The European Commission has proposed a further €5 billion in macro-financial assistance (MFA) loans to Ukraine as the second 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.
The Commission disbursed the first €1 billion of this MFA package in early August. The remaining up to €3 billion will be provided as soon as possible. The proposal will complement 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 would bring the total MFA support to Ukraine since the beginning of the war to €7.2 billion, and could reach up to €10 billion once the full package of exceptional MFA to Ukraine becomes operational this year.
Under the proposal, MFA funds will be made available to Ukraine in the form of long-term loans on favourable terms, to be disbursed in a small number of instalments. The EU budget will also cover the interest costs and administrative fee payments linked to the loans. As for all previous MFA loans, the Commission will borrow the funds on international capital markets and transfer the proceeds on the same terms to Ukraine.
The loans to Ukraine will be backed by guarantees provided by Member States which will complement the provisioning available from the EU budget. Between the EU budgetary provisions and the Member State guarantees, the loans will be fully secured for 70% of their value.
As soon as the European Parliament and the Council approve the proposal and the corresponding Memorandum of Understanding and Loan Agreement with the Ukrainian authorities are signed, the Commission will swiftly make available the € 5 billion.
You can find more details at the Commission’s website.
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