EU approves up to 35 billion euros in aid to Ukraine using profits from Russian assets: envisages a 45-year loan

The EU Council has approved an aid package for Ukraine that includes €35 billion in macro-financial assistance (MFA) and a mechanism to support the repayment of €45 billion in loans provided by the EU and G7 partners. The MFA loan is expected to be disbursed by the end of 2024 and will have a maximum term of 45 years, the European institution said on October 23, UNN reported.

Details

"The EU Council has approved a financial assistance package for Ukraine, including an exceptional macro-financial assistance (MFA) of up to €35 billion and a Loan Cooperation Mechanism (LCM) that will support Ukraine in repaying up to €45 billion in loans provided by the EU and G7 partners," the statement said.

The MFA Exceptional Loan and eligible bilateral loans from G7 partners under the Additional Revenue Arrangement (ERA) will be repaid from future earnings that flow to central securities depositories in the EU as a result of the implementation of the freezing of Russian sovereign assets.

The Ukraine Credit Cooperation Facility 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 help it service and repay all G7 loans.

The MFA loan of up to EUR 35 billion is the EU's contribution to the G7 loan of up to EUR 45 billion (USD 50 billion). The new MFA operation will be linked to policy conditions that are aligned with the Ukraine Facility, in particular the Ukraine Plan. The management and control systems proposed under the Ukraine Plan and special provisions to prevent fraud and other irregularities will also apply to the MFA loan.

The EU borrowing to finance the MFA emergency loan to Ukraine will reportedly be guaranteed by the EU budget reserve.

"The MFA loan is expected to be disbursed to Ukraine by the end of 2024 and will have a maximum term of 45 years," the EU Council said.

According to new rules adopted on October 23, 95% of the proceeds received by the EU's central securities depositories (CSDs) as a result of the freezing of Russian sovereign assets and transferred to the Union will be allocated to the EU budget and will now be used for the Ukraine Lending Cooperation Mechanism (ULCM), which will disburse these funds in the form of financial support to Ukraine to help it service and repay loans. The remaining 5% will continue to be allocated to the European Peace Fund.

The new distribution, as indicated, will be applied from the second half of 2025 (to the second semi-annual payment of the financial contribution made in 2025 and to all subsequent payments).

The legal acts adopted on October 23 will come into force the day after their publication in the Official Journal of the EU.