds will then be channelled through the EU budget, allowing Ukraine to receive the support in a coordinated manner.
The MFA+ instrument will be accompanied by reforms to help Ukraine advance on its path to becoming a member of the EU. This means that the Ukrainian government will have to complement the financial support with sectoral and institutional reforms, including anti-corruption and judicial reforms, respect of the rule of law, good governance, and modernisation of the national and local institutions.
The Commission’s proposal will need approval by the European Parliament and EU Member States in the Council before entering into force.
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