Ukraine, EU sign credit agreement under Ukraine Facility

Ukraine, EU sign credit agreement under Ukraine Facility

National Bank of Ukraine (NBU) Governor Andriy Pyshnyy and Ukrainian Finance Minister Sergii Marchenko have signed a credit agreement under the Ukraine Facility.

The relevant statement was made by the National Bank’s press service on Facebook, an Ukrinform correspondent reports.

“Today [June 24 – Ed.], the document has also been signed by partners from the European Commission. The credit agreement will enable Ukraine to attract up to EUR 27 billion in support of the country’s state budget in 2024-2027 under the EU’s Ukraine Facility instrument, totaling EUR 50 billion,” the report states.

The funds provided under this agreement will ensure predictable and flexible support for the Ukrainian state, adjusted to the unprecedented challenges caused by Russian armed aggression.

According to the NBU, shortly after this agreement comes into effect, Ukraine will also receive EUR 1.9 billion in pre-financing from the EU.

On May 14, 2024, the Council of the EU approved the Ukraine Plan for 2024-2027 under the Ukraine Facility. This plan contains a list of structural reforms for this period, which are aimed not only at recovery and reconstruction efforts but also Ukraine’s progress on its path towards EU membership and support for European integration processes in the country.

“At the same time, this plan does not include a full list of all planned short- and medium-term reforms. It is only part of the government’s plans,” the NBU explained.

Additionally, on June 6, 2024, the Verkhovna Rada of Ukraine ratified the agreement between Ukraine and the EU on special financing mechanisms under the Ukraine Facility.

This agreement was signed by the parties in late May 2024 and defines the principles of financial cooperation between Ukraine and the EU, namely with regard to management and control over the use of funds under the Ukraine Facility. This document officially launched the implementation of the Ukraine Plan.

“The Ukraine Facility will include three key components: firstly, direct support to the state budget (EUR 38.27 billion, including EUR 33 billion in loans and EUR 5.27 billion in grants); secondly, a special investment instrument to cover risks in priority sectors (EUR 6.97 billion); thirdly, technical support for the implementation of reforms, as well as interest coverage on loans, including those received earlier (EUR 4.76 billion),” the NBU added.

Tranches will be received once a quarter based on the completion of indicators under the Ukraine Plan and their positive assessment by the EU. Overall, Ukraine is expected to obtain about EUR 16 billion in budget support under the Ukraine Facility this year.

A reminder that, according to Ukrainian Prime Minister Denys Shmyhal, Ukraine has attracted USD 11.8 billion in external financing since early 2024 and expects to receive EUR 1.9 billion under the Ukraine Facility this month.

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