E.U. Aims to Finalize $9.5B Ukraine Loan Package This Week
TIn order to support the war-torn country, the European Union expects to approve details of a $9 billion ($9.5billion) financial package to Ukraine within the next few days.
A new program of macro-financial aid for Kyiv will consist in 25-year loans with a grace period of 10 years to repay the principal. Three E.U. According to officials, interest payments will be paid by the E.U. budget.
According to officials, the proposal will be available by this week. leaders scheduled to meet Thursday and Friday in Brussels to discuss Ukraine’s reconstruction plan and its bid for membership in the bloc. Each of the 27 member countries would have to approve this aid plan.
The European Commission first proposed the latest aid package in mid-May to cover part of Ukraine’s financial needs of around 5 billion euros per month. The Ukrainian government has been calling on its partners to transfer the funds as a matter of urgency, but the commission and Germany disagreed over the package’s design.
The E.U.’s executive arm insisted on using a loan-based instrument, while Germany had been pushing to use grants to avoid increasing Kyiv’s debt burden. Berlin made a non-refundable 1 billion Euro contribution to Ukraine at a G7 meeting last May.
According to sources familiar with the situation, loans may have been questioned by other countries such as Slovakia at first, which was not a good way of supporting Kyiv. Denmark was also asked by other members whether they would offer grants to undermine Ukraine’s reputation on the market.
E.U. must support the financial package The European Parliament and member states.
A second issue was how large a guarantee would be required by national governments to support the loans in the case of default from Ukraine. With 8 billion euros of contributions from member states, the bloc will be able to cover 100 percent. Rest would be paid by the E.U. According to officials, there would be no budget.
Although the Commission is in the process of finalizing details about the guarantee, the E.U. remains optimistic that this summer will see the first disbursement. Official said.
The bloc originally aimed to complete the plan early this month since Ukraine’s financial needs keep piling up. The people stated that according to this timetable the commission planned to raise money in the markets next month for the first transfer.
E.U. planned to transfer three or four more installments by the end of the year, although it would depend on the availability of the guarantees and Ukraine’s financial needs, said the people, who asked not to be identified because the talks were private.
The financial package is expected to include some conditions that would take into account Ukraine’s current circumstances and be related to reconstruction efforts and avoiding the misuse of funds, E.U. According to officials,
—With assistance from Michael Nienaber and Alberto Nardelli.
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