EU Releases €1.5 Billion of Macro-Financial Aid to Ukraine
Today, the European Commission paid Ukraine another tranche of 1.5 billion euros in macro-financial support from the total package of 18 billion euros planned for this year.
Ursula von der Leyen, the President of the European Commission, announced this on her official Twitter page.
"Today we disbursed another 1.5 billion euros to Ukraine. Just this year, we have provided 13.5 billion euros to help Ukraine ensure the operation of hospitals, schools, and other institutions. This also supports Ukraine on its path to the EU, backing transformative reforms. Europe stands firmly by Ukraine," she wrote.
Ukraine received a previous tranche of the same size of macro-financial assistance at the end of August.
It's worth noting that the first tranche of 3 billion euros in macro-financial assistance from the EU was provided to Ukraine in January without requiring any conditions. Previously, EU funds were always provided in exchange for reforms. This is a fundamental principle underlying the mechanism of macro-financial assistance.
According to the agreements, the next 15 billion euros will be given to Ukraine only upon fulfilling its commitments.
According to the Ministry of Finance of Ukraine, last year, state budget expenditures amounted to 2,704 billion hryvnias. Of these, external aid, such as grants and loans, covered 1,045 billion hryvnias, or 38.6%.
If weapons supplies are added, foreign partners cover more than half of Ukraine's budget expenses, primarily EU and NATO countries.
To maintain the Ukrainian economy and help Kyiv win the war, Western support, both military and financial, must continue.
Ukraine has insisted that these funds are for survival and should be provided unconditionally. However, in 2023, the European Union decided to use financial support as a lever for lobbying reforms in Ukraine.
Macro-financial loans are a standard EU instrument to support other countries. Highly favourable terms have been agreed upon to ensure that Ukraine does not end up in a 'debt hole' after receiving 18 billion euros.
The repayment term for Ukraine is 35 years. Ukraine will not have to make payments for the next 10 years. Repayment will only begin in 2033. Ukraine will not pay interest and other servicing fees for this loan.
As a reminder, the European Commission is preparing to recommend membership negotiations for Ukraine in the European Union. Possible interim terms will be discussed by EU leaders as early as this December.