Brussels: Europe and the Arabs
   The Council of Member States and the European Parliament have reached a provisional agreement on the creation of a new single instrument dedicated to supporting Ukraine's recovery, reconstruction and modernization, while supporting its efforts to implement reforms as part of its accession process to the European Union. The total budget of the Ukraine facility will amount to 50 billion euros.
The Ukraine Facility will consolidate EU budget support to Ukraine into a single instrument, providing coherent, predictable and flexible support for the period 2024-2027 to Ukraine, adapting to the unprecedented challenges of supporting a country at war.
“The European Union is ready to support Ukraine for as long as there is a need. The Ukraine Facility will allow us to provide consistent and predictable support to Ukraine to help its people rebuild their country in the midst of the unprecedented challenges brought by Russia’s war of aggression. At the same time this support will help Ukraine to Moving forward with the reforms and modernization efforts necessary for it to move forward on its path towards future EU membership, according to Vincent van Petegem, Belgian Minister of Finance.
Roberta Mizzola, President of the European Parliament, commented on this agreement and said, "This is great news. For Ukraine and Europe. For our common security. For our common future."
Structure in three pillars
According to a European statement distributed in Brussels, the Ukraine facility will be structured on three pillars:
Pillar One: The Government of Ukraine will prepare a “Ukraine Plan”, which sets out its intentions regarding the recovery, reconstruction and modernization of the country and the reforms it plans to undertake as part of the EU accession process. Financial support will be provided in the form of grants and loans to the State of Ukraine based on the implementation of the Ukraine Plan, which will be supported by a set of conditions and a disbursement schedule.
Pillar 2: Under the Ukraine Investment Framework, the EU will provide support in the form of budget guarantees and a mix of grants and loans from public and private institutions. The Ukrainian guarantee will cover the risks of loans, guarantees, capital market instruments and other forms of financing supporting the objectives of the facility.
Pillar Three: EU accession assistance and other supportive measures that help Ukraine align with EU laws and implement structural reforms on its way to future EU membership
Financing aspects
The total budget of 50 billion euros for the Ukraine facility will be divided between 33 billion euros in loans and 17 billion euros in grants.
Grants will be mobilized through a new special instrument, proposed in the context of the mid-term review of the Multiannual Financial Framework. The loans will be guaranteed through own resources, similar to current financing under Macro Financial Assistance Plus (MFA+).
Ukraine may request, as part of the Ukraine Plan, a pre-financing payment in the amount of up to 7% of the Facility.
A significant share of the investment part of the Ukraine Plan and the Ukrainian Investment Framework will be allocated to green investments and part of the Ukrainian Investment Framework will be reserved for SMEs. The plan will also be directed towards supporting national authorities.
The text provides for the possibility of temporary financing in order to ensure that the funds reach Ukraine as soon as possible.
There will be some flexibility regarding budget management given that Ukraine is a country at war.
A precondition for support to Ukraine under the Facility will be that Ukraine continues to support and respect effective democratic mechanisms, including the multi-party parliamentary system, the rule of law, and to ensure respect for human rights, including the rights of persons. Belonging to minorities.
Furthermore, the regulation will ensure that the Verkhovna Rada and civil society organizations of Ukraine are duly informed and consulted on the design and implementation of the Ukraine Plan.
The Ukrainian facilities dialogue would provide the opportunity for the European Parliament to invite the Commission to discuss the implementation of the plan at least every four months.
In order to evaluate the implementation of the plan, the regulation will include a scoreboard that will help to easily monitor progress in various qualitative and quantitative steps, including an overview of the social, economic and environmental elements of Ukraine's plan.
Building on the success of this interim agreement, negotiators will now continue work on the broader review of the 2021-2027 Multiannual Financial Framework, of which the Ukraine Facility and the Strategic Technologies Platform for Europe (STEP) are part, with a view to reaching an agreement as quickly as possible.
The interim agreement is subject to approval by the Council and Parliament before the text goes through formal adoption procedures. Once adopted, it will be published in the Official Journal of the European Union and will enter into force the next day. The regulations will be implemented immediately after they enter into force.
It is noteworthy that on 20 June 2023, the Commission adopted a proposal to review the Multiannual Financial Framework (MFF) 2021-2027, together with two proposals on regulations establishing the Ukraine Facility and the Strategic Technologies Platform for Europe (STEP).