Europe to provide €50 billion financial aid package to Ukraine

The European Union is ready to propose a financial aid package worth €50 billion to finance priority reconstruction works and current budget expenditures of the Ukrainian government.

This was reported by Bloomberg

The aid package is expected to be announced on the eve of the Ukraine Recovery Conference 2023(URC), to be held in London on June 21-22.

During the meeting in the UK, the partners will focus on consolidating efforts to support Ukraine's "economic and social stabilization," as well as facilitating the further process of Ukraine's recovery from the consequences of a full-scale war.

Speaking on condition of anonymity, Bloomberg was told that the commission is seeking to help the Ukrainian government rebuild the country and will offer its support in the form of concessional loans, grants and guarantees.

Previously, financial assistance from Ukraine's Western partners was made up of borrowings on the markets and loans, meanwhile the current package will be financed by contributions from member states. According to an anonymous Bloomberg source, the aid will cover the most urgent needs of Ukrainians - payment of salaries, pensions and social benefits, as well as financing the restoration of critical infrastructure.

The offer will run from 2024 to 2027 providing funding in the amount of 12.5 billion per year. Earlier this year, the European Union has already allocated €18 billion to Ukraine

Despite the compromise on aid provision, there is an ongoing discussion among EU member states about assessing Ukraine's progress toward finalizing reforms aimed at eradicating corruption and strengthening the rule of law. As noted, this discussion may have a deterrent effect.

This March, the European Commission in cooperation with the Government of Ukraine, the World Bank Group and the United Nations, announced an assessment of the damage caused by Russia's unprovoked war between February 24, 2022 and February 24, 2023. Thus, about $411 billion will be used for priority reconstruction after a year of war. The Ukrainian government estimates that this amount will double after the territory is de-occupied.

To recap, in May, the European Bank for Reconstruction and Development provided scenarios under which Ukraine could recover within 5 years after the war, subject to additional external investment of $50 billion a year.