EU sends first EUR 4.2 bn reconstruction payment to Ukraine
Ukraine war tank - Photo © European Union 2022 - source EP
(BRUSSELS) - Ukraine is set to receive close to EUR 4.2 billion in funds after EU states gave the green light to the first regular payment of grants and loans under the EU's Ukraine Facility.
The aim of the Ukraine Facility, which entered into force on 1 March 2024, is to support Ukraine's macro-financial stability and the functioning of its public administration.
The Facility 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.
With its decision, the EU Council concludes that Ukraine has satisfied the necessary conditions and reforms envisaged in the Ukraine Plan for receiving the funds, which will be disbursed from the Ukraine Facility.
The plan for reforms 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.
The Council has also stressed the importance of allocating the money as soon as possible, given the difficult fiscal situation in Ukraine.
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.
In May 2024 the Council concluded that the Ukraine Plan fulfilled the preconditions for Ukraine to receive up to €50 billion in support under the Ukraine Facility.