FASI: Funding Aid Strategies Investments

A first tranche to help Ukraine with its financial needs. The EU Commission disburses €1 billion

European Union, 2022 / Photographer: Lukasz KobusThe EU Commission disbursed its first tranche of the exceptional macro-financial assistance (MFA) announce in May 2022 and approved by the European Parlament and the EU Council.

Thanks to the EU support Ukraine can rely on a 1 billion euros funding made available in the form of long-term loans on favourable terms. It will help the ukranian government to address its immediate financial needs given the hardships encountered since the start of Russia's invasion of the country in ensuring the payment of pensions, salaries and basic public services. This first tranche is part of the 9 billion euros macro-financial assistance package announced by the EU Commission announced in May 2022. A decision by EU Member States on the delivery of the remaining 8 billion euros is expected in September 2022 and will include some grants among the resources to disburse. 

The Commission declared that the EU budget will cover the interest costs on this loan. As for all previous MFA loans, the Commission borrows funds on international capital markets and transfers the proceeds on the same terms to Ukraine. This loan to Ukraine is backed for 70% of the value set aside from the EU budget. The support is added to the 1.59 billion euros financial assistance package approved by the European Investment Bank to help Ukraine repair the most essential damaged infrastructure and resume critically important projects addressing the urgent needs of Ukrainian people.

This is the second aid package for Ukraine under the EIB's urgent solidarity response, developed in close cooperation with the European Commission, after another emergency support package of EUR 668 million, disbursed within a month of the start of the war. Like the first one, “this new financing is offered on favourable terms, including for the long term,' the note states.

The approval of the resources was hailed in a tweet by EU Commission President Ursula von der Leyen. The macro-financial assistance will see "the immediate disbursement of EUR 1 billion and will help rebuild infrastructure and resume services. And to support energy, transport and education projects for the future. We stand by Ukraine,' writes von der Leyen.

The relief package consists in two blocks of intervention:

  • Immediate financial assistance with a total of €1.05 billion.
  • Resuming implementation of EIB-financed projects in Ukraine totalling €540 million where possible, excluding areas of active hostilities and territories not controlled by the Ukrainian government.

The first block of immediate financial assistance will consist of upfront disbursements under eight existing finance contracts. It will help the Ukrainian government to cover priority short-term financing needs, provide support to strategic state-owned companies, ensure urgent repairs of damaged infrastructure, resume the provision of disrupted municipal services, and support urgent energy and energy efficiency measures in preparation for the cold season.

As for the the selected financed by EIB projects will cover energy, energy efficiency, roads, transport, education and infrastructure, as well as reconstruction and recovery programmes. The exact timing of these disbursements will depend on the state of advancement of underlying projects.

“With this emergency package, as part of Team Europe, we are sending a strong message — the European Union and its Bank remain unshakeable in our solidarity with Ukraine and its people, in its hour of need and in the longer-term support of its reconstruction”, said EIB President Werner Hoyer.