The European Commission would like to further help the Ukrainian economy, which has plunged into a major recession. The conflict in Crimea has had severe repercussions on the economic health of the country, which is why the Commission has proposed another generous package of macro-financial assistance (MFA) to Ukraine of up to €1.8 billion in medium-term loans. The new MFA program, which is subject to approval by the European Parliament and the Council of Ministers of the EU, is aimed to help Kiev face challenging economic and financial times, such as its fiscal situation or weak balance of payments. The Commission’s main objective is to assist the new government in reform efforts and to help face political challenges. As such, the new package will be linked to reform actions.
Once the MFA is approved, the disbursement of the package will depend on the successful continuation of Ukraine’s program run by the International Monetary Fund (IMF) as well as the implementation of such economic and financial policies that the Commission deems important. These include, for example, fiscal consolidation, continuation of the comprehensive reforms in the energy and banking sectors as well as macroeconomic management, transparency, judicial and anti-corruption reforms and economic governance.
The proposed new package of €1.8 billion can be implemented throughout this year and in early 2016, subject to the adoption of the Commission’s proposal. When approved, it will be the third MFA program for Ukraine since 2010. Last year alone, the EU distributed almost €1.4 billion under the current programs running in the country. The disbursement of the last tranche of €250 million under these programs could be expected by the upcoming spring provided that Ukraine will stick to agreed policy measures and demonstrate a satisfactory track record with the IMF program.