The European Union is preparing to provide Ukraine with up to €40 billion by the end of 2024, without involving the United States. This decision came after the G7 countries’ plan to use frozen Russian assets failed. Now the EU is taking the lead in financial support for Ukraine, reports Komersant ukrainskyi
reports with reference to the Financial Times.
Brussels fears that Hungary could create obstacles to a decision that would allow the US to join the frozen assets scheme. Viktor Orban’s government is trying to postpone the decision until after the US presidential election on 5 November. In response to these risks, the European Union is considering alternative options for assisting Ukraine.
Forecasts by the International Monetary Fund and the Ukrainian government indicate that the country may face a financing gap of around $38 billion in 2025. Therefore, the EU plans to start active work on a new financial assistance package in the coming weeks.
It is expected that by the end of this year, the EU will provide Ukraine with loans worth several billion euros, although the exact amount has not yet been determined. This decision can be made by majority vote, without the need for unanimous approval of all members, which will prevent Hungary from blocking it.
The amount of financial support will range from €20 billion to €40 billion, and it will be finalised after consultations between the European Commission and EU member states. As the current assistance package for Ukraine expires at the end of the year, a new plan must be developed in a short time.
Additionally, the profits from frozen Russian assets, which bring in between €2.5 and €3 billion a year, will be used to repay the loans. These funds are already being channelled to Ukraine through the EU budget, helping to stabilise the country’s economy in times of war.
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Ukraine Facility
In February 2024, the EU approved the Ukraine Facility, a €50 billion financing mechanism for Ukraine for the period 2024-2027. The programme consists of €17 billion in grants and €33 billion in loans. The mechanism provides not only for financing budgetary areas in Ukraine during the war, but also for programmes aimed at implementing the reforms on which Ukraine’s accession to the EU depends.
The resolution emphasises that EU support should be directed in three areas:
- Financial support for Ukraine to implement reforms and investments, and to maintain the country’s macro-financial stability, as envisaged in the Ukraine Plan to be developed by the Ukrainian government.
- Ukraine’s investment framework to mobilise investment and increase access to finance.
- Assistance on the path to European integration to mobilise technical expertise and build capacity.