European Commission proposes starting issuance of loans to Ukraine under 9-bln-euro MFA package

BRUSSELS. July 1 (Interfax) - The European Commission said on Friday that it proposed allocating 1 billion euros for Ukraine as the first tranche of a 9-billion-euro macro-financial assistance package it announced in May.

"Today, we propose a 1-billion-euro tranche of the new macro-financial assistance package for Ukraine. This first part of the assistance announced in May will allow us to give an immediate answer to the urgent needs of Ukraine. The EU will keep on providing relief to Ukraine and in the longer-term support its reconstruction as a democratic and prosperous country," the European Commission quoted its President Ursula von der Leyen as saying.

The MFA package announced by the European Commission on May 18, 2022 was endorsed by the European Council on June 23-24, 2022, it said.

Today's proposal will complement the support already provided by the EU, including a 1.2-billion-euro emergency MFA loan paid out in the first half of the year, it said.

The new MFA proposal will be made available to Ukraine "in the form of long-term loans on favorable terms" and should support Ukraine's macroeconomic stability and overall resilience in the context of Russia's special military operation and the ensuing economic challenges.

As another sign of the EU's solidarity with Ukraine, the EU budget will cover the interest costs on this loan, it said.

"As for all previous MFA loans, the Commission will borrow funds on international capital markets and transfer the proceeds on the same terms to Ukraine. This loan to Ukraine will be backed for 70% of the value by amounts set aside from the EU budget," the document says.

As soon as the European Parliament and the Council of the EU approve the proposal and the corresponding Memorandum of Understanding and Loan Agreement are signed with Kyiv, the European Commission "will swiftly make available the amount of 1 billion euros to Ukraine," it said.