Ukraine and the European Union have signed a memorandum of understanding and a loan agreement for up to EUR 35 billion in macro-financial assistance (MFA). As reported by the Ministry of Finance of Ukraine on 4 December, these funds will be allocated under the G7 initiative on the Extraordinary Revenue Acceleration Loans for Ukraine (ERA) mechanism.
Details of the deal
The agreement was signed by Minister of Finance of Ukraine Sergii Marchenko, Governor of the National Bank of Ukraine Andrii Pyshnyi and Vice-President of the European Commission Valdis Dombrovskis.
The final amount of funding will be determined after the amount of loans is agreed upon by all participants in the initiative. Under this mechanism:
- The US offers to allocate $20 billion;
- The EU – up to €18 billion, which will be part of a total package of $50 billion.
The loans will be repaid exclusively from future proceeds from Russia’s frozen assets in the EU.
Guarantees and conditions
The MFA funds for Ukraine will be provided on a non-repayable basis, and the state’s domestic resources will not be used to repay them.
“This is an important step towards strengthening Ukraine’s financial stability in times of war and will contribute to the economic recovery,” the Ministry of Finance said.
G7 initiative
The ERA mechanism agreed by the G7 countries provides for the use of frozen sovereign assets of the Russian Federation to support Ukraine. For the first time, this creates a practical opportunity to consolidate international efforts to channel such funds to rebuild Ukraine.
Ukraine expects that these funds will become a key resource for financing priority needs and rebuilding the country.
