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The European Parliament and the Council of the EU have reached a preliminary agreement on a new mechanism to provide financial support for Ukraine

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Estimated Reading Time: 2 min

The European Parliament and the Council of the European Union have preliminarily agreed on a new mechanism to support Ukraine by establishing a €50 billion Ukraine Fund within the EU budget.

The Council of the European Union reported this development on its website.

Belgian Finance Minister Vincent van Petegem expressed:

«The EU is ready to support Ukraine for as long as it takes. The mechanism for Ukraine will allow us to provide consistent and predictable support to help its people rebuild their country amid unprecedented challenges from Russia’s aggressive war. Simultaneously, this support will assist Ukraine in implementing necessary reforms and modernization efforts on its path towards future EU membership».

The Fund will consolidate EU budgetary support into a single instrument for assistance during the period 2024-2027.

The support mechanism for Ukraine will consist of three components:

  1. The Cabinet of Ministers will develop a special plan outlining the country’s intentions for recovery, reconstruction, and modernization, including reform plans tied to the EU accession process. Financial support, in the form of grants and loans, will be provided based on the plan’s implementation, subject to necessary conditions and disbursement timelines.
  2. The EU will offer support through budgetary guarantees, combining grants and loans from public and private institutions.
  3. Financial assistance aims to encourage Ukraine to harmonize its legislation with the EU acquis and implement structural reforms on its path to future EU membership.

The preliminary agreement between the European Parliament and the Council of the EU defines the financial aspects of the Ukraine Fund’s creation. The €50 billion fund’s budget will be distributed as follows: €33 billion in loans and €17 billion in grants.

Grants will be allocated through a new specialized instrument proposed as part of the mid-term review of the EU’s multi-annual budget. Loans will be disbursed through the EU’s own resources, similar to financing for macro-financial assistance to Ukraine.

Under the Ukraine Plan, Ukraine can request an advance payment of up to 7% of the Fund’s capacity.

Some of the investment part of the Ukraine Plan and the Investment Framework will be dedicated to green investments.

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