The European Commission has proposed a further €5 billion in macro-financial assistance (MFA) loans to Ukraine as the second part of the exceptional MFA package of up to €9 billion announced in the Commission's communication of 18 May. The Commission disbursed the first €1 billion of this MFA package in early August. The remaining up to €3 billion will be provided as soon as possible.

This proposal is part of the extraordinary effort by the EU, alongside the international community, to help Ukraine to address its soaring financial needs following the unprovoked and unjustified aggression by Russia. It is a key element of the overall short-term liquidity relief measures as announced by the Commission in May 2022 and makes a sizeable contribution to close the outstanding funding gap for the fourth quarter to ensure maintained stability.

Under the proposal, MFA funds will be made available to Ukraine in the form of long-term loans on favourable terms, to be disbursed in a small number of instalments.  In a further expression of solidarity, the EU budget will cover the interest costs and administrative fee payments linked to the loans. As for all previous MFA loans, the Commission will borrow the funds on international capital markets and transfer the proceeds on the same terms to Ukraine.

The loans to Ukraine will be backed by guarantees provided by Member States which will complement the provisioning available from the EU budget. Between the EU budgetary provisions and the Member State guarantees, the loans will be fully secured for 70% of their value.

As soon as the European Parliament and the Council approve today's proposal and the corresponding Memorandum of Understanding and Loan Agreement with the Ukrainian authorities are signed, the Commission will swiftly make available the €5 billion.

Image © European Commission