European Commission disburses first tranche of the new €1 billion macro-financial assistance for Ukraine
The European Commission, on behalf of the EU, has today disbursed the first half (€500 million) of a new €1 billion macro-financial assistance (MFA) operation for Ukraine. The second tranche (another €500 million) will be disbursed tomorrow, 2 August. The decision about this new exceptional MFA was adopted by the European Parliament and the Council on 12 July 2022.
This additional MFA of €1 billion is part of the extraordinary effort by the EU, alongside the international community, to help Ukraine to address its immediate financial needs following the unprovoked and unjustified aggression by Russia. It is the first part of the exceptional MFA package of up to €9 billion announced in the Commission's communication of 18 May 2022 and endorsed by the European Council of 23-24 June 2022. It complements the support already provided by the EU, including a €1.2 billion emergency MFA loan paid out in the first half of the year. Taken together, the two strands of the programme bring the total MFA support to Ukraine since the beginning of the war to €2.2 billion.
The MFA funds have been made available to Ukraine in the form of long-term loans on favourable terms. The assistance supports Ukraine's macroeconomic stability and overall resilience in the context of Russia's military aggression and the ensuing economic challenges. In a further expression of solidarity, the EU budget will cover the interest costs on this loan. As for all previous MFA loans, the Commission borrows funds on international capital markets and transfers the proceeds on the same terms to Ukraine. This loan to Ukraine is backed for 70% of the value set aside from the EU budget.
This financial assistance comes in addition to the unprecedented support provided by the EU to date, notably humanitarian, development and defence assistance, the suspension of all import duties on Ukrainian exports for one year or other solidarity initiatives, e.g. to address transport bottlenecks so that exports, in particular of grains, could be ensured.
Members of the College said:
Valdis Dombrovskis, Executive Vice-President for An Economy that Works for People said:
“This €1 billion payment is a first part of our €9 billion macro-financial assistance package to help Ukraine meet its emergency financial needs caused by Russia's brutal war. At the same time, we are working closely with EU Member States and our international partners on the next steps to rebuild Ukraine for the longer term. The EU will provide all political, financial, military and humanitarian support required to assist Ukraine and its people in the face of Russia's continued illegal aggression – for as long as it takes.”
Josep Borrell, High Representative of the European Union for Foreign Affairs and Security Policy, said:
“Our support to Ukraine is unwavering. We will continue to support the Ukrainian people -politically, financially and with military means - in facing the adversity and challenges caused by Russia's aggression. Ukraine is defending its sovereignty and right to exist with determination and dignity. The EU is standing by Ukraine in these endeavours and will continue to do so”.
Johannes Hahn, Commissioner for Budget and Administration, said:
“The Commission's quick disbursement of the first tranche of the exceptional MFA loan of €1 billion shows the EU's unwavering solidarity with Ukraine and its people. The EU budget plays a central role in this solidarity by backing these funds for 70% of their value and covering the interest costs of this loan. A further example that the EU budget delivers also for our partners in times of crisis.”
Paolo Gentiloni, Commissioner for Economy, said:
“With this disbursement the European Commission continues to support Ukraine in shoring up its public finances. In the face of Russia's unrelenting and brutal aggression, the EU must remain unwavering in its solidarity with the Ukrainian people. Work is ongoing on a proposal for the second part of this exceptional macro-financial assistance, as announced in May and endorsed by the European Council.”
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