Brussels (The Brussels Morning Newspaper) – The European Council approves the first payment of about €4.2 billion under the Ukraine Facility.
Ukraine is assigned to receive close to €4.2 billion in funds after the EU Council greenlighted the first regular payment of contributions and loans under the EU’s Ukraine Facility, to defend Ukraine’s macro-financial strength and the functioning of its public administration.
How Will the EU’s Ukraine Facility Support Economic Reforms?
In a decision adopted, the EU Council found that Ukraine had fulfilled the requirements and reforms envisaged in the Ukraine Plan for acquiring the funds, which will be spent from the Ukraine Facility. These reforms protect public financial management, governance of state-owned companies, business environment, energy and demining. It also highlighted the importance of giving the money as soon as possible, given the challenging fiscal situation in Ukraine.
The Ukraine Plan outlines Ukraine’s purposes regarding the recovery, reconstruction and modernisation of the country and the reforms it intends to undertake as part of its EU accession procedure in the next four years. In May 2024 the EU Council concluded that the Ukraine Plan fulfilled the preconditions for Ukraine to obtain up to €50 billion in support under the Ukraine Facility.
What Are the Goals of the Ukraine Plan for 2024-2027?
The Ukraine Facility, which came into force on 1 March 2024, expects up to €50 billion of stable financing, in grants and loans, to help Ukraine’s recovery, reconstruction, and modernisation for the duration of 2024 to 2027. Of this, up to €32 billion is indicatively committed to sustain reforms and investments set out in the Ukraine Plan, whereby disbursements will be prepared for the delivery of specified indicators. Since it entered into force, the Ukraine Facility has already spent €6 billion by way of bridge financing and €1.89 billion in pre-financing, after the completion of agreed policy conditions.
How Will the €50 Billion Ukraine Facility Transform Ukraine?
In the Ukraine Plan presented on 20 March 2024, Ukraine drafted its vision for reconstruction, modernisation and the reforms it plans to undertake as part of its EU accession process. The plan highlights structural reforms and investments in the sectors with the biggest growth potential. It addresses progress in public administration, highlighting good governance, commitment to the rule of law and the fight against corruption and fraud.
What Reforms Are Required for Full Access to Ukraine Facility Funds?
In its examination dated 15 April 2024, the EU Commission established that the Ukraine Plan satisfies the criteria established by the Ukraine Facility Regulation, and offered in-depth and extensive research covering the consequence of the war of aggression of Russia on Ukraine, the macroeconomic perspective country, and challenges related to Ukraine’s recovery, reconstruction and modernisation, including the requirement for external funding, expanded labour force, government’s capacity to enforce reforms as well as transparency and accountability at all phases.
If all suggested reforms and investments are fully enforced, the assessment is that Ukraine’s GDP could rise by 6.2% by 2027 and by 14.2% by 2040 and could also usher in a decline of the debt by about 10 per cent effectiveness of GDP by 2033.
