EU provides EUR 1.2 bln of macro-financial assistance to Ukraine to overcome pandemic effects

Ukraine signed a memorandum of understanding with the European Union and a loan agreement between Ukraine, the National Bank of Ukraine and the EU on macro-financial assistance worth EUR 1.2 billion, Prime Minister Denys Shmyhal wrote in Telegram.

“Ukraine will receive 1.2 billion euros in macro-financial assistance from the European Union. Today, we signed a memorandum and a loan agreement with the European Commission as part of our working visit to Brussels together with Finance Minister Serhii Marchenko and NBU Governor Kyrylo Shevchenko,” he wrote.

Mr. Shmyhal added that 1.2 billion euros for Ukraine is the largest tranche provided by the European Commission under the “exceptional” macro-financial assistance program designed for 10 countries and aimed to overcome adverse consequences of the coronavirus pandemic.

According to a report by Interfax Ukraine, Denys Shmyhal told journalists that the memorandum on the fifth macro-financial assistance program envisages a 12-month term. The loan itself is provided for 15 years (until 2035) at the interest rate of 0.125% APR. According to Prime Minister, the macro-financial assistance will be spent on maintaining macro-financial stability in Ukraine and continuing structural reforms.

 

Ukraine will receive the first tranche of 600 million euros immediately after the parliament ratifies the memorandum. To receive the second tranche, the country needs to fulfil a number of conditions divided into four blocks.

First block: management of public funds. This block includes medical procurements, governance (corporatization) of Public Procurements SE, continuing reform of the tax and customs services (open competitive selection of senior officials).

Second block: public administration and the rule of law. It includes judicial reform, reform of the Higher Judge Certification Commission and the Judge Qualification Commission, establishment of the Ethics Commission with international participation, and continuing reform of the civil service.

Third block: improvement of business climate. It includes, in particular, continuing expansion of powers of private enforcers, facilitation of bank account freezing by granting authorization of electronic communication between enforcers and banks, and also, phased liquidation of the tax police and establishment of the Bureau of Financial Investigation.

Fourth block: sectoral reforms and state enterprises. It includes, in particular, corporatization reform, establishment of independent supervisory boards at the top 10 state enterprises, and continuing implementation of all sectoral reforms.

It is worth reminding that on 20 May, the Council of the European Union approved the European Commission’s proposal to allocate 1.2 billion euros in macro-financial assistance to Ukraine to overcome economic consequences of the coronavirus pandemic.

By Tetiana Litvinchuk

Source: NV