The European Commission has adopted a proposal for a new Macro-Financial Assistance (MFA) program for Ukraine worth up to EUR 1 billion to support economic stabilization and structural reforms.
"Today's proposal follows a request from the Ukrainian authorities and direct discussions between Commission President Jean-Claude Juncker and Ukraine's President Petro Poroshenko. The new program seeks to build on the progress made in supporting economic stabilization and structural reforms under the three previous MFA operations," the European Commission said in a press release.
The EU has so far pledged EUR 12.8 billion to support the reform process in Ukraine, including EUR 2.8 billion through three MFA programs, since the onset of the crisis in 2014, it said.
"Today's proposal on the fourth Macro-Financial Assistance program of EUR 1 billion shows the EU's commitment to stand with the people of Ukraine. This solidarity must go hand-in-hand with a continued commitment from the Ukrainian authorities to an ambitious reform agenda to ensure a stable and prosperous Ukraine. We are counting on the European Parliament and Member States for their support for this important program," Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, said.
All disbursements under the proposed program, including the first, would be conditional on the implementation of reform measures designed to address vulnerabilities identified in the Ukrainian economy. Established in a Memorandum of Understanding, they would take into account measures that remain outstanding from the previous MFA program and include steps to intensify the fight against corruption.
The Commission recognizes the significant reform efforts undertaken by the Ukrainian authorities in recent years, including in crucial sectors such as energy, public administration, social safety nets, public finance management and the judiciary. Since the expiry of the previous MFA program in January 2018, reform efforts have continued in Ukraine, including on some of the four measures that had remained outstanding and prevented the disbursement of the final tranche of that program. One of these commitments has now been fulfilled, with the establishment of a central credit registry. On the other outstanding measures from the previous program, more progress is needed. It is important that the reform momentum be maintained to fight corruption, promote confidence and support a sustainable economic recovery, jobs and growth.
Macro-financial assistance (MFA) operations are part of the EU's wider engagement with neighboring countries and are intended as an exceptional EU crisis response instrument. They are available to EU neighborhood countries experiencing severe balance-of-payments problems. In addition to MFA, the EU supports Ukraine through several other instruments, including humanitarian aid, budget support, thematic programs, and technical assistance and blending facilities to support investment.
Ukraine has so far benefitted from a total of EUR 2.81 billion worth of EU MFA loans since the onset of the crisis in early 2014. This includes EUR 1.61 billion disbursed in 2014-2015 as part of two earlier MFA operations and EUR 1.2 billion in 2015-2017 as part of a third operation. Ukraine fulfilled 17 of the 21 policy commitments attached to the third tranche of EUR 600 million that could have been made available to Ukraine under the third MFA operation. Although four measures were not implemented by the time the availability period of the assistance expired in January 2018. Under these circumstances, the Commission was not in a position to disburse the last tranche under the third MFA operation.
The Commission proposal for a fourth MFA program to Ukraine is subject to the approval of the European Parliament and of the Council of the EU under the ordinary legislative procedure.