The finance ministers of the European Union on Tuesday has approved an EU Commission proposal for €1 billion in macro-financial assistance to Ukraine, to be provided as a long-term concessional loan.
An EU budget guarantee will back the amount, and the EU budget will subsidize interest payments.
The help is part of an international effort to plug Ukraine’s budget deficit and avert a financial crisis in the war-torn nation.
Meanwhile, Czech Finance Minister Zbyněk Stanjura said, “This will give Ukraine the required funds to cover urgent needs and ensure the operation of critical infrastructure.” Prague is holding the rotating presidency of the Council of the European Union.
But a broader help package of up to €9 billion supported by European Union nation guarantees, proposed by the Commission in May & endorsed by European Union leaders, failed to gather the support of Germany. Berlin argues that loans add to Ukraine’s debt substantiality issues and advocates instead for grants. It has provided a €1 billion grant to Kyiv.
Following months of haggling, the Commission went ahead with a smaller amount to raise and disburse funds in July, after agreeing with Ukraine on conditions including “enhanced transparency and reporting on the use of funds.”
Discussions on further assistance and broader plans on financing Ukraine’s reconstruction continues, and the Commission will likely present proposals after the summer break, said a European Union diplomat.