The EU Commission proposes a 18 billion support package to Ukraine for 2023
The European Commission has proposed to the European Parliament and to the Council of the EU a stable, regular and predictable financial assistance to Ukraine (Macro Financial Assistance +) of up to 18 billion euros for 2023.
The support package will be disbursed in the form of highly concessional loans to be repaid in maximum 35 years, averaging 1,5 billion per month, and intends to cover Ukraine's short-term funding needs of 3 to 4 billion per month as estimated by the International Monetary Fund. The US has pledged to cover 1.5 billion dollars per month, asking allies to do the same
What the package will finance?
Thanks to the financial support, the Ukrainian State would be able to:
- pay wages and pensions;
- maintain essential public services available (hospitals, schools and housing)
- have macroeconomic stability
- restore critical infrastructure and transport networks damaged by the Russian aggression for a total value of 108 billion dollars according to the Kyiv School of Economics.
The financial instrument will be accompanied by reforms to enhance the rule of law, governance, anti-fraud and anti-corruption measures in the country.
How will the package work?
The European executive power has proposed to borrow money from capital markets using a diversified funding strategy.
The Commission proposes to use, in a targeted manner, the difference between the EU 2021-2027 budget own resources' ceiling (the maximum amount of resources that the Commission can ask European Member States to contribute in a given year) and the funds that it actually needs to cover the expenses foreseen by the budget.
The headroom, which is already used to guarantee the borrowing for financial assistance programmes to Member States, will guarantee bond investors that the amounts lent to the EU to finance Ukrainian loans borrowing will be repaid under all circumstances.
3 legislative proposals, which need approval by the European Parliament and Council before entering into force.