THE European Union today proposed an additional € 9 billion in EU loans to Ukraine in 2022 to continue the country’s basic services and to set up a facility, the RebuildUkraine Facility, for grants and loans, modeled on its Recovery Fund EU.
The money will be borrowed by the Commission from the market with guarantees from EU governments under its macro-financial assistance program so that basic services in Ukraine will continue to operate until the end of June as the country fights the Russian invasion.
The International Monetary Fund estimates Ukraine needs around $ 5 billion a month for key operations, and the EU expects the United States and Britain and Japan, which are also members of the G7, to contribute. The G7 will discuss the issue at a meeting in Bonn tomorrow Thursday and Friday.
“The EU will continue to provide short-term financial support to Ukraine to meet its needs and continue to provide basic services,” said Commission President Ursula von der Leyen.
“We are ready to take the lead in international reconstruction efforts to help rebuild a democratic and prosperous Ukraine. This means that investment will go hand in hand with reforms that will support Ukraine in pursuing its European path,” he said.
The EU has already provided 4.1 billion euros to Ukraine since Russia invaded on February 24, including military aid.
The EU can borrow to rebuild Ukraine
Rebuilding Ukraine after the war will be a much bigger challenge, with some economists estimating that it will take between one and two trillion. euros, although no calculation can be reliable as long as the war continues.
The Commission proposes to set up a facility, the “RebuildUkraine” Facility, through a mix of grants and loans to be integrated into the EU budget.
It will build on the EU’s experience of its own means of facilitating post-COVID recovery, but will adapt to the “unprecedented challenges” of Ukraine’s reconstruction.
“The facility itself will have a government structure ensuring its full ownership by Ukraine,” the commission said.
Additional grants for Ukraine could be funded either by further contributions from EU members or third countries as well as by existing EU programs.
“Given the scale of the loans that are likely to be required, the options include raising money for loans on behalf of the EU or with national guarantees from the Member States,” the commission said.
It is unclear how much support the funding program will receive as some EU countries, such as Germany, oppose new EU joint borrowing.
Another option could be to seize frozen Russian assets in the EU and make them available to Ukraine. But officials warn that the issue is legally complicated as the EU has no laws on such a move.
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