News & Analysis

EU offers Ukraine more help, but says country must deliver on reform

The European Commission has agreed to offer Ukraine macro-financial assistance (MFA) of up to 1 billion euros in the form of medium- and long-term loans. The EU loans are intended to support the continued economic stabilisation of the country, including through structural and governance reforms.

Commission Vice-President responsible for the Euro and Social Dialogue Valdis Dombrovskis, also in charge of financial stability, financial services and capital markets union, said: “Europe strongly supports Ukraine on its path of economic recovery and reform. The new programme of EU macro-financial assistance will help Ukraine reduce its economic vulnerabilities and enhance stability. At the same time, by implementing important reforms related to the new MFA operation, especially in the area of the fight against corruption, Ukraine needs to deliver on the expectations of its citizens and send a strong signal to its international partners and investors.”

The proposed new assistance complements three previous MFA programmes, through which the EU has supported Ukraine with a total of 2.8 billion euros since the onset of the crisis in 2014, and a programme of the International Monetary Fund (IMF).

The funds of the new assistance programme will be disbursed in two instalments of up to 500 million euros. Each disbursement is conditional on the implementation of specific policy measures agreed between Ukraine and the EU. The agreed policy programme covers in particular the fight against corruption, public finance management, governance of state-owned enterprises and banks as well as key social policies. The programme is consistent with the reform path agreed between the EU and Ukraine in the context of Ukraine’s Association Agreement.

As is always the case with macro-financial assistance, disbursements will also be dependent on the fulfilment of the political preconditions, which require Ukraine to continue respecting effective democratic mechanisms, including a multi-party parliamentary system, and the rule of law and guaranteeing the respect for human rights. Finally, disbursements will be contingent on progress with Ukraine’s programme with the IMF.