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Ukraine: €500 million of EU Macro-Financial Assistance disbursed

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11295516503_a027f76fcf_nThe European Commission, on behalf of the EU, today (17 June) disbursed €500 million to Ukraine, the first loan tranche from the new EU Macro-Financial Assistance (MFA II) programme for the country. This follows a disbursement of €100m on 20 May from the previously agreed MFA programme (MFA I). The objective of both MFA programmes is to support Ukraine economically and financially in the current critical stage of its development.

 European Commission Vice President for Economic and Monetary Affairs and the Euro Olli Rehn said: "The European Union is providing essential support for Ukraine's efforts to address its major economic challenges. Today's disbursement is a further concrete sign of European solidarity towards the people of Ukraine. It is vital that Ukraine seizes this opportunity to take forward reforms to deliver budgetary stability, sustainable growth and job creation."

Total EU MFA support for Ukraine comes to €1.61 billion, with €1.01bn remaining after today's disbursement. The assistance is part of a wider package of support for Ukraine announced by the European Commission on 5 March and endorsed by EU leaders at the European Council of 6 March. The EU's MFA complements the resources made available by the International Monetary Fund (IMF) and other donors in the context of the stabilization and reform programme recently launched by the Ukrainian authorities. The assistance aims to reduce the economy’s short-term balance of payments and fiscal vulnerabilities.

Beyond today's disbursement, subsequent payments will be conditional on the implementation of specific economic policy actions. These are outlined in two Memoranda of Understanding – which were signed by the European Commission and the Ukrainian authorities in 2013 and 2014 respectively. The MFA, besides supporting Ukraine in meeting its immediate external financing needs, also aims to underpin economic reforms which have been demanded by the Ukrainian people themselves. The conditionality linked to this programme focuses on public finance management and anti-corruption, trade and taxation, the energy sector (including provisions for increased social subsidies for the most vulnerable households) and financial sector reforms.

Background

Macro-Financial Assistance is an exceptional EU crisis-response instrument available to the EU's neighbouring partner countries experiencing severe balance of payments problems. It is complementary to the assistance provided by the IMF. MFA loans are financed through EU borrowings on capital markets. The funds are then on-lent with similar financial terms to the beneficiary countries. The funding for the €500m tranche disbursed today was raised on the financial markets on 10 June by the European Commission on behalf of the European Union.

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