The financial assistance aims to provide immediate relief to Ukraine’s urgent financing needs that have increased due to Russia’s intensified aggression towards Ukraine.
The repayment of the exceptional MFA loan and eligible bilateral loans from G7 partners under the ‘Extraordinary Revenue Acceleration Loans for Ukraine’ (ERA) initiative, will be ensured by funds coming from future flows of extraordinary revenues stemming from the immobilisation of Russian sovereign assets.
The Ukraine loan mechanism will disburse these funds – as well as possible amounts received as voluntary contributions from member states and third countries or other sources -in the form of financial support to Ukraine, to assist it in servicing and repaying the loans.
The up to €35 billion MFA loan is the EU’s contribution to the G7 loan of up to €45 billion. The new MFA operation will be linked to policy conditions that are consistent with the Ukraine Facility, in particular the Ukraine Plan. The management and control systems proposed under the Ukraine Plan and specific provisions on the prevention of fraud and other irregularities will also apply to the MFA loan.
In view of a speedy adoption and ensuring that the macro-financial assistance reaches Ukraine as soon as possible, member states agreed today that if the European Parliament adopts the Commission’s proposal without changes, the Council will also proceed to adopt the text without modifications.
Next steps
The Council plans to adopt the regulation by written procedure after the European Parliament has adopted the text in first reading. The regulation is expected to enter into force on the day after its publication in the Official Journal of the EU.
The aim is to make the MFA loan available in 2024, with disbursement in 2025, to be repaid over a maximum period of 45 years.
Background
G7 Leaders agreed in June 2024 to provide a loan before the end of 2024 of up to $50 billion (€45 billion) for Ukraine to be repaid with revenues stemming from the immobilisation of Russian sovereign assets via a so-called “Extraordinary Revenue Acceleration initiative” (ERA). This agreement was confirmed by member states in the European Council meeting of 27 June 2024. The financial package agreed today implements these commitments.
EU borrowing to fund the extraordinary MFA loan to Ukraine will be backed by a guarantee from the EU budget headroom.
- Agreement on the proposal for regulation establishing the Ukraine Loan Cooperation Mechanism and providing exceptional macro-financial assistance to Ukraine
- EU response to Russia’s invasion of Ukraine (background information)
- The Ukraine Facility (background information)
Source – EU Council