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EU aid worth €50 billion: How much Ukraine will receive by summer

EU aid worth €50 billion: How much Ukraine will receive by summer Ukraine may receive €6.3 billion from the EU under the Ukraine Facility program by summer (Getty Images)

Ukraine could receive €6.3 billion from the EU by summer under the Ukraine Facility support program. However, this tranche will improve the financial situation but won't cover the budget needs.

More on this in RBC-Ukraine's article "EU pledges €50 billion to Ukraine. Funds allocated with stringent oversight for reforms".

How the aid will be received

€4.5 billion is expected in March. This will be transitional financing before the launch of the 4-year €50 billion Ukraine Facility program. To receive this money, a memorandum with the EU and a credit agreement will be signed soon. After the approval of the program's conditions, expected in April-May, another tranche of €1.8 billion will be received.

"This is expected to happen in April or May," said First Deputy Minister of Economy of Ukraine Oleksii Sobolev, adding that all EU funds will be used to cover the state budget deficit.

Quarterly tranches will then be disbursed after reviewing the program and evaluating Ukraine's performance.

"The second quarter will end in July-August, and in July and August we will evaluate and receive money for the implementation of reforms," Sobolev said.

Less than expected

As experts point out, these financial inflows will improve the situation, but still won't fully cover the state budget needs.

"6.3 billion euros is less than the government expects for this period (until the summer - ed.). The key issue is funding from the United States. If it comes, the planned amounts from the EU will be sufficient to comfortably finance the budget deficit. But without funds from the United States, this amount is far from desirable," said Vitalii Vavryshchuk, Head of the Macroeconomic Research Department at ICU Group.

The head of the analytical department of Concorde Capital, Oleksandr Parashchii, believes that Ukraine should have enough money by summer, considering inflows from the EU, IMF, assistance from Japan, as well as increased revenues from internal sources such as dividends from state-owned companies and increased fees.

"Another question is what will happen in the middle and second half of the year when all the extra taxes and dividends are exhausted," Parashchii said.

However, he believes there is potential to raise $31-33 billion in international assistance by the end of the year. According to the expert, the shortfall is not so critical and considering the government's optimistic expectations, it can be covered by the US and other partners.

Moreover, there is a high probability of Ukraine receiving interest from Russian assets in the EU. Currently, they have accumulated over $4 billion.

€50 billion from EU for Ukraine

On February 1, at the summit of the European Union leaders, it was unanimously decided to allocate €50 billion to Ukraine under the Ukraine Facility program. On the same day, President Volodymyr Zelenskyy thanked the EU leaders for creating a Fund for Ukraine in the amount of €50 billion. He emphasized that financial support is no less important than military assistance and sanctions pressure on Russia.

On February 14, ambassadors from 27 EU countries at a meeting agreed on the legal texts necessary to launch the €50 billion EU package to support Ukraine. On February 22, the relevant committees of the European Parliament supported the Ukraine Facility financial support program. However, this EU assistance to Ukraine is insufficient. It will not cover the country's needs until 2027.

In June 2023, the European Commission proposed to create a special mechanism for Ukraine, under which grants and loans totaling up to €50 billion would be provided until 2027. It was intended to replace the current EU support to Ukraine through the Macro-Financial Assistance Program. The program expired at the end of 2023.