15:29 26.06.2018

Council of EU approves 4th MFA program worth EUR 1 bln for Ukraine

3 min read
Council of EU approves 4th MFA program worth EUR 1 bln for Ukraine

 The Council of the European Union has finally approved the fourth macro-financial assistance (MFA) program for Ukraine, which envisages the allocation of EUR 1 billion in loans when Kyiv fulfills a number of conditions; only Hungary voted against the decision, the institution said on its website

"Today's decision is recognition of our progress on the reform path and confirmation of unity and solidarity with Ukraine in countering internal and external challenges," Ukrainian President Petro Poroshenko wrote on his Facebook page, welcoming the decision of the Council of the EU.

The objective of the allocation is to cover the financial gap and support economic stabilization and a program for structural reforms.

As it was reported, the conditions for the MFA will be established in a Memorandum of Understanding between Ukraine and the European Commission.

The Council of the EU, the European Parliament and the European Commission preliminarily approved the provision of financial assistance for Ukraine in the amount of EUR 1 billion, presenting the conditions in a joint statement. The conditions will be laid down in a memorandum of understanding between Ukraine and the Commission. The further disbursements will be conditional on Ukraine respecting democratic mechanisms and the rule of law, and guaranteeing respect for human rights.

According to the joint statement, the economic policy and financial conditions of the Memorandum of Understanding shall include inter alia obligations to strengthen the governance, the administrative capacities and the institutional set-up in particular for the fight against corruption in Ukraine, notably regarding a verification system for asset declarations, the verification of companies' beneficial ownership data and a well-functioning specialised anticorruption court in line with the recommendations of the Venice Commission. Conditions on combating money laundering and tax avoidance shall also be considered.

A pre-condition for granting the Union's macro-financial assistance should be that Ukraine respects effective democratic mechanisms, including a multi-party parliamentary system.

According to the published materials, the loans shall have a maximum average maturity of 15 years. It will be divided into two disbursements, which sizes will be approved additionally. The Union's macro-financial assistance shall be made available for a period of two and a half years, starting from the first day after the entry into force of the Memorandum of Understanding with Ukraine.

The Union's macro-financial assistance shall be disbursed to the National Bank of Ukraine. Subject to the provisions to be agreed in the Memorandum of Understanding, including a confirmation of residual budgetary financing needs, the Union funds may be transferred to the Ukrainian Ministry of Finance as the final beneficiary.

The EU recalled that since May 2014 Ukraine has received EUR 2.81 billion of macro-financial assistance from the Union. Following its technical mission of November 2017, the International Monetary Fund (IMF) revised its estimates of Ukraine's external financing needs, identifying an additional gap of $4.5 billion for 2018 and 2019.

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