EU aims to complete a € 9 billion Ukrainian loan package


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A new support package consisting of a 25-year loan. EU leaders will meet later this week to discuss ways to further support the country.

A new support package consisting of a 25-year loan. EU leaders will meet later this week to discuss ways to further support the country.

Ukrainian President Volodymyr Zelensky and European Commission President Ursula von der Leyen meet in Kieu in early June

Photo provider: AFP

The European Union is expected to finalize the details of the € 9 billion financial package for Ukraine in the coming days to strengthen the war-torn country.

Kyiv’s new macro-financial support program consists of a 25-year loan with a 10-year grace period to repay the principal, three EU officials said, saying interest payments will be covered by the EU budget. Added.

The proposal is likely to be ready later this week, officials said, and EU leaders will meet in Brussels on Thursday and Friday to discuss Ukraine’s reconstruction plans and bids to join the block. Aid plans need to be approved by all 27 member states.

The European Commission first proposed the latest aid package in mid-May to cover some of Ukraine’s financial needs of around € 5 billion per month. The Ukrainian government has called on partners to transfer funds as an urgent matter, but the Commission and Germany disagreed on the design of the package.

EU authorities insisted on the use of loan-based means, but Germany was promoting the use of subsidies to avoid increasing Kyiv’s debt burden. Berlin announced a € 1 billion non-refundable contribution to Ukraine last May at the Group of Seven Finance Ministers’ Meeting hosted by Germany.

Several other countries, including Slovakia, also first questioned whether loans were a better way to help Kyiv, according to people familiar with the matter. Other member states, including Denmark, asked if the provision of subsidies would undermine Ukraine’s credibility in the market.

The financial package requires the support of EU member states and the European Parliament.

Another issue is how much guarantees must governments provide to support lending in case Ukraine defaults. The block covers 100% of it and will be provided by member countries with approximately € 8 billion. Officials said the rest would come from the EU budget.

The European Commission has contacted Member States to finalize some details related to the guarantee, but is confident that the first payment will be made this summer, EU officials said. rice field.

As Ukraine’s financial needs continue to pile up, Brock initially aimed to complete the plan earlier this month. Under that schedule, people said the Commission was planning to start raising money in the market next month for the first transfer.

The EU will not reveal its identity because the talks were private, saying it plans to transfer three or four more installments by the end of the year, depending on the availability of guarantees and the financial needs of Ukraine. Those who asked said.

According to EU officials, the financial package is expected to include some conditions related to reconstruction efforts and avoiding misuse of funds, given the current situation in Ukraine.

© 2022 Bloomberg LP

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