ua en ru

EU readies €50 billion Ukraine package - Bloomberg

EU readies €50 billion Ukraine package - Bloomberg The EU is preparing aid package for Ukraine (Getty Images)
Author: Maria Kholina

The European Union is ready to propose a financial aid package of around €50 billion to support Ukraine. The offer by the European Commission will help finance the current expenses of the Ukrainian government and prioritize urgent reconstruction efforts. This announcement was made by US President Joe Biden, according to Bloomberg.

The package, still subject to changes before it’s made public, will be announced Tuesday ahead of a conference this week in London, where donors will discuss how to rebuild the country and Ukrainian officials will seek private sector involvement.

The European Commission wants to avoid a burdensome reconstruction instrument for a country at war and will offer the aid in the form of grants, concessional loans and guarantees, said the people, who spoke on condition of anonymity because the discussions are private.

The aid package comes at a pivotal time in the war, with Ukraine’s forces launching a long-expected spring campaign. The Ukrainian government is counting on the counteroffensive to push Russian forces from more territory and encourage allies to continue providing needed support even as some countries are pressuring Kyiv and Moscow to negotiate. Ukrainian officials last week said their troops had made some advances amid “severe fighting.”

EU proposal

The proposal, part of the review of the EU’s longterm budget, would cover the period from 2024-2027. It would provide less annually than the €18 billion in financial assistance the EU is offering this year. The World Bank has estimated that Ukraine’s reconstruction costs could amount to $411 billion.

The commission’s plan also comes at a delicate moment for the bloc, as member states are facing additional borrowing costs to finance the massive spending required to deal with the Covid pandemic and the energy crisis.

According to one anonymous source, unlike previous financial packages for Ukraine, the plan will be financed via contributions from member states instead of borrowing from the markets, one of the people said. The package seeks to bring together assistance used to pay wages, pensions and some public services with the costs related to rebuilding essential infrastructure.

The EU and its member states have approved nearly €38 billion in economic assistance to Ukraine since the start of the war.

The funds will be disbursed provided Ukraine fulfills reforms to improve the rule of law and address corruption. The reforms aim to put Ukraine on a path to become an EU member with leaders to decide whether to open negotiations by the end of the year.

The commission has previously said it would cover the bulk of the reconstruction needs, although the bloc expects other donors and the private sector to contribute to the efforts. The EU is also looking at options to use frozen assets, including from Russia’s central bank.

Approximately 50% of Ukraine's 2023 budget is financed through Western aid. The US has pledged to provide Ukraine's budget with $9.9 billion in grants in 2023, while the EU will offer €18 billion in macrofinancial assistance in the form of concessional credits.