On Friday, March 8, the Cabinet of Ministers of Ukraine approved the text of the Memorandum of Understanding between Ukraine and the European Union regarding bridge financing under the Ukraine Facility programme, as well as the corresponding loan agreement. After the signing of the documents, which is scheduled for March 11, Ukraine will be able to receive EUR 6 billion to ensure the current costs of the state budget until the full launch of the programme.

“We are on the finish line to the completion of the Plan for the Ukraine Facility and the full launch of the programme. At the same time, Ukraine is already implementing the reforms that will be provided for in the Plan, and European partners highly appreciate our progress. The signing of the Agreement will allow financing to begin even before the official approval of the Plan and will provide EUR 6 billion to cover the current needs of the state budget in March and April of this year,” Yuliia Svyrydenko, First Deputy Prime Minister - Minister of Economy of Ukraine, said.

According to the regulations of the Ukraine Facility, as part of the bridge financing, Ukraine can receive up to EUR 1.5 billion every month until the final approval of the Plan for the Ukraine Facility. At the same time, the bridge financing will go into effect from 31 December 2023. Accordingly, the signing of the Memorandum will allow Ukraine attracting EUR 4.5 billion already in March 2024 to support macro-financial stability. Ukraine will be able to receive the next EUR 1.5 billion in April 2024.

Support within the framework of transitional financing will be provided if Ukraine fulfils the indicators provided for in the Plan for the beginning of 2024. Thus, Ukraine implements 5 indicators in the areas of public finance management, fight against corruption, development of the business environment, etc. Three of them have already been implemented, namely:

• Adoption of the National Revenue Strategy for 2024-2030;
• Adoption of changes in Law On the Prosecutor’s Office and in laws on strengthening the independence of the Special Anti-Corruption Prosecutor’s Office;
• Additional measures to prevent and counteract the illicit proceeds of crime and terrorism financing.

Two more steps necessary to receive bridge financing are under development, namely:

• Measures to support the launch of industrial parks as a tool for attracting investment to the de-occupied territories;
• Bringing the State Land Cadastre in line with the State Register of Property Rights to Immovable Property.

The implementation of these indicators is also in line with the terms of the Memorandum as to the compliance with the principles of good financial governance, including anti-corruption measures and improved revenue management. The EU’s financial assistance is also conditioned by common objectives to support democratic principles, the rule of law and human rights. This emphasises the comprehensive nature of support that goes beyond financial assistance.

The Ministry of Economy of Ukraine, together with the European Commission, will coordinate monitoring and reporting under the Agreement.

As a reminder, in February 2024, the European Parliament approved the regulation to set up the Ukraine Facility. According to the adopted regulation, the EU will provide EUR 50 billion of support to Ukraine during 2024-2027, of which EUR 38.27 billion will be channelled to assist the state budget.

The Ukraine Facility Plan is a technical document required to implement the EU’s financial support programme for Ukraine. The plan is not a general recovery strategy, it will cover only a part of the governmental changes envisaged for the coming years, with a focus on macroeconomic growth.

The Plan is being prepared by the Government under the coordination of the Ministry of Economy of Ukraine in constant consultation with representatives of the European Commission, thus ensuring that the document meets most of the requirements of the approved regulation at the preliminary preparation stage.

In addition, representatives of businesses, NGOs, the Parliament, and representatives of the regions were actively involved in the development of the Plan. Kyiv School of Economics provides analytical and organisational support in the development of the document with the support of the UK International Development from the UK Government.