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50 billion from the European Union: what it means for Ukraine

Yulia Svyrydenko, First Vice Prime Minister – Minister of Economy

The European Council has approved €50 billion in funding for Ukraine. Now, support for our country is enshrined in the EU budget and will be provided over the period 2024-2027 under the Ukraine Facility programme.

Last summer, the announcement of the EU’s Ukraine Facility programme was a major achievement of the London Conference on Ukraine’s Recovery. The European Commission developed the programme as a tool similar to other EU support mechanisms for its own members.

At the time, our delegation presented a vision of how the Ukrainian economy could develop. We sought to show that Ukraine can already transform from a recipient of aid to a reliable ally that strengthens the economy and security of the free world.

The conference was attended by hundreds of investors from all over the world, heads of state and heads of government, international organisations and financial institutions. And they saw two key things.

First, the EU is already starting to work with Ukraine as a full member of the community.

Secondly, Ukraine is also working on internal transformations that will integrate our economy with the EU and our other allies.

Immediately after the conference, we and our European partners launched two parallel processes to launch the Ukraine Facility. The EU moved on to preparing the programme regulations and internal approval of funding, while Ukraine started preparing the Ukraine Facility Plan – a list of reforms and measures that will lay the foundation for further economic growth.

Usually, it takes 1-2 years to develop and approve such programmes, but we managed to prepare everything together at a very fast pace. And today, all 27 member states have already enshrined their support for Ukraine in the EU budget.

For the European Union, approving a programme of the Ukraine Facility’s scale is a long bureaucratic process. And we have once again seen how smoothly this mechanism can work, despite political challenges.

As a candidate for the European Union, we have learnt from the Ukraine Facility that the EU was created to overcome crises where a common solution needs to be found for all member states, institutions and stakeholders.

The European Union has once again proved that it is able to overcome all kinds of contradictions. This consensus also sends a good signal for further steps towards Ukraine’s accession to the EU, no matter what challenges and complex issues we face.

Another important signal is that the European Council’s decision shows a positive assessment of the preparation of the Ukraine Facility Plan. The work on the document itself has become a learning experience of how to be an EU member. The Plan takes into account all internal EU standards. It was important for the document to meet EU requirements and be approved quickly.

All of this is the merit of hundreds and thousands of people: government officials, businesses that participated in working groups, civil society, and experts who helped to improve the Plan. The Ministry of Economy coordinated the work on the document. This is our collective achievement.

What are the next steps after today’s decision?

Now the European Council, the European Commission and the European Parliament have to determine the final terms of the programme. After that, the European Parliament will have to adopt the Ukraine Facility regulations during its plenary session scheduled for 26-29 February 2024. But we can already say for sure that Ukraine will receive funding from the EU. And this can undoubtedly be considered our common victory. A step that creates the basis for macro-financial stability and certainty for the next four years.

When the European Parliament approves the regulation, we will incorporate its final terms into the Plan. Our consultations with the EU have been ongoing since the beginning of the work on the document, and we will jointly finalise it in accordance with the adopted programme. After that, the Plan will be approved by the Government and submitted to the European Commission for consideration.

We expect to receive the first instalment of EUR 4.5 billion in March. The Government is currently working on the respective agreement on transitional financing together with the European partners. Negotiations between the member states and the European Parliament will start on Monday.

In total, macro-financial support for the budget over 4 years will amount to EUR 39 billion, of which we are to receive EUR 18 billion this year. Of course, the budget deficit is much higher than this amount.

Ukraine’s external financing needs in 2024 are more than $37 billion. But the EU’s support will definitely make a significant contribution to our resilience. In addition, we expect that the €8 billion investment instrument to cover risks in priority sectors will attract more than €30 billion in additional investment to the country.

But the importance of today’s decision is not only measured in terms of money, it has a much deeper meaning – Ukraine is approaching full membership in the European Union. Our partners support us and this support will remain unchanged in the years to come.

Of course, there is still a lot of work to be done. To receive funds, we will have to meet the quarterly indicators of the Reform and Investment Plan. This includes public finance reform, judicial reform, anti-corruption and many other issues ranging from privatisation to improving the business environment in Ukraine. This is by no means a complete list of reforms that Ukraine needs. Their implementation will require coordinated and systematic work of all government agencies in the coming years.

But today we can definitely say that we are one step closer to economic sustainability in the next 4 years. But most importantly, we are one step closer to the European family.

Source: Ukrainska Pravda.