This emergency loan will serve to cover the basic needs of the country, affected by the consequences of the war
The European Union strengthened its economic aid to Ukraine on Tuesday. The Twenty-seven have given the green light to a €1,000 million macro-financial program to help the country meet its core financing needs. This amount, added to the 1,200 million granted in emergency loans in the first half of the year, brings the EU’s financial assistance to 2,200 million since the start of the war.
This aid, approved by the European Council, aims to cover the country’s “most urgent” financing needs (pensions, civil servants’ salaries…) so that they can continue to function despite the conflict. The war has already destroyed 30% of the Ukrainian economy and left a huge hole in the public treasury. More specifically, according to data from the International Monetary Fund, the country will need about €37.3 billion this year to cover its financing needs.
The European program will operate as a long-term loan “on very favorable terms” and will be covered by 70% of the earmarked amounts charged to the budget of the European Union. The support is conditional on the implementation of a series of reforms and the provision of greater transparency in Kiev’s management of the funds.
At the first meeting of the economy and finance ministers under the Czech presidency, Zbynek Stanjura – the Czech representative – welcomed the approval of this aid package: “Continuing material and financial aid to Ukraine is not an option. It is our duty”, assured he.
The European Commission proposed in May to increase the financial support through this mechanism to 9,000 million euros, but in the absence of a specific proposal from Brussels, only this first disbursement of 1,000 million euros has been made. After the approval of the Council and the European Parliament, the executive must sign the Memorandum of Understanding and the Loan Agreement with the Ukrainian authorities to define the objectives and reforms to which this aid will be subject.
The 1,000 million will be paid in one lump sum and is part of the “extraordinary international effort of the international financial institutions to support Ukraine,” the European Council said in its statement. These funds are also complemented by other European initiatives for humanitarian aid, development and defence.
Source: La Verdad
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