The Council today adopted a financial assistance package to Ukraine, including an exceptional macro-financial assistance (MFA) loan of up to €35 billion and a loan cooperation mechanism that will support Ukraine in repaying loans for up to €45 billion provided by the EU and G7 partners.
The financial assistance package aims at supporting Ukraine in covering its urgent financing needs that have increased due to Russia’s intensified aggression against Ukraine. The exceptional MFA will contribute to covering Ukraine´s financing gap, thereby supporting macro-financial stability in Ukraine and easing Ukraine´s external financial constraints.
The exceptional MFA loan and eligible bilateral loans from G7 partners under the ‘Extraordinary Revenue Acceleration (ERA) Loans for Ukraine’ initiative will be repaid by future flows of extraordinary profits accruing to central securities depositories in the EU as a result of the implementation of the immobilisation of Russian sovereign assets.
The Ukraine loan cooperation 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 all G7 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.
EU borrowing to fund the extraordinary MFA loan to Ukraine will be guaranteed by the EU budget headroom.
The MFA loan is expected to be made available to Ukraine before the end of 2024 and have a maximum duration of 45 years.
According to new rules also adopted today, 95% of the proceeds that have been generated by central securities depositories (CSDs) in the EU as a result of their implementation of the immobilisation of Russian sovereign assets and that have been transferred to the Union will be allocated to the EU budget and will now be used for the Ukraine Loan Cooperation Mechanism (ULCM), which will disburse these funds in the form of financial support to Ukraine, to assist it in servicing and repaying the loans. The remaining 5% will continue to be allocated to the European Peace Facility.
The new allocation will start applying from the second half of 2025 (to the second biannual payment of the financial contribution made in 2025 and to all payments thereafter).
Next steps
The legal acts adopted today will enter into force on the day after its publication in the Official Journal of the EU.
Background
On 19 September 2024 the Commission presented a proposal for a regulation on an exceptional macro-financial assistance (MFA) loan and a Ukraine loan cooperation mechanism. At the same time, the High representative presented a proposal for a Council implementing decision on restrictive measures in view of Russia’s actions destabilising the situation in Ukraine and, together with the Commission, a joint proposal for a Council implementing regulation concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine.
Subject to EU law, Russia’s assets should remain immobilised until Russia ceases its war of aggression against Ukraine and compensates it for the damage caused by this war.
In view of a speedy adoption and ensuring that the macro-financial assistance reaches Ukraine as soon as possible, the European Parliament and the Council adopted the Commission’s proposal for a regulation without changes. The European Parliament voted on the text in first reading on 22 October 2024 and the Council by written procedure, which ended today. The two implementing acts were also adopted by the Council by written procedure today.
G7 Leaders announced in June 2024 the launch of the “Extraordinary Revenue Acceleration” loans for Ukraine, to make available approximately $ 50 billion (€45 billion) for Ukraine that will be serviced and repaid by future flows of extraordinary revenues stemming from the immobilisation of Russian sovereign assets held in the European Union and other relevant jurisdictions. In its conclusions, the European Council on 27 June 2024 invited the Commission, the High Representative and the Council to take work forward. The financial package adopted today implements these commitments.
Until now, extraordinary profits stemming from the immobilisation of Russian sovereign assets and available to the EU have been channelled principally through the European Peace Facility to support Ukraine’s military capabilities, and to a lesser extent through the Ukraine Facility to support the country’s reconstruction and modernisation. On 26 July 2024, a first instalment of €1.5 billion was made available by the EU in support of Ukraine.