On Wednesday, MEPs has given a green signal to a €1.2 billion macro-financial loan to help Ukraine cover its external financing needs in 2022.
Parliament agreed to a Commission proposal to assist Kyiv with macro-financial assistance, an emergency resource for EU neighbourhood nations that are struggling to pay their bills. It will be paid out in two instalments.
Half of the €1.2 billion loans can be disbursed immediately to foster stability in Ukraine if certain preconditions are met.
The loan plays a role as “swift support in a situation of acute crisis & to empower the nation’s resilience,” the proposal states. In order for the money to be disbursed, the nation must show progress in implementing a macroeconomic programme set up by the International Monetary Fund (IMF). MEPs focused that “effective democratic mechanisms, including a multi-party parliamentary system, and the rule of law, and ensures respect for human rights” are also preconditions for disbursement.
The resolution, that has been adopted under the urgency procedure, passe with 598 votes for, 55 against and 41 abstentions.
Ukraine’s external financing has dried up due to Russia’s military threat & the worsening economic situation in the wake of the COVID-19 pandemic.
According to the Commission, since 2014, the European Union and European financial institutions have allocated over €17 billion in grants and loans to the country. €5 billion of this came through five MFA programmes to support the implementation of broad reform.
The IMF identified a $2.5 billion (€2.2 billion) gap in Ukraine’s financing needs for 2022.