The Ukraine Facility is working: Ukraine receives €1.9bn tranche
28 June 2024 01:00
Ukraine has received a new tranche of financial assistance from the European Union under the Ukraine Facility programme. The amount of support is 1.9 billion euros. This was announced by the Prime Minister of Ukraine Denys Shmyhal on the social network X, "Komersant Ukrainian" reports
“I would like to express my gratitude to the President of the European Commission Ursula von der Leyen and her entire team for such unwavering support,”
– he wrote.
Shmyhal noted that since the beginning of the year, the total amount of budget support from the EU has already reached almost €8 billion.
It is worth noting that on 6 June, the Verkhovna Rada of Ukraine ratified the agreement with the EU on the Ukraine Facility Plan, which outlines a reform plan until 2027. The European Commission has set up a special body, the Ukraine Facility Audit Board, to monitor the use of funds.
Ukraine received the first tranche of EUR 4.5 billion under the Ukraine Facility programme on 20 March this year.
Ukraine Facility
In February, the EU approved the Ukraine Facility, a €50 billion financing mechanism for Ukraine for the period 2024-2027. The programme consists of €17 billion in grants and €33 billion in loans. The mechanism provides not only for financing budgetary areas in Ukraine during the war, but also for programmes aimed at implementing the reforms on which Ukraine’s accession to the EU depends.
The resolution emphasises that EU support should be directed in three areas:
- Financial support for Ukraine to implement reforms and investments, and to maintain the country’s macro-financial stability, as envisaged in the Ukraine Plan to be developed by the Ukrainian government.
- Ukraine’s investment framework to mobilise investment and increase access to finance.
- Assistance on the path to European integration to mobilise technical expertise and build capacity.
What the plan for the Ukraine Facility envisages
The Ukraine Facility Plan envisages the implementation of structural reforms in the public sector, a number of economic reforms aimed at improving the business climate and entrepreneurship, and steps to develop priority sectors that can deliver rapid economic growth. The implementation of the Plan will contribute to Ukraine’s European integration and further sustainable economic development.
The Ukraine Facility Plan includes more than 150 indicators in 69 reform areas to be implemented by 2027. The plan was developed in full synchronisation with Ukraine’s key international partners.
The Ukraine Facility Plan also includes 16 investment indicators that are part of the overall list of changes. To meet them, it is necessary to continue and strengthen programmes for infrastructure development, demining, renewable energy, support for small and medium-sized enterprises, etc.
Funding under the Ukraine Facility programme is directly dependent on the fulfilment of the indicators set out in the Ukraine Facility Plan. In 2024, more than 36 indicators are planned to be implemented in the areas of improving public financial management, fighting corruption, managing state property, developing human capital, improving the business environment and developing priority sectors.
The last instalment under the programme is expected to be disbursed in 2028 based on the performance of the indicators for the fourth quarter of 2027.
A €6 billion transitional financing mechanism is envisaged for the period until the final launch of the Ukraine Facility programme.
As part of the transitional financing arrangements, Ukraine is implementing 5 indicators in the areas of public financial management, anti-corruption, business environment development and land market functioning. Three of them have already been implemented, and two more steps required to receive transitional funding are under development.
