EC approves Kiev-proposed plan to begin 50 bln euros Ukraine Facility financing
MOSCOW. April 16 (Interfax) - The European Commission has approved the plan drafted by the Ukrainian authorities to implement the Ukraine Facility program, Ukrainian media reported, quoting a European Commission's press release.
"The Commission has adopted a proposal for a [European] Council Implementing Decision that assesses positively the Ukraine Plan, Ukraine's comprehensive reform and investment strategy for the next four years. This important step paves the way for regular and predictable support to Ukraine under the EU's up to 50 billion euros Ukraine Facility," the press release said.
Following the Commission's positive assessment of the Ukraine Plan, member states have one month to adopt the Council Implementing Decision put forward by the Commission, which would enable the Commission to disburse up to 1.89 billion euros in pre-financing until regular disbursements tied to the implementation of reform and investment indicators under the Ukraine Plan would start.
The EC said the Ukraine Facility foresees up to 50 billion euros to support Ukraine's recovery, reconstruction, and modernization for the period to 2027.
"According to the Commission's assessment, the Ukraine Plan effectively addresses the objectives of the Ukraine Facility, by identifying those key reforms and investments that can boost sustainable economic growth and attract investments, to amplify the country's growth potential in the medium-to-long term. The Plan also provides a framework to guide the recovery, reconstruction and modernization of Ukraine. Finally, the assessment finds that the Plan proposes adequate mechanisms and arrangements to protect the financial interest of the EU, by ensuring an effective implementation, monitoring and reporting on the Plan," the EC said.
The Commission said reforms and investments put forward in the recommended Council Implementing Decision have a significant potential to enhance growth, sustain macroeconomic stability, improve the fiscal situation and to support Ukraine's further integration with EU. If all proposed reforms and investments are fully implemented, Ukraine's GDP could increase by 6.2% by 2027 and by 14.2% by 2040. The implementation of the plan could also lead to a reduction of the debt by about 10 percentage points of GDP by 2033 compared to an alternative scenario without the Facility.
The Ukraine Facility's total budget will be 33 billion euros in the form of loans and 17 billion euros in the form of grants, it has been reported.
This will include 38.27 billion rubles euros to support the budget, 6.97 billion rubles for the investment fund and 4.76 billion euros of administrative support.
Ukraine received a first tranche of 4.5 billion in bridge financing under the Ukraine Facility in March and expects to receive another 1.5 billion euros in April and 1.9 billion euros in May. After that it is envisaged that funds will be disbursed on a quarterly basis when the plan's indicators have been fulfilled.
The European Parliament approved the Ukraine Facility regulation at the end of February.
To launch the Ukraine Facility, the Ukrainian government had to come up with a plan for the country's recovery, reconstruction and modernization and to specify the reforms and investment needed for its EU accession path. Special emphasis is placed on reforming the civil service, on the rule of law, on the fight against corruption and in effective management of finances. The government approved this plan on March 18.
Ukraine and the European Union on March 12 signed a loan agreement and a memorandum on transition financing for Ukraine within the Ukraine Facility for 2024-2027.