Ukraine and the EU have signed an agreement granting Ukraine EUR 1.2 billion in macrofinancial assistance funds.
The Memorandum and the Loan Agreement have been signed today by Kyrylo Shevchenko, NBU Governor, Serhii Marchenko, Minister of Finance of Ukraine, and Valdis Dombrovskis, European Commission Executive Vice-President responsible for an Economy that Works for People. Denys Shmyhal, Prime Minister of Ukraine, also participated in the meeting.
The macrofinancial assistance will be divided into two tranches, EUR 600 million each, which will be used to support the state budget and to replenish Ukraine’s international reserves.
"The EU has always been and remains Ukraine’s reliable partner. I wish to thank the European side for its efficient and constructive approach to implementing the new program. This long-term, affordable assistance is especially important for us now that the global and Ukrainian economies have been struggling to meet the challenges posed by the COVID-19 pandemic," said NBU Governor Kyrylo Shevchenko.
Between 2014 and 2020, Ukraine and the EU have implemented four macrofinancial assistance programs, under which Ukraine received EUR 3.81 billion in aid.
Macrofinancial assistance is a unique financial instrument extended by the EU for up to 15 years to eligible countries so that they can stabilize their financial and economic systems. This instrument is granted to EU partner countries to supplement the financial aid they receive from the IMF.
For using the macrofinancial assistance, Ukraine pays an interest rate that is determined when the European Commission, which has the highest credit rating (AAA), borrows these funds in the international credit market.
As a rule, a country’s central bank acts as an agent for the borrowing country by opening a euro account to which the respective tranches of the EU’s macrofinancial assistance are then transferred.