Ukraine has received from the European Commission the second tranche under the fourth EU macro-financial assistance (MFA) program with a nominal amount of EUR 500 million. The money disbursed is a loan at 0.125% per annum with the loan repayment date being 10 June, 2035.
The resource will be used to finance state budget expenditures and help reduce external financial pressure on Ukraine as well as improve the balance of payments.
Given the need for appropriate funding for measures to overcome the negative economic consequences of the spread of acute respiratory disease COVID-19 caused by the coronavirus SARS-CoV-2, obtaining the aforesaid funds will certainly contribute to maintaining financial stability in Ukraine.
Obtaining the preferential credit resource became possible after Ukraine (at the end of 2019) had fulfilled all 12 special conditions for the implementation of measures to introduce and pursue the reforms in the following areas:
- counteraction and fight against corruption;
- social policy;
- prevention of money laundering;
- energy sector;
- implementation of the customs policy;
- reform of tax and customs services;
- corporate governance in state-owned banks;
- counteracting the base erosion and profit shifting;
- reduction of the high level of bad loans in the banking system, as well as the launch of a new cooperation program with the IMF.
In December 2018, Ukraine received the first tranche under the 4th EU macro-financial assistance program with a nominal amount of EUR 500 million.
The total amount of preferential EU credit assistance received by Ukraine in the framework of the implementation of four EU MFA programs during 2014-2020 reached EUR 3.81 billion.
All these funds, in accordance with the terms of the relevant Memoranda with the European Union, were used to reduce external financial pressure on Ukraine, improve its balance of payments and meet budget needs.
The Government of Ukraine and the European Commission are in consultation on the terms of a new “exclusive” EU macro-financial assistance program to Ukraine to support efforts to address the spread of acute respiratory disease COVID-19 caused by the coronavirus SARS-CoV-2.
The EUR 1.2 billion program is intended for 12 months and will involve the payment of two tranches, with the first being unconditional.