FantasticSearch

(1) An association agreement between the Union and Ukraine , including a Deep and Comprehensive Free Trade Area, entered into force on 1 September 2017.

(2) In spring 2014, Ukraine embarked on an ambitious reform programme with the aim of stabilising its economy and improving the livelihoods of its citizens. The fight against corruption, as well as constitutional, electoral and judicial reforms, are among the top priorities on the agenda. The implementation of those reforms was supported by consecutive macro-financial assistance programmes, under which Ukraine has received assistance in the form of loans for a total of EUR 6,6 billion. The emergency macro-financial assistance, which was made available in the context of mounting tensions at the border with Russia, pursuant to Decision (EU) 2022/313 of the European Parliament and of the Council , provided EUR 1,2 billion in loans to Ukraine, disbursed in two instalments, each of EUR 600 million, in March and May 2022. The Union’s exceptional macro-financial assistance of up to EUR 1 billion pursuant to Decision (EU) 2022/1201 of the European Parliament and of the Council , provided swift and urgent support to the Ukrainian budget and was fully disbursed in two tranches on 1 and 2 August 2022. That assistance constituted the first stage of the planned full Union’s exceptional macro-financial assistance to Ukraine for up to EUR 9 billion, announced by the Commission in its communication of 18 May 2022 entitled ‘Ukraine Relief and Reconstruction’ and endorsed by the European Council of 23-24 June 2022. This Decision constitutes the second stage in the implementation of that envisaged Union’s exceptional macro-financial assistance. It establishes the basis for providing to Ukraine a further amount of up to EUR 5 billion of macro-financial assistance in the form of loans on highly concessional terms. This Decision should be followed swiftly by the adoption of a further decision implementing the third stage of the planned full Union’s exceptional macro-financial assistance for a further amount of up to EUR 3 billion once the design of that assistance has been determined.

(3) Russia’s unprovoked and unjustified war of aggression against Ukraine since 24 February 2022 has caused Ukraine a loss of market access and a drastic drop in public revenues, while public expenditure to address the humanitarian situation and to maintain the continuity of State services has increased markedly. In that very uncertain and volatile situation, the best estimates of Ukraine’s funding needs by the International Monetary Fund (IMF) point to an extraordinary financing gap of around USD 39 billion in 2022, of which around half could be met if the international support pledged thus far were fully disbursed. The swift provision by the Union of the macro-financial assistance to Ukraine under this Decision is, under the current extraordinary circumstances, considered to be an appropriate short-term response to the sizeable risks to Ukraine’s macro-financial stability. The further amount of up to EUR 5 billion of Union’s exceptional macro-financial assistance under this Decision is to support Ukraine’s macro-financial stabilisation, strengthen the immediate resilience of the country and sustain its capacity towards recovery, thereby contributing to the public debt sustainability of Ukraine and its ability to ultimately be in a position to repay its financial obligations.

(4) The Union’s exceptional macro-financial assistance under this Decision will contribute significantly to satisfying Ukraine’s funding needs as estimated by the IMF and other international financial institutions, taking into account Ukraine’s capacity to finance itself with its own resources. The determination of the amount of the Union’s exceptional macro-financial assistance also takes into account expected financial contributions from bilateral and multilateral donors, the need to ensure fair burden-sharing between the Union and other donors, as well as the pre-existing deployment of the Union’s other external financing instruments in Ukraine and the added value of the overall Union involvement. The Ukrainian authorities’ commitment to close cooperation with the IMF on the design and implementation of short-term emergency measures and their intent to work with the IMF on an appropriate economic programme when conditions permit should be acknowledged. Such a programme was formally requested in August 2022. The Union’s exceptional macro-financial assistance should aim to maintain macro-financial stability and resilience under the war circumstances. The Commission should ensure that the Union’s exceptional macro-financial assistance is legally and substantially in accordance with the key principles and objectives of the measures taken within the different areas of external action and other relevant Union policies.

(5) The Union’s exceptional macro-financial assistance should support the Union’s external policy towards Ukraine. The Commission and the European External Action Service should work closely together throughout the macro-financial assistance operation in order to coordinate, and ensure the consistency of, Union external policy.

(6) A precondition for granting the Union’s exceptional macro-financial assistance should be that Ukraine respect effective democratic mechanisms, including a multi-party parliamentary system, and the rule of law, and guarantee respect for human rights. The ongoing war, and in particular the current state of martial law, should not encroach on those principles, despite the concentration of power in the executive branch.

(7) In order to ensure that the Union’s financial interests linked to the Union’s exceptional macro-financial assistance are protected efficiently, Ukraine should take appropriate measures relating to the prevention of, and fight against, fraud, corruption and any other irregularities linked to that assistance. In addition, provision should be made in the loan agreement for the Commission to carry out checks, for the Court of Auditors to carry out audits and for the European Public Prosecutor’s Office to exercise its competences, in accordance with Articles 129 and 220 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (the ‘Financial Regulation’).

(8) The Union’s exceptional macro-financial assistance should be linked to stringent reporting requirements and policy conditions, to be set out in a memorandum of understanding (the ‘MoU’). Those stringent reporting requirements should aim, under the current war circumstances, to ensure that the funds are used in an efficient, transparent and accountable manner. The policy conditions should aim to strengthen the immediate resilience of Ukraine and its longer-term debt sustainability, thereby reducing risks linked to the repayment of its outstanding and future financial obligations.

(9) In order to ensure uniform conditions for the implementation of this Decision, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council .

(10) The loans provided under this Decision and Decision (EU) 2022/1201 should together have a maximum average maturity of 25 years.

(11) Given that the loans under this Decision and Decision (EU) 2022/1201 imply the same risks for the Union budget and should have together a maximum average maturity of 25 years, the total amount of EUR 6 billion of the Union’s macro-financial assistance to Ukraine under this Decision and Decision (EU) 2022/1201 should be covered by a common methodology for managing the financial and budgetary implications. In particular, the same level of budgetary cover should be established as adequate protection against the possibility of potential non-repayment by Ukraine of some or all of the loans at the scheduled time. The provisions made available from the Union budget against the two sets of loans of the Union’s exceptional macro-financial assistance should be managed as an integrated set of provisions. Such management will enhance the resilience and flexibility of the Union budget in response to any situation of non-payment. Decision (EU) 2022/1201 should therefore be amended accordingly.

(12) The exceptional macro-financial assistance under this Decision and Decision (EU) 2022/1201 constitutes a financial liability for the Union within the overall volume of the External Action Guarantee under Regulation (EU) 2021/947 of the European Parliament and of the Council . The total amount of up to EUR 6 billion of Union’s exceptional macro-financial assistance loans to Ukraine should benefit from 9 % of paid-in provisioning available for macro-financial assistance loans under the External Action Guarantee. The amount of provisioning should be financed from the financial envelope programmed for macro-financial assistance under Regulation (EU) 2021/947 for a total amount of EUR 540 million. That amount should be committed and paid into the common provisioning fund under the multiannual financial framework 2021–2027, laid down in Council Regulation (EU, Euratom) 2020/2093 .

(13) In accordance with Article 210(3) of the Financial Regulation, the contingent liabilities arising from budgetary guarantees or financial assistance borne by the Union budget are to be deemed sustainable if their forecast multiannual evolution is compatible with the limits set by Regulation (EU, Euratom) 2020/2093 and the ceiling on annual payment appropriations set out in Article 3(1) of Council Decision (EU, Euratom) 2020/2053 . In order to enable the Union to provide substantial support to Ukraine through the Union’s exceptional macro-financial assistance in unprecedented amounts in a financially safe manner, while preserving the high credit standing of the Union and, hence, its capacity to deliver effective financing in the context of both its internal and external policies, it is essential to adequately protect the Union budget from the materialisation of those contingent liabilities and to ensure they are financially sustainable within the meaning of Article 210(3) of the Financial Regulation.