The European Parliament and the Council of the EU have reached a preliminary agreement on a new mechanism for supporting Ukraine through the creation of the Ukrainian Fund in the amount of €50 billion in the budget of the European Union.
This was reported on the website of the Council of the European Union.
"The EU is ready to support Ukraine as long as necessary. The Ukraine Facility will allow us to channel consistent and predictable support to Ukraine to help its people rebuild their country in the face of unprecedented challenges posed by Russiaʼs war of aggression. At the same time, this support will help Ukraine implement the reforms and modernization efforts it needs to advance on the path to future EU membership," noted Belgian Finance Minister Vincent van Peteghem.
The fund will combine EU budget support into a single instrument that will allow providing assistance for the period 2024-2027.
The support mechanism in Ukraine is structured according to three components:
- The Cabinet of Ministers will develop a special plan that will determine the intentions for the restoration, reconstruction and modernization of the country, as well as contain reform plans within the framework of the EU accession process. Financial support in the form of grants and loans for Ukraine will be provided on the basis of the implementation of this plan, subject to the necessary conditions and payment schedule.
- The European Union will provide support in the form of budget guarantees and will combine grants and loans from public and private institutions.
- Financial support will stimulate Ukraine to make its legislation compatible with EU legislation, as well as to carry out structural reforms on the way to EU membership in the future.
The preliminary agreement reached between the European Parliament and the Council of the EU defines the financial aspects in the context of the creation of the Ukrainian Fund. The fundʼs total budget of €50 billion will be distributed as follows: €33 billion in loans and €17 billion in grants.
Grants will be allocated through a new specialized instrument proposed to be created as part of the mid-term review of the EUʼs multi-annual budget. Loans will be allocated through reserves of the EUʼs own resources, similar to the financing used during the implementation of macro-financial assistance for Ukraine.
Ukraine can make a request, within the framework of the Ukrainian plan, for an advance payment in the amount of up to 7% of the Fundʼs capacity.
Part of the investment part of the Plan in Ukraine and the Framework Investment Program will be allocated to green investments.
- On February 1, the leaders of the EU member states unanimously agreed to provide financial support to Ukraine in the amount of €50 billion. €17 billion is direct financial aid to Ukraine, and the rest are loans that Kyiv will receive over the next four years. Ukraine expects to receive the first payment of €4.5 billion in March.
- On June 20, 2023, the European Commission proposed to create the Ukraine Facility for the years 2024-2027 for €50 billion in grants and loans. In October, the European Parliament amended the EU budget to finance this fund.
- The aid fund for Ukraine was created by the decision of the summit of EU leaders in December 2023, but they could not approve the allocation of €50 billion, as Hungary blocked the decision.