European Parliament approves establishment of EUR 50 billion Ukraine Facility

At a plenary meeting in Strasbourg, the European Parliament has approved the creation of the Ukraine Facility worth EUR 50 billion in the EU budget for 2024-2027, as delivered by the Members of the European Parliament, Michael Gahler and Eider Gardiazabal Rubial, and the proposals of the Council of the EU in this regard.

The decision was approved with 536 votes in favour, 40 against and 39 abstentions, Ukrinform reported.

The Ukraine Facility is intended to help Ukraine overcome social, economic, and environmental consequences of Russian armed aggression, promote Ukraine’s reconstruction, recovery, and modernization, as well as the implementation of necessary reforms for the state to gain membership in the EU.

“The Ukraine Facility’s main objective includes assistance in maintaining the country’s macro-financial stability and alleviating Ukraine’s external and internal financial difficulties; reconstruction and modernization of war-damaged infrastructure, namely energy infrastructure, water supply systems, internal and cross-border transport networks, including railways, roads, bridges, border crossing points,” the document reads.

Separately, the document provides for social aid, namely to internally displaced persons, war veterans, and the most vulnerable social groups, and to rebuild the housing destroyed during hostilities.

The measures provided in the Ukraine Recovery Plan, which should be prepared by Ukraine, will be implemented using the Ukraine Facility and should include an accelerated transition to sustainable and inclusive economy for Ukraine’s further integration into the EU’s single market and the key reforms, in particular those related to the judicial system, democracy and rule of law, the fight against corruption and crime.

Support from the Ukraine Facility shall be additional to the support provided under other EU programmes and instruments. Activities eligible for funding under this Regulation may receive support from other EU programmes and instruments provided that such support does not cover the same costs.

The regulatory rules for the use of the Ukraine Facility also take into consideration the green transition and the needs of the protection of the environment. In particular, the Ukraine Facility should not support activities or measures which promote investments in fossil fuels, or that do not respect the principle of ‘do no significant harm’, including to biodiversity or the climate.

The Ukraine Facility should contribute to adherence to the United Nations Framework Convention on Climate Change and the Paris Agreement adopted under that Convention, and should not contribute to environmental degradation or cause harm to the environment or climate.

The support under the Facility will be made available under the precondition that Ukraine continues to respect effective democratic mechanisms and institutions, including a multi-party parliamentary system and the rule of law, and to guarantee respect for human rights, including the rights of persons belonging to minorities.

“The European Commission and the Member States will ensure the coherence, consistency, complementarity and transparency of their support, in particular through regular consultations and frequent exchanges of information during the different phases of the support cycle with relevant stakeholders, including at local and regional level,” reads the document.

The financial support for Ukraine under the Ukraine Facility in the form of loans will be available for the period from January 1, 2024 to December 31, 2027. 

“Member States, third countries, international organizations, international financial institutions, and other sources may make additional financial contributions to the (Ukraine) Facility… Additional proceeds received as external profits in accordance with EU legislation on restrictive measures in connection with Russia’s actions to destabilize the situation in Ukraine should be added to these resources,” the document says.

Loans under the Ukrainian Facility are issued for a period of up to 35 years. The European Union may bear the costs of financing, liquidity management costs, and administrative costs associated with borrowing and lending (“loan cost subsidy”), except for costs that may be associated with early repayment of the loan. The EU will also cover the cost of borrowing between January 1, 2024 and December 31, 2027, within the limits set by the annual EU budgets.

Ukraine, after submitting the Ukraine Recovery Plan, may request an advance funding of 7% of the grant amount (EUR 17 billion – ED.) provided for by the Ukrainian Facility.

The European Commission may decide to allocate limited and extraordinary assistance to Ukraine, so-called “transitional financing,” to maintain Ukraine’s macro-financial stability. The amount of such “transitional financing” should not exceed EUR 1.5 billion per month.

The regulatory rules for the use of the Ukraine Facility separately define the EU’s efforts to create favourable conditions for the inflow of foreign investment into Ukraine and mitigate the risks associated with Russian aggression against Ukraine.

As it was previously reported, on February 1, during a special meeting of the European Council, the leaders of the EU countries adopted a political decision to amend the EU’s multi-annual budget for 2021-2027, in particular, regarding the establishment of the Ukraine Facility with a total budget of EUR 50 billion for 2024-2027 for immediate budget support of Ukraine, as well as for its further recovery and modernization on the path to EU membership.

On February 5, the European Parliament and the Council of the EU reached a provisional agreement on setting up the Ukraine Facility with a total budget of EU 50 billion euros in the budget of the European Union for the period of four years.

After the formal approval of these proposals by the European Parliament and the Council, the text of this agreement will be published in the Official Journal of the European Union, after which the document will enter into force.

ukrinform.ua