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(1) Since the beginning of Russia’s unprovoked and unjustified war of aggression against Ukraine on 24 February 2022, the Union, its Member States and European financial institutions have mobilised unprecedented support for Ukraine’s economic, social and financial resilience. That support combines support from the Union budget, including exceptional macro-financial assistance and support from the European Investment Bank and the European Bank for Reconstruction and Development, fully or partially guaranteed by the Union budget, as well as further financial support by Member States.

(2) The provision by the Union of macro-financial assistance of up to EUR 18 billion under Regulation (EU) 2022/2463 of the European Parliament and of the Council was considered an appropriate response to Ukraine’s financing gap for 2023 and helped to mobilise significant financing from other donors and international financial institutions. It constituted a major contributing factor to Ukraine’s macroeconomic and financial resilience at a critical time.

(3) On 29 February 2024, Regulation (EU) 2024/792 of the European Parliament and of the Council established the Ukraine Facility as an exceptional medium-term instrument that brings together the bilateral support provided by the Union to Ukraine, ensuring coordination and efficiency (the ‘Ukraine Facility’). Over the period 2024 to 2027, the Ukraine Facility helps address Ukraine’s financing needs and contributes to its recovery, reconstruction and modernisation needs, while at the same time supporting Ukraine’s reforms effort as part of its path towards accession to the Union. The Ukraine Facility has put into action the Union’s unwavering commitment to providing continued financial support to Ukraine and its people.

(4) Russia’s war of aggression against Ukraine has caused tremendous damage in Ukraine, with estimated recovery and reconstruction costs of USD 486 billion as of 31 December 2023. Moreover, Ukraine has lost access to international financial markets and experienced a significant drop in public revenue, while public expenditure has increased substantially. Against that background, substantive funding needs for the coming years can be foreseen.

(5) On 30 March 2023, the International Monetary Fund (IMF) agreed with Ukraine a USD 15,6 billion four-year programme under the Extended Fund Facility (EFF) to sustain economic and financial stability at a time of exceptionally high uncertainty, restore debt sustainability, and promote reforms that support Ukraine’s recovery in the post-war period. The IMF programme, together with financing assurances from the G7 Leaders, the Union and other donors, is designed to address Ukraine’s balance-of-payments financing needs and restore medium-term external viability. To date, Ukraine has successfully completed four programme reviews under the EFF, thus underscoring the Ukrainian authorities’ steadfast commitment to conducting reforms and prudent policy-making. The baseline total financing gap over the IMF programme period is estimated by the IMF at USD 121,9 billion.

(6) In view of the exceptionally elevated uncertainty surrounding the outlook regarding the situation in Ukraine, on the occasion of the fourth programme review under the EFF, the IMF presented an updated downside scenario which factors in the economic shock resulting from a more intense war running into 2025. As a consequence of the adverse impact on economic sentiment, migration, increasing pressure on energy supply, impairment of export capacities, and in particular defence spending, the total financing gap under that downside scenario would risk increasing to USD 140,7 billion over the IMF programme period. Given the continued intensity of the war, and the damage to Ukraine’s critical civilian infrastructure from increased large-scale attacks by Russia, Ukraine needs to mobilise significant additional resources for its budgetary and long-term recovery and reconstruction priorities. As a result and given that a residual financing gap remains over and above the resources already provided by the Union, other donors and international financial institutions, including the IMF, the Union should continue to provide an appropriate response.

(7) The G7 Leaders, in their Communiqué adopted on 14 June 2024 in Apulia, reaffirmed their unwavering support for Ukraine and their strong commitment to helping Ukraine meet its urgent short-term financing needs, as well as to supporting its long-term recovery and reconstruction priorities. To that end, G7 Leaders announced the launch of the ‘Extraordinary Revenue Acceleration Loans for Ukraine’ initiative, in order to make available approximately USD 50 billion in additional funding for Ukraine’s military, budget and reconstruction needs by the end of 2024. G7 Leaders announced their intention to provide financing that will be serviced and repaid by future flows of extraordinary revenues stemming from the immobilisation of Russian sovereign assets held in the Union and other relevant jurisdictions.

(8) In its conclusions of 27 June 2024, the European Council invited the Commission, the High Representative and the Council to take work forward, while addressing all relevant legal and financial aspects, in order to provide additional funding for Ukraine by the end of the year in the form of loans serviced and repaid by future flows of the extraordinary revenues together with G7 partners as discussed by G7 Leaders, to support Ukraine’s current and future military, budget and reconstruction needs. The European Council also stated that, subject to Union law, Russia’s assets should remain immobilised until Russia ceases its war of aggression against Ukraine and compensates it for the damage caused by this war.

(9) In the context of Russia’s continued war of aggression against Ukraine, it is necessary to ensure that Ukraine is provided with sufficient and continuous financial support. To that end, a Ukraine Loan Cooperation Mechanism (the ‘Mechanism’) should be established to provide Ukraine with non-repayable financial support with a view to assisting the country to repay loans provided to support it. The Mechanism should receive resources, including from future flows of the extraordinary profits stemming from Russia’s immobilised assets, and disburse those resources on a regular basis to Ukraine to cover the principal, interest and any other related costs of loans. Furthermore, in order for the Union to directly help Ukraine meet its financing needs, the Union should provide exceptional macro-financial assistance to Ukraine in the form of a loan (the ‘MFA Loan’) to be supported by the Mechanism.

(10) On 21 May 2024, the Council adopted Decision (CFSP) 2024/1470 , which amended Council Decision 2014/512/CFSP . Decision (CFSP) 2024/1470 states, in recital 28, that the restrictive measures linked to the prohibition of transactions related to the management of the assets and reserves of the Central Bank of Russia should remain in place until Russia ceases its war of aggression against Ukraine and compensates Ukraine for the damage caused by this war.

(11) On 21 May 2024, the Council adopted Regulation (EU) 2024/1469 , which amended Council Regulation (EU) No 833/2014 . Regulation (EU) 2024/1469 gives effect to certain measures provided for in Decision (CFSP) 2024/1470. Those measures comprise the rules on how the net profits ensuing from the unexpected and extraordinary revenues accruing to central securities depositories as a result of the implementation of the prohibition laid down in Article 1a(4) of Decision 2014/512/CFSP and in Article 5a(4) of Regulation (EU) No 833/2014 are to be directed to support Ukraine, including through Union programmes which are financed from the Union budget, consistent with applicable contractual obligations, and in accordance with Union and international law, in coordination with partners. In particular, central securities depositories holding assets and reserves of the Central Bank of Russia with a total value exceeding EUR 1 million are to make a financial contribution to the Union equivalent to 99,7 % of the net profits stemming from the immobilisation of Russian sovereign assets and accumulating since 15 February 2024.

(12) The financial contribution from the central securities depositories to the Union should be due as long as the restrictive measures linked to the prohibition of transactions related to the management of the assets and reserves of the Central Bank of Russia are in place, and should remain in place until Russia ceases its war of aggression against Ukraine and compensates Ukraine for the damage caused by that war.

(13) On 24 October 2024, the Council adjusted to 95 % the percentage of the amounts of the financial contribution due by central securities depositories to be used to support Ukraine through Union programmes set out in Decision 2014/512/CFSP. On the same date, the Council adjusted the allocation of the amounts of the financial contribution paid to the Union budget as external assigned revenue, set out in Annex XLI to Regulation (EU) No 833/2014, and allocated 100 % of that contribution to the Mechanism. The Union has therefore taken the necessary steps to ensure the continued use of the financial contribution for the Mechanism.