On 12 March 2024, Ukraine and the European Union signed the Memorandum on Bridge Financing for Ukraine under the Ukraine Facility and a relevant loan agreement. The signatories on behalf of Ukraine were First Deputy Prime Minister – Minister of Economy Yuliia Svyrydenko, Minister of Finance Serhii Marchenko and Governor of the National Bank of Ukraine Andrii Pyshnyi.

In the near future, Ukraine will receive EUR 6 billion to cover current state budget expenditures until the programme is fully launched.

“Along with our European partners, we are completing the preparation of the Plan for the Ukraine Facility and preparing for the full launch of the programme. We have made significant progress. The signing of the Agreement will allow us to start financing even before the official approval of the Plan and will provide EUR 6 billion to cover the current needs of the state budget in March and April this year,” Yuliia Svyrydenko noted.

Under the Ukraine Facility, as part of the bridge financing mechanism, Ukraine can obtain EUR 1.5 billion on a monthly basis, until the final approval of the Plan for the Ukraine Facility. In addition, the bridge financing will be in effect from 31 December 2023. Accordingly, the signing of the Memorandum will allow Ukraine attracting EUR 4.5 billion in March 2024 to maintain macro-financial stability. Ukraine will be granted the next tranche of EUR 1.5 billion in April 2024 after it has met the indicators for the bridge financing.

“The bridge financing mechanism will allow covering the urgent needs of the budget until the final approval of the Plan of Ukraine under the Ukraine Facility, which provides for indicators of reforms during 2024-2027. Our profound cooperation with the European institutions continues to contribute to strengthening Ukraine’s macro-financial stability, further economic growth and progress towards full EU membership,” Serhii Marchenko said.

Support under the bridge financing will be provided if Ukraine meets the indicators set out in the Plan by the beginning of 2024. Thus, Ukraine is implementing 5 indicators in the areas of public finance management, anti-corruption, business environment development, etc. Three of those have been met by Ukraine, in particular:

• Adoption of the National Revenue Strategy for 2024-2030;
• Adoption of changes in Law On the Prosecutor’s Office and in laws on strengthening the independence of the Special Anti-Corruption Prosecutor’s Office;
• Additional measures to prevent and counteract the illicit proceeds of crime and terrorism financing.

Two more steps necessary to receive bridge financing are under development, namely:

• Measures to support the launch of industrial parks as a tool for attracting investment to the de-occupied territories;
• Bringing the State Land Cadastre in line with the State Register of Property Rights to Immovable Property.

The implementation of these indicators is also in line with the terms of the Memorandum of Understanding on good financial governance, including anti-corruption measures and improved revenue management. The EU’s financial assistance is also conditioned by common objectives to support democratic principles, the rule of law and human rights. This emphasises the comprehensive nature of support that goes beyond financial assistance.

The Ministry of Economy of Ukraine, together with the European Commission, will coordinate monitoring and reporting under the Agreement.

“Having approved the instrument of financial support for Ukraine, the European Union has once again demonstrated its commitment to enlargement and unity in helping our country. This will support Ukraine’s macro-financial stability, facilitate economic recovery and European integration, and the reforms enshrined in the Ukraine Facility Plan will be a catalyst for this process. We do not plan to stray from this path and will try our best to get the maximum result,” Andrii Pyshnyi said.

As a reminder, in February 2024, the European Parliament approved the Regulation to set up the Ukraine Facility. According to the adopted regulation, the EU will provide EUR 50 billion of support to Ukraine during 2024-2027, of which EUR 38.27 billion will be channelled to assist the state budget.

The Ukraine Facility Plan is a technical document required to implement the EU’s financial support programme for Ukraine. The plan is not a general recovery strategy, it will cover only a part of the governmental changes envisaged for the coming years, with a focus on macroeconomic growth.

The Plan is being prepared by the Government under the coordination of the Ministry of Economy of Ukraine in constant consultation with representatives of the European Commission, thus ensuring that the document meets most of the requirements of the approved regulation at the preliminary preparation stage.

In addition, representatives of businesses, NGOs, the Parliament, and representatives of the regions were actively involved in the development of the Plan. Kyiv School of Economics provides analytical and organisational support in the development of the document funded by the UK’s Department for International Development from the UK Government.