Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL providing further macro-financial assistance to Ukraine
Date: 2018-03-09
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: European neighbourhood policy, International Monetary Fund, Ukraine, economic reform, economic stabilisation, macro-financial assistance, structural adjustment

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   EUROPEAN COMMISSION  Brussels, 9.3.2018  COM(2018) 127 final 2018/0058 (COD)  Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL providing further macro-financial assistance to Ukraine {SWD(2018) 66 final}  
 
 
EXPLANATORY MEMORANDUM 

1. 

 

CONTEXT OF THE PROPOSAL  

Grounds for and objectives of the proposal 

The European Union (EU) has substantially strengthened its partnership with Ukraine 
in recent years, going beyond mere bilateral cooperation to evolve towards gradual political 
association and economic integration. By promoting deeper political ties, stronger economic 
links and the respect for common values, the EU-Ukraine Association Agreement, which was 
signed  in  2014  and  includes  a  Deep  and  Comprehensive  Free  Trade  Area  (DCFTA),  is  the 
main  tool  for  bringing  Ukraine  and  the  EU  closer  together.  Parts  of  the  Association 
Agreement  were  provisionally applied from 1 November 2014, the DCFTA since 1 January 
2016.  The  Agreement  entered  into  force  on  1  September  2017,  following  its  ratification  by 
Ukraine and all EU Member States and its conclusion by the Council of the EU in July 2017.  

Despite the return to growth of 2016-2017 after a deep recession in 2014-2015, Ukraine’s 
economy  remains  vulnerable  to  external  shocks.  This  is  reflected  by  the  country's  high 
dependency  on  commodity  exports, 
its 
international  reserves  and  its  elevated  external  indebtedness,  in  particular  once  payment 
obligations on  restructured  Eurobonds  resume  in  2019.  In  this  context,  continued  support 
from Ukraine's international partners remains essential. 

the  slower-than-expected  replenishment  of 

In  March  2015,  the  International  Monetary  Fund  (IMF)  approved  an  Extended  Fund 
Facility programme for Ukraine of around USD 17.5 billion that is ending in March 2019. 
The  IMF  financial  assistance  was  complemented  by  substantial  support  from  the  EU,  its 
Member States, a number of bilateral partners (such as the US, Japan, Canada, Switzerland) 
and other international financial institutions such as the World Bank, the European Bank for 
Reconstruction  and  Development  (EBRD)  and  the  European  Investment  Bank  (EIB). 
However,  as  the  economic  recovery  is  still  fragile  and  a  number  of  vulnerabilities  persist, 
Ukraine will face additional external financing needs in 2018 and early 2019, which the IMF 
estimates at USD 4.5 billion (approximately EUR 3.8 billion1).  

On  29  November  2017,  Ukraine  Finance  Minister  Oleksandr  Danyliuk  addressed  an 
official request to European Commission Vice-President Valdis Dombrovskis for additional 
macro-financial  assistance  from  the  EU.  This  assistance would  contribute  to  covering  the 
country's external financing needs and support reform implementation.  

In light of this request and of the economic situation in Ukraine, in particular the emergence 
of  additional  external  financing  needs,  the  European  Commission  is  submitting  to  the 
European  Parliament  and  the  Council  a  proposal  to  provide  further  macro-financial 
assistance (MFA) to Ukraine, based on Article 212 of the TFEU, for an amount of up to 
EUR 1 billion to be provided in the form of medium- to long-term loans in two tranches.  

The  proposed  new  MFA  operation  would  complement  the  preceding  three  MFA 
operations, totalling EUR 3.4 billion, that have been offered to Ukraine since the onset of 
the crisis in 2014. A total of EUR 2.8 billion was disbursed under these operations, including 
EUR 1.6 billion in 2014-2015 (under the so-called MFA I and II) and two tranches of EUR 
600 million each in July 2015 and April 2017 (under MFA III). A third and final tranche of 
EUR 600 million under MFA III, subject to the implementation of 21 policy measures jointly 
agreed with the Ukrainian authorities, was not disbursed. Although Ukraine fulfilled a large 
number  of  policy  commitments  attached  to  this  instalment,  four  measures,  including  two 

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All conversions in this document are based on a EUR/USD exchange rate of 1.19. 

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related to the fight against corruption, had not been implemented by the time the availability 
period of the assistance expired in January 2018. Under these circumstances, the Commission 
was  not  in  a  position  to  disburse  the  last  instalment  under  MFA  III,  which  was  officially 
cancelled on 18 January 2018. 

The  objective  of  the  proposed  MFA  is  to  help  Ukraine  cover  part  of  its  additional 
external  financing  needs  in  2018-2019,  reducing  the  economy’s  short-term  balance-of-
payment and fiscal vulnerabilities. In addition, the EU assistance would provide incentives to 
step up Ukraine's reform efforts by agreeing with the Ukrainian authorities a Memorandum 
of  Understanding  setting  out  an  appropriate  package  of  measures  supporting  economic 
adjustment and  structural reforms. The Commission would seek a broad consensus with the 
Ukrainian authorities, so as to ensure ownership and hence increase the likelihood of smooth 
implementation  of  the  agreed  conditionality.  The  policy  conditions  should  address  key 
weaknesses of the Ukrainian economy and economic governance system and be in line with 
the  reform  commitments  taken  by  Ukraine  in  the  context  of  the  Association  Agreement,  as 
well as under other EU support instruments and the adjustment programmes with the IMF and 
the  World  Bank.  Delivering  on  key  anti-corruption  and  governance  reforms  will  be 
indispensable if the MFA operation is to be successfully completed. 

In  light  of  the  incomplete  implementation  by  Ukraine  of  the  policy  programme  linked  to 
MFA III,  which  led  to  the  cancellation  of  the  final  tranche  by  the  Commission  in  January 
2018,  it  is  appropriate  to  include  specific  conditions  for  each  of  the  two  tranches  of  this 
assistance.  More  specifically,  it  is  planned  to  reflect  the  measures  that  were  not 
implemented under the previous programme in the following way: 

 

 

 

 

On the verification of asset declarations of public officials, the Commission 
would insist on the establishment of an effective verification system, including 
through  automatic  verification  software  with  direct  and  automatic  access  to 
state  databases  and  registers.  In  the  Memorandum  to  be  agreed  with  Ukraine 
under  the  proposed  new  MFA  operation,  the  Commission  would  therefore 
require  the  aforementioned  automated  verification  system  to  be  in  place  and 
operating,  with  a  significant  number  of  declarations  verified  through  the 
automated system, giving priority to high-level officials.  

On  the  verification  of  data  to  be  provided  by  companies  on  their  beneficial 
owners  and  the  enforcement  of  companies’  reporting  obligation,  it  has  to  be 
recognised  that  this  is  still  in  its  infancy  internationally,  including  in  the  EU. 
Expert  exchanges  between  Ukraine  and  the  EU  will  be  organised,  on  a 
Ukrainian  request,  with  a  view  to  defining  feasible  steps  for  Ukraine  to 
operationalise a verification mechanism. On this basis, the Memorandum could 
specify tangible benchmarks for a verification mechanism as a condition under 
the MFA programme.  

The  wood  export  ban,  which  is  not  compatible  with  refraining  from  trade-
restricting  measures,  remains  in  place,  and  a  law  repealing  it  is  yet  to  be 
considered  by  the  responsible  parliamentary  committee  in  Ukraine.  The 
Commission will engage with the Ukrainian authorities with a view to finding 
a  solution  to  this  irritant  through  the  use  of  dedicated  trade  instruments, 
possibly including the bilateral dispute settlement.  

As  to  the  law  establishing  a  central  credit  registry,  it  was  adopted  by  the 
Ukrainian  parliament  on  6  February  2018  and  entered  into  force  on  4  March 
2018. This measure can thus be assessed as implemented and does not need to 
be reflected in the new Memorandum. 

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In addition, the Memorandum for the new programme will also include other measures 
to  be  implemented  by  Ukraine  in  order  to  receive  the  first  and  second  disbursement. 
These  will  comprise  actions  in  the  area  of  public  finance  management,  which  is  part  of  all 
MFA-related  policy  programmes.  More  generally,  the  conditionality  will  focus  on  a  select 
number of key sectors that are relevant to Ukraine's macroeconomic stabilisation.  

As  further  elaborated  in  the  Commission  Staff  Working  Document  accompanying  this 
proposal and based, among others, on the assessment of the political situation made jointly by 
the  Commission  and  the  European  External  Action  Service  (EEAS),  the  Commission 
considers  that  the  political  and  economic  pre-conditions  for  the  proposed  MFA 
operation are satisfied. 

 

General context 

Ukraine was affected by a particularly deep recession in 2014 and 2015, where real GDP 
contracted  by  6.6%  and  9.8%  respectively.  While  reflecting  Ukraine's  long-standing 
macroeconomic  and  structural  weaknesses,  the  economic  crisis  was  largely  driven  by  the 
confidence  loss  and  damage  to  production  capacity  resulting  from  the  conflict  provoked  by 
Russia's destabilising actions in the East of the country. The combination of a strong policy 
response and a large-scale international support package helped the economy return to growth 
in 2016 (2.3%). The recovery continued into 2017, when GDP growth reached an estimated 
2.2%, despite the negative impact of a cargo blockage introduced in March 2017 vis-à-vis the 
non-government-controlled  areas.  The  expansion  of  economic  activity  in  2017  was  mainly 
driven by investment and household consumption, on the back of improving confidence and 
wage growth.  

In spite of the economic crisis, Ukraine has made significant progress in the consolidation of 
its public finances in the past three years. The overall fiscal deficit, including the deficit of 
the oil and gas company Naftogaz, was reduced from 10% of GDP in 2014 to only 2.4% in 
2016  (compared  with  the  3.7%  deficit  target  agreed  for  2016  under  the  IMF  programme). 
Budget execution continued to be strong in 2017 due to robust tax collection, rising dividend 
payments from state-owned enterprises and some one-off factors such as the confiscation of 
frozen  assets  of  former  President  Yanukovych  (totalling  1%  of  GDP).  As  a  result,  the 
consolidated  state  budget  deficit  in  2017  amounted  to  approximately  1.5%  of  GDP.  Quasi-
fiscal deficits, associated with the recapitalisation of state-owned companies and banks, have 
been significantly reduced, notably due to the elimination of the operating deficit of Naftogaz. 
Such  fiscal  consolidation,  coupled  with  relative  exchange  rate  stability  since  2016,  has  also 
helped  reduce  general  government  debt  to  an  estimated  76%  of  GDP  at  the  end  of  2017 
(down from 81% at end-2016).  

The  2018  budget  envisages  a  fiscal  deficit  of  2.4%  of  GDP  (in  line  with  the  2.5%  ceiling 
foreseen in the IMF programme) and is based on assumptions of 3% real GDP growth and 9% 
consumer  price  inflation.  The  disinflation  trend  that  prevailed  from  spring  2015  (60.9%  in 
April  2015)  to  mid-2016  (6.9%  in  June  2016)  has  been  gradually  reversed.  Since  then,  the 
pick-up in inflation (14.1% in January 2018) has been driven by growing production costs and 
consumer demand (notably resulting from wage hikes), as well as rising raw food prices (due 
to  the  frost  in  early  2017  which  damaged  crops)  and  fuel  prices.  Growing  inflationary 
pressure  has  led  the  central  bank  to  raise  its  policy  interest  rate  by  a  cumulative  4.5 
percentage points since October 2017 to 17% as of 2 March 2018. 

With respect to the external sector, Ukraine’s current account deficit has gradually widened 
(3.5% of GDP in 2017) following the sharp downward adjustment induced by the economic 
crisis (from 9% of GDP in 2013 to 0.3% in 2015). This was mainly the result of the recovery 
in  investment  imports  (in  line  with  improving  business  confidence)  and  of  robust  domestic 

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consumption. A further widening of the current account deficit was contained by the strong 
rebound in exports (17% year-on-year in 2017) on the back of a growing global economy and 
favourable terms of trade. Private, non-FDI, capital inflows have also increased, notably as a 
result  of  a  USD  3  billion  Eurobond  placement  by  the  government  in  September  2017.  The 
support  from  Ukraine's  multilateral  and  bilateral  partners,  coupled  with  current  account 
adjustment  and  a  gradual  return  of  private  financial  flows,  helped  Ukraine  replenish  its 
international reserves to USD 18.6 billion at end-January 2018, despite weakness in FDI.  

Despite  the  improvement  of  the  economic  situation  since  2015,  a  number  of 
vulnerabilities  remain  due  to  the  country's  high  dependency  on  commodity  exports,  the 
slower-than-expected  replenishment  of  its  international  reserves  and  its  elevated  external 
indebtedness.  Additionally,  the  unstable  domestic  political  environment  and  a  continued 
threat of intensification of tensions in the Eastern part of the country are downside risks that 
could weigh on the still timid recovery. 

Being a commodity exporter (agricultural products and metals account for approximately 70% 
of  Ukraine's  merchandise  exports),  Ukraine  remains  particularly  vulnerable  to  worsening 
terms of trade and to the measures introduced by Russia to restrict transit from Ukraine. In 
fact,  the  global  plunge  of  commodity  prices  was  a  key  factor  for  the  balance  of  payments 
crises which Ukraine went through in 2009 and 2014-2015.  

Ukraine's  high  external  indebtedness  constitutes  another  source  of  vulnerability.  Despite 
steep deleveraging by the corporate and banking sectors since the 2014 crisis, gross external 
debt  amounted  to  USD 117.3 billion  as  of 1 October  2017 (111%  of GDP),  including USD 
47.5 billion of short-term maturities (45% of GDP). While this debt relates predominantly to 
the  private  sector  and  does  not  represent  as  such  a  direct  liability  for  the  state,  part  of  it  is 
related to state-owned companies (sometimes guaranteed by the state) and thus amounts to a 
contingent  liability  for  the  authorities.  The  amount  of  direct  state-owned  external  debt 
maturing  in  the  following  year  has  significantly  declined  with  the  crisis,  as  the  authorities 
resorted  to  long-term  lending  from  international  financial  institutions  and  rescheduled  some 
USD 15 billion of bonded debt (both directly owned as well as guaranteed) with its so-called 
debt operation of November 2015. However, it remains relatively elevated and the repayment 
obligations in 2018-2019 are considerable. 

Reserves  remain  below  IMF  adequacy  standards,  notably  in  a  context  of  high  external 
indebtedness. While Ukraine has managed to replenish its gross international reserves over 
the last three years, the process has been slower than initially programmed by the IMF. With 
USD  18.6  billion  at  end-January  2018,  reserves  remain  below  their  pre-crisis  level  and  the 
level foreseen for end-2017 at the launch of the IMF programme (USD 22.3 billion). Reserves 
could  come  under  renewed  pressure  in  2018-2019,  when  the  country  is  expected  to  make 
more  than  USD  12  billion  of  payments  (interest  and  principal)  on  sovereign  and  quasi-
sovereign  external  debt.  This  peak  in  debt  repayments  comes  at  the time  of  the  presidential 
and  parliamentary  elections  in  2019.  In  this  context,  the  further  replenishment  of  Ukraine’s 
international reserves seems necessary, and the EU’s additional MFA could usefully support 
this  effort,  both  directly  (through  its  disbursements)  and  indirectly  (as  a  catalyst  for  private 
capital inflows and instilling confidence in the local currency).  

In this context, continued support from the IMF and Ukraine's international partners, 
including  the  EU,  remains  essential.  Since  the  onset  of  the  crisis,  the  USD  17.5  billion 
Extended Fund Facility programme for Ukraine approved by the IMF in March 2015 has been 
complemented  by  substantial  support  from  Ukraine's  bilateral  partners,  including  the  EU. 
Other international financial institutions such as the World Bank, the EBRD and the EIB have 
also  significantly  scaled  up  their  activity  to  support  the  country’s  economic  transition. 

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However, as Ukraine's economy remains fragile and exposed to a number of vulnerabilities, 
the IMF estimates that the country will face additional external financing needs in 2018 and 
early  2019,  amounting  to  USD  4.5  billion  (approximately  EUR  3.8  billion2).  The  proposed 
MFA  would  cover  26.5%  of  the  total  additional  financing  gap.  The  World  Bank  is  also 
preparing  a  new  Development  Policy  Loan  in  the  amount  of  USD  800  million  as  a 
contribution towards the financing gap. Once the potential contribution from the World Bank 
is taken into account, the EU MFA will finance 32% of the remaining gap of USD 3.7 billion. 

 

Existing provisions in the area of the proposal  

MFA has been provided to Ukraine under four separate decisions: 

– 

– 

– 

– 

Council  Decision  of  12  July  2002  providing  supplementary  macro-financial 
assistance to Ukraine (2002/639/EC)3 

Decision No 646/2010/EU of the European Parliament and of the Council of 7 
July 2010 providing macro-financial assistance to Ukraine4  

Council  Decision  of  14  April  2014  providing  macro-financial  assistance  to 
Ukraine (2014/215/EU)5 

Decision No (EU) 2015/601 of the European Parliament and of the Council of 
15 April 2015 providing macro-financial assistance to Ukraine6  

 

Consistency with the other policies and objectives of the Union  

The proposed MFA is consistent with the EU’s commitment to support Ukraine’s economic 
and political transition. It is consistent with the principles governing the use of the instrument 
of  MFA,  including  its  exceptional  character,  political  preconditions,  complementarity, 
conditionality and financial discipline. 

in  Ukraine  and,  more  broadly,  resilience 

The  proposed  MFA  is  in  line  with  the  objectives  of  the  European  Neighbourhood  Policy 
(ENP).  It  contributes  to  support  the  European  Union’s  objectives  of  economic  stability  and 
development 
the  Eastern  European 
neighbourhood.  By  supporting  the  authorities’  efforts  to  establish  a  stable  macroeconomic 
framework and implement ambitious structural reforms, the proposed operation enhances the 
added value of the overall EU involvement in Ukraine and improves the effectiveness of other 
forms  of  EU  financial  assistance  to  the  country,  including  budget  support  operations  and 
grants available through external financial instruments under the current multiannual financial 
framework for 2014-2020. The proposed MFA is also an integral part of overall international 
support  for  Ukraine  and  will  continue  to  complement  the  assistance  provided  by  other 
multilateral and bilateral donors.  

in 

Ukraine  has  important  economic  ties  to  the  EU.  On  1  September  2017,  the  EU-Ukraine 
Association  Agreement  came  into  force.  The  provisions  concerning  the  Deep  and 
Comprehensive  Free  Trade  Area (DCFTA)  had  been  provisionally  applied  since  1  January 
2016, when the EU and Ukraine started to mutually open their markets for goods and services. 
The EU is Ukraine's first trading partner, accounting for 40.6% (in value terms) of Ukraine's 
total trade in 2016. Bilateral trade increased further in 2017. Ukrainian exports to the EU grew 
by 27.3% year-on-year, while imports from the EU rose by 22.1% (in value terms).  

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All conversions in this document are based on a EUR/USD exchange rate of 1.19. 
OJ L 209, 6.8.2002, p. 22-23. 
OJ L 179, 14.7.2010, p. 1. 
OJ L 111, 15.4.2014, p. 85. 
OJ L 100, 17.4.2015, p. 1–7. 

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2. 

 

LEGAL ELEMENTS OF THE PROPOSAL  

Summary of the proposed action 

The  European  Union  shall  make  MFA  available  to  Ukraine  for  a  total  amount  of  up  to 
EUR 1 billion, provided in the form of medium- to long-term loans, which will contribute to 
cover Ukraine’s residual external financing needs in 2018-19. The assistance is planned to be 
disbursed in two loan instalments. Provided the policy measures attached to each tranche have 
been implemented in a timely manner, the first instalment is expected to be disbursed in the 
second half of 2018, while the second instalment could be released in the first half of 2019. 
The assistance will be managed by the Commission. Specific provisions on the prevention of 
fraud and other irregularities, consistent with the Financial Regulation, are applicable.  

The  Commission  and  the  Ukrainian  authorities  would  agree  on  a  Memorandum  of 
Understanding setting out the structural reform measures associated with the proposed MFA 
operation, including aspects of timing and sequencing. Moreover, as is normally the case with 
MFA,  the  disbursements  would  inter  alia  be  conditional  on  satisfactory  reviews  under  the 
IMF programme and the continued drawing by Ukraine on IMF funds. 

 

Legal basis 

The legal basis for this proposal is Article 212 of the TFEU.  

 

Subsidiarity principle 

is  respected  as 

The  subsidiarity  principle 
the  objectives  of  restoring  short-term 
macroeconomic  stability  in  Ukraine  cannot  be  sufficiently  achieved  by  the  Member  States 
alone and can therefore be better achieved by the European Union. The main reasons are the 
budgetary constraints faced at the national level and the need for strong donor coordination in 
order to maximise the scale and effectiveness of the assistance.  

 

Proportionality principle 

The  proposal  complies  with  the  proportionality  principle:  it  confines  itself  to  the  minimum 
required in order to achieve the objectives of short-term macroeconomic stability and does not 
go beyond what is necessary for that purpose.  

As  identified  by  the  Commission  based  on  the  estimates  of  the  IMF  in  the  context  of  the 
stand-by  arrangement,  the  amount  of  the  assistance  corresponds  to  around  26.5%  of  the 
estimated additional financing gap for the period 2018-2019. This significant commitment is 
justified  by:  the  political  importance  of  Ukraine  for  the  stability  in  the  European 
Neighbourhood; the political association and economic integration of the country with the EU 
as reflected by the Association Agreement between the two sides that entered into force on 1 
September 2017; as well as the challenging situation that Ukraine continues to face, notably 
as a result of the conflict in the Eastern part of the country. 

 

Choice of instruments 

Project  finance  or  technical  assistance  would  not  be  suitable  to  address  macroeconomic 
objectives. The key value added of the MFA in comparison to other EU instruments would be 
to  alleviate  the  external  financial  constraint  in  a  swift  manner  and  to  help  create  a  stable 
macroeconomic  framework,  including  by  promoting  a  sustainable  balance  of  payments  and 
budgetary situation, and an appropriate framework for structural reforms. By helping to put in 
place an appropriate framework for macroeconomic and structural policies, MFA can increase 
the effectiveness of the actions financed in Ukraine under other, more narrowly focused EU 
financial instruments.  

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3. 

 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS  

Consultation of interested parties 

In  the  preparation  of  this  proposal  for  MFA,  the  Commission  services  have  been  in  regular 
contact  with  the  Ukrainian  authorities,  in  order  to  foster  Ukraine's  ownership  of  the 
programme. Besides, as MFA is provided as an integral part of the international support for 
the economic stabilisation of Ukraine, the Commission has also consulted with international 
partners of Ukraine such as the International Monetary Fund and the World Bank, which are 
supporting the country through sizeable financing programmes.  

 

Collection and use of expertise 

An Operational Assessment verifying the quality and reliability of Ukraine's public financial 
circuits and administrative procedures was carried out by the Commission with the assistance 
of  external  experts,  with  the  final  report  prepared  in  August  2014.  A  new  Operational 
Assessment is foreseen to be conducted in the second quarter of 2018 in order to reflect recent 
developments.  

 

Impact assessment 

The  EU’s  macro-financial  assistance  is  an  exceptional  emergency  instrument  aimed  at 
addressing  severe  balance-of-payment  difficulties  in  third  countries.  Therefore,  this  MFA 
proposal is exempted from the requirement to carry out an Impact Assessment in accordance 
with  the  Commission’s  Better  Regulation  Guidelines  (SWD(2015)  111  final)  as  there  is  a 
political  imperative  to  move  ahead  quickly  in  this  emergency  situation  requiring  a  rapid 
response. 

More  generally,  the  Commission’s  MFA  proposals  build  on  lessons  learned  from  ex-post 
evaluations  carried  out  on  past  operations  in  the  EU’s  neighbourhood.  The  MFA  and  the 
economic adjustment and reform programme attached to it will help alleviate Ukraine’s short-
term financing needs while supporting policy measures aimed at strengthening the country's 
fiscal  and  external  positions  in  the  medium  term  and  at  laying  the  ground  for  sustainable 
growth. 

4. 

BUDGETARY IMPLICATION  

The  planned  assistance  would  be  provided  in  the  form  of  loans  and  should  be  financed 
through  borrowing  operations  that  the  Commission  will  conduct  on  behalf  of  the  EU.  The 
budgetary costs of the assistance will correspond to the provisioning, at a rate of 9%, of the 
amounts disbursed  into the guarantee fund for external  lending  of the EU, from budget line 
01 03 06 (“Provisioning of the Guarantee Fund”). Assuming that the first loan disbursements 
will be made in 2018 for a total amount of EUR 500 million and the second loan disbursement 
in  2019  for  the  amount  of  EUR  500  million,  and  according  to  the  rules  governing  the 
guarantee fund mechanism, the provisioning will take place in the budgets for 2020 (EUR 45 
million) and 2021 (EUR 45 million).  

Based on current projections on the utilisation of the budget line 01 03 06, the Commission 
assesses  that  the  budgetary  impact  of  the  proposed  MFA  operation  for  Ukraine  can  be 
accommodated. 

5. 

 

OPTIONAL ELEMENTS 

Review/revision/sunset clause 

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The proposal includes a sunset clause. The proposed MFA would be made available for two 
and a half years, starting from the first day after the entry into force of the Memorandum of 
Understanding. 

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2018/0058 (COD) 

Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

providing further macro-financial assistance to Ukraine 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 212 (2) thereof, 

Having regard to the proposal from the European Commission,  

After transmission of the draft legislative act to the national parliaments, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 
Relations  between  the  European  Union  and  Ukraine  continue  to  develop  within  the 
framework  of  the  European  Neighbourhood  Policy  and  the  Eastern  Partnership.  An 
Association  Agreement  between 
including  a  Deep  and 
Comprehensive Free Trade Area (DCFTA), entered into force on 1 September 2017. 

the  Union  and  Ukraine, 

(2) 
Since spring 2014, Ukraine has embarked on an ambitious reform programme aiming 
to  stabilise  its  economy  and  improve  the  livelihoods  of  its  citizens.  Ukraine  and  the  Union 
have  jointly  defined  a  reform  agenda  (the  Association  Agenda,  which  was  last  updated  in 
March  2015).  The  fight  against  corruption  as  well  as  constitutional,  electoral  and  judicial 
reforms are among the top priorities on the agenda. 

In  addition  to  its  political  support,  the  Union  pledged  over  EUR  11  billion  financial 
(3) 
package  in  March  2014  to  support  economic  stabilisation  and  reform  implementation  in 
Ukraine,  including  1.6  billion  of  macro-financial  assistance  pursuant  to  Council  Decision 
2002/639/EC7, Decision No 646/2010/EU of the European Parliament and of the Council8 and 
pursuant  to  Council  Decision  2014/215/EU9.  In  view  of  Ukraine's  substantial  external 
financing  needs,  an  additional  EUR  1.8  billion  of  macro-financial  assistance  was  made 
available to the country in April 2015 pursuant to Decision (EU) 2015/601 of the European 
Parliament and of the Council10.  

(4) 
Since May 2014 Ukraine has received EUR 2.81 billion of macro-financial assistance 
from  the  Union,  including  EUR  1.2  billion  out  of  the  EUR  1.8  billion  available  under 
Decision  (EU)  2015/601  of  the  European  Parliament  and  of  the  Council.  The  third  and  last 
instalment of EUR 600 million of macro-financial assistance under Decision (EU) 2015/601 

7 

8 

9 

10 

Council Decision 2002/639/EC of 12 July 2012 providing supplementary macro-financial assistance to 
Ukraine, OJ L 209, 6.8.2002, p. 22. 
Decision  No  646/2010/EU  of  the  European  Parliament  and  of  the  Council  of  7  July  2010  providing 
macro-financial assistance to Ukraine, OJ L 179, 14.7.2010, p. 1. 
Council Decision 2014/215/EU of 14 April 2014 providing macro-financial assistance to Urkaine, OJ L 
111, 15.4.2014, p. 85. 
Decision (EU) 2015/601 of the European Parliament and of the Council of 15 April 2015, OJ L 100, 
17.4.2015, p. 1. 

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9 

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was  cancelled  on  18  January  2018  due  to  incomplete  compliance  by  Ukraine  with  the 
programme of structural reforms attached to this instalment.  

(5) 
On 11 March 2015, the International Monetory Fund approved a four-year Extended 
Fund  Facility  programme  for  Ukraine  of  around  USD  17.5  billion  to  support  the  country's 
economic adjustment and reform programme, out of which USD 8.5 billion were disbursed in 
2015-2017. The IMF financial assistance has been complemented by substantial support from 
a number of bilateral partners (including the Union and its Member States, as well as the US, 
Japan  and  Canada).  Other  international  financial  institutions  such  as  the  World  Bank,  the 
European  Bank  for  Reconstruction and  Development  (EBRD)  and  the  European  Investment 
Bank  (EIB)  have  also  significantly  scaled  up  their  activity  to  support  Ukraine’s  economic 
transition. 

Following  its  technical  mission  of  November  2017,  the  IMF  revised  its  estimates  of 
(6) 
Ukraine's external financing needs, identifying an additional gap of USD 4.5 billion for 2018 
and  2019.  Those  financing  needs  go  over  and  above  the  funding  committed  so  far  by  the 
international  community,  which  includes  the  Union's  macro-financial  assistance  pursuant  to 
Council Decision 2002/639/EC, Decision No 646/2010/EU of the European Parliament and of 
the  Council,  Council  Decision  2014/215/EU  and  Decision  (EU)  2015/601  of  the  European 
Parliament and of the Council.  

In  November  2017,  in  view  of  the  challenging  economic  and  financial  situation  that 
(7) 
Ukraine continues to face, the authorities requested additional macro-financial assistance from 
the Union. 

At  the  EU-Ukraine  Association  Council  which  took  place  on  8  December  2017,  the 
(8) 
Union  reaffirmed  its  support  for  Ukraine's  substantial  reform  efforts,  including  financial 
assistance linked to concrete reform progress. 

Given  that  Ukraine  is  a  country  covered  by  the  European  Neighbourhood  Policy,  it 

(9) 
should be considered to be eligible to receive macro-financial assistance from the Union. 

(10)  The Union’s macro-financial assistance should be an exceptional financial instrument 
of  untied  and  undesignated  balance-of-payments  support,  which  aims  at  addressing  the 
beneficiary’s immediate external financing needs, and should underpin the implementation of 
a policy programme containing strong immediate adjustment and structural reform measures 
designed to improve the beneficiary's balance-of-payments position in the short term. 

(11)  Given that a residual external financing gap remains in Ukraine’s balance of payments 
over  and  above  the  resources  provided  by  the  IMF  and  other  multilateral  institutions,  the 
Union macro-financial assistance to be provided to Ukraine is, under the current exceptional 
circumstances, considered to be an appropriate response to Ukraine’s request for support to its 
economic stabilisation, in conjunction with the IMF programme. The Union’s macro-financial 
assistance  would  support  the  economic  stabilisation  and  the  structural  reform  agenda  of 
Ukraine, supplementing resources made available under the IMF’s financial arrangement. 

(12)  The  Union’s  macro-financial  assistance  should  aim  to  support  the  restoration  of  a 
sustainable  external  financing  situation  for  Ukraine  thereby  supporting  its  economic  and 
social development. 

(13)  The determination of the amount of the Union’s macro-financial assistance is based on 
a complete quantitative assessment of Ukraine’s residual external financing needs, and takes 
into account its capacity to finance itself with its own resources, in particular the international 
reserves  at  its  disposal.  The  Union’s  macro-financial  assistance  should  complement  the 
programmes and resources provided by the IMF and the World Bank. The determination of 
the  amount  of  the  assistance  also  takes  into  account  expected  financial  contributions  from 

EN 

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bilateral and multilateral donors and the need to ensure fair burden sharing between the Union 
and  other  donors,  as  well  as  the  pre-existing  deployment  of  the  Union’s  other  external 
financing instruments in Ukraine and the added value of the overall Union involvement.  

(14)  The Commission should ensure that the Union’s macro-financial assistance is legally 
and  substantially  in  line  with  the  key  principles,  objectives  and  measures  taken  within  the 
different areas of external action and other relevant Union policies. 

(15)  The  Union’s  macro-financial  assistance  should  support  the  Union’s  external  policy 
towards  Ukraine.  Commission  services  and  the  European  External  Action  Service  should 
work  closely  together  throughout  the  macro-financial  assistance  operation  in  order  to 
coordinate, and to ensure the consistency of, Union external policy. 

(16)  The  Union’s  macro-financial  assistance  should  support  Ukraine’s  commitment  to 
values shared with the Union, including democracy, the rule of law, good governance, respect 
for human rights, sustainable development and poverty reduction, as well as its commitment 
to the principles of open, rules-based and fair trade. 

(17)  A  pre-condition  for  granting  the  Union’s  macro-financial  assistance  should  be  that 
Ukraine  respects  effective  democratic  mechanisms  –  including  a  multi-party  parliamentary 
system – and the rule of law, and guarantees respect for human rights. In addition, the specific 
objectives  of  the  Union’s  macro-financial  assistance  should  strengthen  the  efficiency, 
transparency  and  accountability  of  the  public  finance  management  systems  in  Ukraine  and 
should  promote  structural  reforms  aimed  at  supporting  sustainable  and  inclusive  growth, 
employment  creation  and  fiscal  consolidation.  Both  the  fulfilment  of  the  preconditions  and 
the  achievement  of  those  objectives  should  be  regularly  monitored  by  the  Commission  and 
the European External Action Service. 

(18) 
In  order  to  ensure  that  the  Union’s  financial  interests  linked  to  the  Union’s  macro-
financial  assistance  are  protected  efficiently,  Ukraine  should  take  appropriate  measures 
relating to the prevention of, and  fight against, fraud, corruption and any other irregularities 
linked to the assistance. In addition, provision should be made for the Commission to carry 
out checks and for the Court of Auditors to carry out audits. 

(19)  Release of the Union’s macro-financial assistance is without prejudice to the powers 
of the European Parliament and the Council as budgetary authority.  

(20)  The  amounts  of  provisioning  required  for  macro-financial  assistance  should  be 
consistent  with  the  budgetary  appropriations  provided  for  in  the  multiannual  financial 
framework. 

(21)  The  Union’s  macro-financial  assistance  should  be  managed  by  the  Commission.  In 
order  to  ensure  that  the  European  Parliament  and  the  Council  are  able  to  follow  the 
implementation  of  this  Decision,  the  Commission  should  regularly  inform  them  of 
developments relating to the assistance and provide them with relevant documents. 

In  order  to  ensure  uniform  conditions  for  the  implementation  of  this  Decision, 
(22) 
implementing  powers  should  be  conferred  on  the  Commission.  Those  powers  should  be 
exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and 
of the Council.11 

11 

Regulation  (EU)  No 182/2011  of  the  European  Parliament  and  of  the  Council  of  16 February  2011 
laying down the rules and general principles concerning mechanisms for control by Member States of 
the Commission’s exercise of implementing powers (OJ L 55, 28.2.2011, p. 13). 

EN 

11 

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(23)  The  Union's  macro-financial  assistance  should  be  subject  to  economic  policy 
conditions, to be laid down in a Memorandum of Understanding. In order to ensure uniform 
conditions  of  implementation  and  for  reasons  of  efficiency,  the  Commission  should  be 
empowered to negotiate such conditions with the Ukrainian authorities under the supervision 
of the committee of representatives of the Member States in accordance with Regulation (EU) 
No 182/2011. Under that Regulation, the advisory procedure should, as a general rule, apply 
in  all  cases  other  than  as  provided  for  in  that  Regulation.  Considering  the  potentially 
important  impact  of  assistance  of  more  than  EUR  90  million,  it  is  appropriate  that  the 
examination procedure be used for operations above that threshold. Considering the amount 
of the Union's macrofinancial assistance to Ukraine, the examination procedure should apply 
to  the  adoption  of  the  Memorandum  of  Understanding,  and  to  any  reduction,  suspension  or 
cancellation of the assistance, 

HAVE ADOPTED THIS DECISION: 

1. 

2. 

3. 

4. 

5. 

Article 1 

The  Union  shall  make  macro-financial  assistance  of  a  maximum  amount  of 
EUR 1 billion available to Ukraine (“the Union’s macro-financial assistance”), with 
a  view  to  supporting  Ukraine’s  economic  stabilisation  and  a  substantive  reform 
agenda.  The  assistance  shall  contribute  to  covering  Ukraine’s  balance  of  payments 
needs as identified in the IMF programme.  

The  full  amount  of  the  Union's  macro-financial  assistance  shall  be  provided  to 
Ukraine in the form of loans. The Commission shall be empowered on behalf of the 
Union  to  borrow  the  necessary  funds  on  the  capital  markets  or  from  financial 
institutions  and  to  on-lend  them  to  Ukraine.  The  loans  shall  have  a  maximum 
average maturity of 15 years. 

The  release  of  the  Union’s  macro-financial  assistance  shall  be  managed  by  the 
Commission in a manner consistent with the agreements or understandings reached 
between  the  International  Monetary  Fund  (IMF)  and  Ukraine,  and  with  the  key 
principles and objectives of economic reforms set out in the EU-Ukraine Association 
Agreement,  including  the  DCFTA,  agreed  under  the  European  Neighbourhood 
Policy (ENP). 

The Commission shall regularly inform the European Parliament and the Council of 
developments 
including 
disbursements  thereof,  and  shall  provide  those  institutions  with  the  relevant 
documents in due time. 

the  Union’s  macro-financial  assistance, 

regarding 

The Union’s macro-financial assistance shall be made available for a period of two 
and  a  half  years,  starting  from  the  first  day  after  the  entry  into  force  of  the 
Memorandum of Understanding referred to in Article 3(1). 

If  the  financing  needs  of  Ukraine  decrease  fundamentally  during  the  period  of  the 
disbursement  of  the  Union’s  macro-financial  assistance  compared  to  the  initial 
projections,  the  Commission,  acting  in  accordance  with  the  examination  procedure 
referred  to  in  Article 7(2),  shall  reduce  the  amount  of  the  assistance  or  suspend  or 
cancel it. 

EN 

12 

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1. 

2. 

3. 

1. 

2. 

3. 

4. 

1. 

12 

Article 2 

A  pre-condition  for  granting  the  Union’s  macro-financial  assistance  shall  be  that 
Ukraine  respects  effective  democratic  mechanisms  –  including  a  multi-party 
parliamentary system – and the rule of law, and guarantees respect for human rights. 

The  Commission  and  the  European  External  Action  Service  shall  monitor  the 
fulfilment  of  this  pre-condition  throughout  the  life-cycle  of  the  Union’s  macro-
financial assistance.  

Paragraphs  1  and  2  of  this  Article  shall  be  applied  in  accordance  with  Council 
Decision 2010/427/EU12. 

Article 3 

The  Commission,  in  accordance  with  the  examination  procedure  referred  to  in 
Article 7(2), shall agree with the Ukrainian authorities on clearly defined economic 
policy  and  financial  conditions,  focusing  on  structural  reforms  and  sound  public 
finances, to which the Union’s macro-financial assistance is to be subject, to be laid 
down  in  a  Memorandum  of  Understanding  (“the  Memorandum  of  Understanding”) 
which shall include a timeframe for the fulfilment of those conditions. The economic 
policy and financial conditions set out in the Memorandum of Understanding shall be 
consistent  with  the  agreements  or  understandings  referred  to  in  Article 1(3), 
including  the  macroeconomic  adjustment  and  structural  reform  programmes 
implemented by Ukraine with the support of the IMF.  

The  conditions  referred  to  in  paragraph  1  shall  aim,  in  particular,  at  enhancing  the 
efficiency,  transparency  and  accountability  of  the  public  finance  management 
systems in Ukraine, including for the use of the Union’s macro-financial assistance. 
Progress  in  mutual  market  opening,  the  development  of  rules-based  and  fair  trade, 
and  other  priorities  in  the  context  of  the  Union’s  external  policy  shall  also  be  duly 
taken  into  account when designing the policy measures. Progress in  attaining  those 
objectives shall be regularly monitored by the Commission. 

The  detailed  financial  terms  of  the Union’s  macro-financial  assistance  shall  be  laid 
down  in  a  Loan  Agreement  to  be  concluded  between  the  Commission  and  the 
Ukrainian authorities.  

The  Commission  shall verify,  at  regular  intervals,  that  the  conditions referred to  in 
Article 4(3) continue to be met, including whether the economic policies of Ukraine 
are in accordance with the objectives of the Union’s macro-financial assistance. In so 
doing, the Commission shall coordinate closely with the IMF and the World Bank, 
and, where necessary, with the European Parliament and the Council. 

Article 4 

Subject  to  the  conditions  referred  to  in  paragraph 3,  the  Union’s  macro-financial 
assistance shall be made available by the Commission in two loan instalments. The 
size  of  each  instalment  shall  be  laid  down  in  the  Memorandum  of  Understanding 
referred to in Article 3.  

Council  Decision  2010/427/EU  of  26 July  2010  establishing  the  organisation  and  functioning  of  the 
European External Action Service (OJ L 201, 3.8.2010, p. 30). 

EN 

13 

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2. 

3. 

4. 

5. 

1. 

2. 

3. 

4. 

13 

The amounts of the Union’s macro-financial assistance shall be provisioned, where 
required, in accordance with Council Regulation (EC, Euratom) No 480/2009.13  

The  Commission  shall  decide  on  the  release  of  the  instalments  subject  to  the 
fulfilment of all of the following conditions: 

(a) 

(b) 

the pre-condition set out in Article 2; 

a  continuous  satisfactory  track  record  of  implementing  a  policy  programme 
that contains strong adjustment and structural reform measures supported by a 
non-precautionary IMF credit arrangement; and 

(c) 

the  satisfactory  implementation  of  the  economic  policy  and  financial 
conditions agreed in the Memorandum of Understanding. 

The  release  of  the  second  instalment  shall  not,  in  principle,  take  place  earlier  than 
three months after the release of the first instalment.  

Where  the  Commission  finds  that  the  conditions  laid  down  in  paragraph 3  are  not 
met, it shall temporarily suspend or cancel the disbursement of the Union’s macro-
financial assistance.  In  such  cases,  it  shall  inform  the  European  Parliament  and  the 
Council of the reasons for that suspension or cancellation.  

The  Union’s  macro-financial  assistance  shall  be  disbursed  to  the  National  Bank  of 
Ukraine.  Subject  to  the  provisions  to  be  agreed  in  the  Memorandum  of 
Understanding,  including  a  confirmation  of  residual  budgetary  financing  needs,  the 
Union  funds  may  be  transferred  to  the  Ukrainian  Ministry  of  Finance  as  the  final 
beneficiary.  

Article 5 

The  borrowing  and  lending  operations  related  to  the  Union’s  macro-financial 
assistance shall be carried out in euro using the same value date and shall not involve 
the Union in the transformation of maturities, or expose it to any exchange or interest 
rate risk, or to any other commercial risk. 

Where  the  circumstances  permit,  and  if  Ukraine  so  requests,  the  Commission  may 
take the steps necessary to ensure that an early repayment clause is included in the 
loan  terms  and  conditions  and  that  it  is  matched  by  a  corresponding  clause  in  the 
terms and conditions of the borrowing operations.  

Where  circumstances  permit  an  improvement  of  the  interest  rate  of  the  loan  and  if 
Ukraine so requests, the Commission may decide to refinance all or part of its initial 
borrowings or may restructure the corresponding financial conditions. Refinancing or 
restructuring operations shall  be carried out  in  accordance with  paragraphs 1 and 4 
and shall not have the effect of extending the maturity of the borrowings concerned 
or  of  increasing  the  amount  of  capital  outstanding  at  the  date  of  the  refinancing  or 
restructuring. 

All costs incurred by the Union which relate to the borrowing and lending operations 
under this Decision shall be borne by Ukraine. 

Council  Regulation  (EC,  Euratom)  No 480/2009  of  25 May  2009  establishing  a  Guarantee  Fund  for 
external actions (OJ L 145, 10.6.2009, p. 10). 

EN 

14 

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5. 

1. 

2. 

3. 

14 

15 

16 

17 

18 

The  Commission  shall  inform  the  European  Parliament  and  the  Council  of 
developments in the operations referred to in paragraphs 2 and 3. 

Article 6 

The  Union’s  macro-financial  assistance  shall  be  implemented  in  accordance  with 
Regulation  (EU,  Euratom)  No 966/2012  of  the  European  Parliament  and  of  the 
Council14 and Commission Delegated Regulation (EU) No 1268/2012.15 

The  Union’s  macro-financial  assistance  shall  be 
management.  

implemented  under  direct 

The Loan Agreement referred to in Article 3(3) shall contain provisions:  

(a) 

(b) 

(c) 

(d) 

ensuring that Ukraine regularly checks that financing provided from the budget 
of  the  Union  has  been  properly  used,  takes  appropriate  measures  to  prevent 
irregularities  and  fraud,  and,  if  necessary,  takes  legal  action  to  recover  any 
funds provided under this Decision that have been misappropriated; 

ensuring  the  protection  of  the  Union’s  financial  interests,  in  particular 
providing  for  specific  measures  in  relation  to  the  prevention  of,  and  fight 
against,  fraud,  corruption  and  any  other  irregularities  affecting  the  Union’s 
macro-financial  assistance,  in  accordance  with  Council  Regulation  (EC, 
Euratom) No 2988/9516, Council Regulation (EC, Euratom) No 2185/9617 and 
Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the 
Council18;  

expressly  authorising  the  Commission,  including  the  European  Anti-Fraud 
Office, or its representatives to carry out checks, including on-the-spot checks 
and inspections;  

expressly  authorising  the  Commission  and  the  Court  of  Auditors  to  perform 
audits  during  and  after  the  availability  period  of  the  Union’s  macro-financial 
assistance,  including  document  audits  and  on-the-spot  audits,  such  as 
operational assessments; 

(e) 

ensuring that the Union is entitled to early repayment of the loan where it has 
been  established  that,  in  relation  to  the  management  of  the  Union’s  macro-

Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 
2012  on  the  financial  rules  applicable  to  the  general  budget  of  the  Union  and  repealing  Council 
Regulation (EC, Euratom) No 1605/2002 (OJ L 298, 26.10.2012, p. 1). 

Commission Delegated Regulation (EU) No 1268/2012 of 29 October 2012 on the rules of application 
of Regulation (EU, Euratom) No 966/2012 on the financial rules applicable to the general budget of the 
Union (OJ L 362, 31.12.2012, p. 1). 

Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European 
Communities financial interests (OJ L 312, 23.12.1995, p. 1). 

Council  Regulation  (EC,  Euratom)  No 2185/96  of  11 November  1996  concerning  on-the-spot  checks 
and inspections carried out by the Commission to protect the Communities’ financial interests against 
fraud and other irregularities (OJ L 292, 15.11.1996, p. 2). 

Regulation  (EU,  Euratom)  No 883/2013  of  the  European  Parliament  and  of  the  Council  of 
11 September  2013  concerning  investigations  conducted  by  the  European  Anti-Fraud  Office  (OLAF) 
and  repealing  Regulation  (EC)  No 1073/1999  of  the  European  Parliament  and  of  the  Council  and 
Council Regulation (Euratom) No 1074/1999 (OJ L 248, 18.9.2013, p. 1). 

EN 

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4. 

1. 

2. 

1. 

2. 

financial assistance, Ukraine has engaged in any act of fraud or corruption or 
any other illegal activity detrimental to the financial interests of the Union. 

the 

implementation  of 

Before 
the 
Commission  shall  assess,  by  means  of  an  operational  assessment,  the  soundness  of 
Ukraine’s financial arrangements, the administrative procedures, and the internal and 
external control mechanisms which are relevant to the assistance. 

the  Union’s  macro-financial  assistance, 

Article 7 

The  Commission  shall  be  assisted  by  a  committee.  That  committee  shall  be  a 
committee within the meaning of Regulation (EU) No 182/2011. 

Where  reference  is  made  to  this  paragraph,  Article  5  of  Regulation  (EU)  No 
182/2011 shall apply. 

Article 8 

By  30 June  of  each  year,  the  Commission  shall  submit  to  the  European  Parliament 
and to the Council a report on the implementation of this Decision in the preceding 
year, including an evaluation of that implementation. The report shall: 

(a) 

(b) 

(c) 

examine  the  progress  made  in  implementing  the  Union’s  macro-financial 
assistance; 

assess  the  economic  situation  and  prospects  of  Ukraine,  as  well  as  progress 
made in implementing the policy measures referred to in Article 3(1); 

indicate the connection between the economic policy conditions  laid  down in 
the  Memorandum  of  Understanding,  Ukraine’s  on-going  economic  and  fiscal 
performance and the Commission’s decisions to release the instalments of the 
Union’s macro-financial assistance. 

Not  later  than  two  years  after  the  expiry  of  the  availability  period  referred  to  in 
Article 1(4),  the  Commission  shall  submit  to  the  European  Parliament  and  to  the 
Council  an  ex-post  evaluation  report,  assessing  the  results  and  efficiency  of  the 
completed  Union’s  macro-financial  assistance  and  the  extent  to  which  it  has 
contributed to the aims of the assistance. 

Article 9 

This  Decision  shall  enter  into  force  on  the  third  day  following  that  of  its  publication  in  the 
Official Journal of the European Union. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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LEGISLATIVE FINANCIAL STATEMENT 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative  

Macro-financial assistance to Ukraine 
Policy area(s) concerned in the ABM/ABB structure19  

1.2. 

Policy area:  Title 01 – Economic and Financial Affairs 

Activity: 

03 – International economic and financial affairs 

1.3. 

Nature of the proposal/initiative  

X The proposal/initiative relates to a new action  

1.4. 

Objectives 

1.4.1.  The  Commission's  multiannual 

strategic  objective(s) 

targeted  by 

the 

proposal/initiative  

“A new boost for jobs, growth and investment: promoting prosperity beyond the EU” 

The DG ECFIN related activities pertain to:  

(a)  Supporting macro-financial stability and promoting growth-enhancing reforms 
outside  the  EU,  including  through  regular  economic  dialogues  with  key 
partners and by providing macro-financial assistance; and  

(b)  Supporting 

the  enlargement  process, 

the  EU 
Neighbourhood Policy and EU priorities in other third countries by conducting 
economic analysis and providing policy assessments and advice.  

implementation  of 

the 

1.4.2. 

Specific objective(s) and ABM/ABB activity(ies) concerned  

Specific objective: “Promoting prosperity beyond the EU” 

ABM/ABB activity(ies) concerned: International Economic and Financial Affairs. 

1.4.3.  Expected result(s) and impact 

The proposed assistance consists of an EU loan of up to EUR 1 billion to Ukraine, 
with a view to contributing to a more sustainable balance-of-payments situation. The 
assistance, to be disbursed in two instalments, should help the country overcome its 
difficult economic and balance-of-payments situation. It will also promote structural 
reforms aimed at raising sustainable economic growth and improving public finance 
management.  

1.4.4. 

Indicators of results and impact  

The  authorities  will  be  required  to  report  on  a  set  of  indicators  to  the  Commission 
services  on  a  regular  basis  and  provide  a  comprehensive  report  on  the  compliance 
with the agreed policy conditions ahead of the disbursement of the instalments of the 
assistance.  

The  Commission  services  will  continue  to  monitor  public  finance  management, 
following  the  operational  assessment  of  the  financial  circuits  and  administrative 
procedures in Ukraine that would be carried out in the second quarter of 2018. The 

19 

ABM: Activity-Based Management – ABB: Activity-Based Budgeting. 

EN 

17 

  EN 

 
                                                 
EU Delegation in Ukraine will also provide regular reporting on issues relevant for 
the  monitoring  of  the  assistance.  The  Commission  services  will  remain  in  close 
contact  with  the  IMF  and  the  World  Bank  to  benefit  from  their  insights  from  their 
on-going activities in Ukraine.  

An annual report to the Council and European Parliament is foreseen in the proposed 
legislative decision, including an assessment of the implementation of this operation. 
An  independent  ex-post  evaluation  of  the  assistance  will  be  carried  out  within  two 
years after the expiry of the implementation period. 

1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term  

The  disbursement  of  the  assistance  will  be  conditional  on  the  fulfilment  of  the 
political  pre-condition  and  a  satisfactory  track  record  in  the  implementation  of  a 
financing  arrangement  between  Ukraine  and  the  IMF.  In  addition,  the  Commission 
shall  agree  with  the  Ukrainian  authorities  on  specific  policy  conditions,  listed  in  a 
Memorandum of Understanding. 

1.5.2.  Added value of EU involvement 

By helping the country to build its external economic resilience, the proposed MFA 
will  contribute  to  promoting  macroeconomic  stability  and  economic  reforms  in  the 
country.  By complementing the resources  made  available by other EU instruments, 
the  international  financial  institutions  and  other  donors,  it  will  contribute  to  the 
overall effectiveness of the package of financial support agreed by the international 
donor community in the aftermath of the crisis.  

The  proposed  programme  will  also  contribute  to  strengthening  the  government's 
reform  commitment.  This  result  will  be  achieved,  inter  alia,  through  appropriate 
conditionality  for  the  disbursement  of  the  assistance.  In  a  larger  context,  the 
programme  will  signal  to  the  other  countries  in  the  region  that  the  EU  is  ready  to 
support  countries  embarking  on  a  clear  path  of  reforms  in  times  of  economic 
difficulties. 

1.5.3.  Lessons learned from similar experiences in the past 

Since  2004,  fifteen  ex-post  evaluations  have  been  carried  out  on  macro-financial 
assistance  operations.  These  evaluations  conclude  that  MFA  operations  do 
contribute,  albeit  sometimes  modestly  and  indirectly,  to  the  improvement  of  the 
external sustainability, the macroeconomic stability and the achievement of structural 
reforms in the recipient country. In most cases, MFA operations had a positive effect 
on  the  balance  of  payments  of  the  beneficiary  country  and  helped  to  relax  their 
budgetary constraints. They also led to somewhat higher economic growth.  

An  independent  evaluation  examined  in  2017  the  added  value,  impact,  design  and 
implementation of two previous MFA operations in Ukraine (MFA I and MFA II for 
a total of EUR 1.61 billion disbursed in 2014-2015) and found them to be relevant, 
effective and efficiently implemented. The main conclusions from the evaluation are 
that the MFA, in part because of the speed of its deployment, had a positive impact 
on  Ukraine’s  economy  helping  to  stabilise  the  financial  situation  and  avoided 
measures that would have had serious negative social impacts (such as further public 
spending cuts). It also contributed to the reform effort in the country. 

EN 

18 

  EN 

 
1.5.4.  Coherence and possible synergy with other relevant instruments 

The  EU  is  among  the  major  donors  to  Ukraine,  supporting  its  economic,  structural 
and institutional reforms as well as civil society. The aim is to maintain the current 
level  of  support  of  up  to  EUR  200  million  annually  in  grants  also  for  the  period 
2018-2020,  provided  that  the  progress  with  reforms  is  maintained.  Apart  from 
supporting  economic  and  government  reforms,  the  EU  assistance  would  aim  to 
ensure improved access to education, jobs and healthcare for the Ukrainian citizens, 
especially for the most vulnerable including those affected by the conflict in the East. 

The key value added  of  the MFA in comparison to  other  EU instruments  would to 
help create a stable macroeconomic framework, including by promoting a sustainable 
balance-of-payments  and  budgetary  situation,  and  an  appropriate  framework  for 
advancing  structural  reforms.  MFA  does  not  provide  regular  financial  support.  The 
MFA  is  to  be  discontinued  as  soon  as  the  country's  external  financial  situation  has 
been brought back onto a sustainable path.  

MFA  would  also  be  complementary  to  interventions envisaged  by  the  international 
financial institutions, in particular the adjustment and reform programmes supported 
by the IMF and the World Bank. 

1.6. 

Duration and financial impact  

X Proposal/initiative of limited duration  

X  Proposal/initiative  in  effect  for  2.5  years  from  the  entry  into  force  of  the 

Memorandum of Understanding, as stated in Article (1.4) of the Decision  

X  Financial impact from 2018 to 2021  

1.7.  Management mode(s) envisaged20  

X Centralised direct management by the Commission  

2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

This assistance is of macroeconomic nature and its design is consistent with the IMF-
supported  economic  programme.  The  monitoring  of  the  action  by  the  Commission 
services  will  take  place  on  the  basis  of  progress  in  the  implementation  of  the  IMF 
arrangement  and  specific  reform  measures  to  be  agreed  with  the  Ukrainian 
authorities in a Memorandum of Understanding (see also point 1.4.4). 

2.2.  Management and control system  

2.2.1.  Risks identified  

There are fiduciary, policy and political risks related to the proposed MFA operation.  

There  is  a  risk  that  the  MFA  could  be  used  in  a  fraudulent  way.  As  MFA  is  not 
designated  to  specific  expenses  by  Ukraine  (contrary  to  project  financing,  for 
example),  this  risk  is  related  to  factors  such  as  the  general  quality  of  management 
systems in the National Bank of Ukraine and the Ministry of Finance, administrative 
procedures,  control  and  oversight  functions,  the  security  of  IT  systems  and  the 
appropriateness of internal and external audit capabilities. 

20 

Details  of  management  modes  and  references  to  the  Financial  Regulation  may  be  found  on  the 
BudgWeb site: http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html 

EN 

19 

  EN 

 
                                                 
A second risk stems from the possibility that Ukraine will fail to service the financial 
liabilities towards the EU stemming from the proposed MFA loans (default or credit 
risk), which could be caused for example by a significant additional deterioration of 
the balance of payments and fiscal position of the country.  

Another  key  risk  to  the  operation  stems  from  the  regional  geopolitical  situation,  in 
particular  the  lingering  conflict  in  the  eastern  part  of  the  country,  which  acts  as  an 
important  deterrent  to  private  capital  inflows.  A  worsening  of  the  regional 
geopolitical  situation  could  have  a  negative  impact  on  Ukraine’s  macroeconomic 
stability,  affecting  the  performance  of  the  IMF  programme  and  the  disbursement 
and/or  repayment  of  the  proposed  MFA.  Ukraine’s  still  difficult  relations  with 
Russia, one of its key export markets, is also negatively impacting on the economic 
recovery of the country.  

On the domestic front, the main risks stem from the complex political environment 
and  the  existence  of  strong  vested  interests  against  reforms.  This  could  result  in 
insufficient reform implementation, in particular ahead of national elections in 2019, 
and  therefore  hamper  the  implementation  of  the  proposed  MFA,  inlcuding  though 
impacting on progress with the IMF programme.  

2.2.2.  Control method(s) envisaged  

The  macro-financial  assistance  will  be  liable  to  verification,  control  and  auditing 
procedures  under  the  responsibility  of  the  Commission,  including  the  European 
Antifraud Office (OLAF), and by the European Court of Auditors. 

2.2.3.  Costs and benefits of controls and probable non-compliance rate 

The basic costs for the Commission related to the methods of verification and control 
as  well  as  the  cost  of  the  Operational  Assessment  of  financial  and  administrative 
circuits  conducted  prior  to  the  operation,  are  described  in  Table  3.2.1.  In  addition, 
there  are  costs  for the  European  Court  of  Auditors  and  of  possible  interventions  of 
the OLAF. The Operational Assessment not only helps assess risks of misuse of the 
funds  but,  as  a  collateral  benefit,  it  provides  useful  information  on  the  necessary 
reforms  in  the  area  of  public  finance  management.  Regarding  the  probable  non-
compliance  rate,  the  risk  of  non-compliance  (in  the  form  of  non-repayment  of  the 
loan or  misuse  of the funds)  is  judged to  be  low, based on the  experience  with  the 
MFA instrument since its creation. 

2.3.  Measures to prevent fraud and irregularities  

To mitigate the risks of fraudulent use several measures have been and will be taken:  

First,  the  Loan  Agreement  will  comprise  a  set  of  provisions  on  inspection,  fraud 
prevention, audits and recovery of funds in case of fraud or corruption. It is further 
envisaged  that  a  number  of  specific  policy  conditions  will  be  attached  to  the 
assistance,  including  in  the  area  of  public  finance  management,  with  a  view  to 
strengthening  efficiency,  transparency  and  accountability.  Also,  the  assistance  will 
be paid to a specific account of the National Bank of Ukraine.  

Moreover, in line with the requirements of the Financial Regulation, the Commission 
services will carry out an Operational Assessment of the financial and administrative 
circuits  of  Ukraine to  ascertain  that  the  procedures  in  place  for  the  management  of 
programme assistance, including MFA, provide adequate guarantees. The assessment 
will cover areas  such  as budget  preparation and execution, public internal financial 
control,  internal  and  external  audit,  public  procurement,  cash  and  public  debt 

EN 

20 

  EN 

 
management,  as  well  as  the  independence  of  the  central  bank.  The  preliminary 
findings of the consultancy company engaged with this Operational Assessment are 
to  be  received  in  the  second  quarter  of  2018.  Developments  in  that  area  will  be 
further  closely  monitored  by  the  EU  Delegation  in  Kyiv.  The  Commission  is  also 
using budget support assistance to help the Ukrainian authorities improve their PFM 
systems, and these efforts are strongly supported by other donors. 

Finally, the assistance will be liable to verification, control and auditing procedures 
under the responsibility of the Commission, including the European Antifraud Office 
(OLAF), and the European Court of Auditors. 

EN 

21 

  EN 

 
3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget 
line(s) affected  

Existing expenditure budget lines  

01 03 02 Macro-financial assistance 

01 03 06 Provisioning of the Guarantee Fund 

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of  
expenditure 

Contribution  

Heading of 
multiannual 
financial 
framework 

4 

4 

Number  
[Description………
………...……….] 

01 03 02 

Macro-financial 
assistance 

01 03 06  

Provisioning of the 
Guarantee Fund 

Diff./non-diff. 
(21) 

from EFTA 
countries22 

from 
candidate 
countries23 

from third 
countries 

within the 
meaning of 
Article 
18(1)(aa) of 
the Financial 
Regulation  

Diff. 

NO 

NO 

NO 

NO 

Non-diff. 

NO 

NO 

NO 

NO 

01 03 06 – According to the Commission proposal, the Guarantee Fund for external actions 
will be provisioned according to the Fund Regulation,24 using the appropriations under budget 
line 01 03 06 (“Provisioning of the Guarantee Fund”), at a rate of 9% of the total outstanding 
liabilities.  The  provisioning  amount  is  calculated  at  the  beginning  of  the  year  “n”  as  the 
difference between the target amount and the Fund’s net assets at the end of the year “n-1”. 
This  provisioning  amount  is  entered in  year “n” into the “n+1”  draft budget and effectively 
paid in one transaction at the beginning of the year “n+1” from the budget line “Provisioning 
of the Guarantee Fund” (budget line 01 03 06). As a result, 9% (i.e. a maximum of EUR 90 
million) of the effectively disbursed amount will be considered in the target amount at the end 
of the year “n-1” for the calculation of the provisioning of the Fund. 

New budget lines requested: not applicable 

. 

21 
22 
23 
24 

Diff. = Differentiated appropriations / Non-Diff. = Non-differentiated appropriations. 
EFTA: European Free Trade Association. 
Candidate countries and, where applicable, potential candidate countries from the Western Balkans. 
Council Regulation (EC, EURATOM) No 480/2009 of 25 May 2009 establishing a Guarantee Fund for 
external actions, OJ L 145, 10.6.2009, p. 10. 

EN 

22 

  EN 

 
 
 
 
                                                 
3.2. 

Estimated impact on expenditure  

3.2.1. 

Summary of estimated impact on expenditure  

Heading of multiannual financial 
framework: 

4 

DG: <ECFIN> 

 Operational appropriations  

EUR million (to 3 decimal places) 

[Heading: The EU as a global partner] 

Year 
2018 

Year 
2019 

Year 
2020 

Year 
2021 

TOTAL 

Budget line 01 03 06 Provisioning of the 
Guarantee Fund 

Commitments 
Payments 

(1a) 

(2a) 

Appropriations  of  an  administrative  nature  financed  from  the  envelope 
of specific programmes  
(operational assessment and ex-post evaluation) 

Budget  line  01  03  02  Macro-financial 
assistance 

TOTAL appropriations 
for DG ECFIN 

 TOTAL operational appropriations  

Commitments 

Payments 

Commitments 

Payments 

(3) 

(3a) 

=1+1a 
+3 

=2+2a 

+3 

0.07 

0.07 

0.07 

0.07 

Commitments 

(4) 

Payments 

(5) 

TOTAL  appropriations  of an  administrative nature  financed 
from the envelope for specific programmes 

(6) 

0.07 

TOTAL appropriations  
under HEADING 4 
of the multiannual financial framework 

Commitments 

Payments 

=4+ 6 

=5+ 6 

0.07 

0.07 

45 

45 

45 

45 

90 

90 

0.15 

0.15 

0.22 

0.22 

45 

45.15 

90.22 

45 

45.15 

90.22 

45 

45 

45 

45 

90 

90 

0.15 

0.22 

45 

45.15 

90.22 

45 

45.15 

90.22 

EN 

23 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
If more than one heading is affected by the proposal / initiative: 

EUR million (to three decimal places) 

Heading of multiannual 
financial framework: 

5 

‘Administrative expenditure’ 

DG: ECFIN 

 Human resources 
 Other administrative expenditure  

Year 
2017 

Year 
2018 

Year 
2019 

Year 
2020 

Year 
2021 

TOTAL 

0.043 

0.429 

0.215 

0.010 

0.010 

0.010 

0.040 

0.020 

0.706 

0.070 

TOTAL DG ECFIN 

Appropriations  

0.053 

0.469 

0.235 

0.010 

0.010 

0.776 

TOTAL appropriations 
for HEADING 5 
of the multiannual financial 
framework  

(Total commitments = 
Total payments) 

0.053 

0.469 

0.235 

0.010 

0.010 

0.777 

EUR million (to three decimal places) 

Year 
2017 

Year 
2018 

Year 
2019 

Year 
2020 

Year 
2021 

TOTAL 

TOTAL appropriations  
under HEADINGS 1 to 5 
of the multiannual financial 
framework  

Commitments 

0.053 

0.539 

0.235 

45.01 

45.16 

90.997 

Payments 

0.053 

0.539 

0.235 

45.01 

45.16 

90.997 

EN 

24 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
3.2.2.  Estimated impact on operational appropriations  

 The proposal/initiative does not require the use of operational appropriations  

X The proposal/initiative requires the use of operational appropriations, as explained below: 

Commitment appropriations in EUR million (to three decimal places) 

Indicate objectives and 
outputs 

 

SPECIFIC OBJECTIVE NO 
125 

Year 2017 

Year 2018 

Year 2019 

Year 2020 

Year 2021 

Type 

Number  Cost  Number  Cost  Number  Cost  Number  Cost  Number  Cost 

Total 
number 

Total 
Cost 

- 
Output 
1 

Ex-post 
evaluation 

Output 
2 

Operational 
assessment 

- 
Output 
3 

Provisioning 
of the 
Guarantee 
Fund 

Subtotal for 
specific objective 
No 1 

TOTAL COST 

1 

0.070 

1 

1 

0.070 

0.070 

1 

0.150 

1 

0.150 

1 

45 

1 

45 

1 

1 

45 

45 

2 

2 

45.150 

45.150 

1 

2 

4 

4 

0.070 

90.0 

90.22 

90.22 

25 

As described in point 1.4.2. ‘Specific objective(s)…’ 

EN 

25 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.3.  Estimated impact on appropriations of an administrative nature 

3.2.3.1.  Summary  

 The  proposal/initiative  does  not  require  the  use  of  appropriations  of  an 

administrative nature  

X  The  proposal/initiative  requires  the  use  of  appropriations  of  an  administrative 

nature, as explained below: 

EUR million (to three decimal places) 

26 

Year 
2017 

Year 
2018 

Year 
2019 

Year 
2020 

Year  
2021 

TOTAL 

HEADING 5 
of the multiannual 
financial framework 

Human resources  

0.043 

0.429 

0.215 

0.010 

0.010 

0.010 

0.040 

0,020 

0.053 

0.469 

0.235 

0.010 

0.010 

Other administrative 
expenditure  (missions) 

Subtotal HEADING 5 
of the multiannual 
financial framework  

Outside HEADING 527 of 
the multiannual financial 
framework  

Human resources  

Other 
of 
an 
nature 

expenditure  
administrative 

Subtotal  
outside HEADING 5 
of the multiannual 
financial framework  

0.707  

0.070 

0.777 

TOTAL 

0.053 

0.469 

0.235 

0.010 

0.010 

0.777 

The  administrative  appropriations  required  will  be  met  by  the  appropriations  of  the  DG  which  are  already  assigned  to 
management  of  the  action  and/or  which  have  been  redeployed  within  the  DG,  together  if  necessary  with  any  additional 
allocation  which  may  be  granted  to  the  managing  DG  under  the  annual  allocation  procedure  and  in  the  light  of budgetary 
constraints.

26 
27 

Year N is the year in which implementation of the proposal/initiative starts. 
Technical  and/or  administrative  assistance  and  expenditure  in  support  of  the  implementation  of  EU 
programmes and/or actions (former ‘BA’ lines), indirect research, direct research. 

EN 

26 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.3.2.   Estimated requirements of human resources  

 The proposal/initiative does not require the use of human resources.  

X The proposal/initiative requires the use of human resources, as explained below: 

Estimate to be expressed in full time equivalent units 

 Establishment plan posts (officials and temporary agents) 

01 01 01 01 (Headquarters and 
Commission’s Representation Offices) 
XX 01 01 02 (Delegations) 
XX 01 05 01 (Indirect research) 
10 01 05 01 (Direct research) 

 External personnel (in Full Time Equivalent unit: FTE)28  

XX 01 02 01 (CA, INT, SNE from the 
"global envelope") 
XX 01 02 02 (CA, INT, JED, LA and 
SNE in the delegations) 

XX 01 04 yy29 

- at Headquarters 

- in delegations  

XX 01 05 02 (CA, SNE, INT - Indirect 
research) 

10 01 05 02 (CA, SNE, INT - Direct 
research) 
Other budget lines (specify) 

TOTAL 

Year 
2017 

Year 
2018 

Year 
2019 

Year 
2020 

Year  
2021 

0.3 

3.0 

1.5 

0.07 

0.07 

0.3 

3.0 

1.5 

0.07 

0.07 

XX is the policy area or budget title concerned. 

The human resources required will be met by staff from the DG who are already assigned to management of the action and/or have 
been  redeployed  within  the  DG,  together  if  necessary  with  any  additional  allocation  which  may  be  granted  to  the  managing  DG 
under the annual allocation procedure and in the light of budgetary constraints. 

Description of tasks to be carried out: 

28 

29 

CA= Contract Agent; LA = Local Agent; SNE = Seconded National Expert; INT = agency staff (‘Intérimaire’); JED= 
‘Jeune Expert en Délégation’ (Young Experts in Delegations). 
Sub-ceiling for external staff covered by operational appropriations (former "BA" lines). 

EN 

27 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Officials and temporary staff 

Director  Dir.  D:  Supervise  and  manage  the  operation,  liaise  with 
Council  and  Parliament  for  the  adoption  of  the  Decision  and  the 
approval  of  the  Memorandum  of  Understanding  (MoU),  negotiate 
with  the  Ukrainian  authorities  the  MoU,  review  reports,  lead 
missions and assess progress with conditionality compliance. 

HoU/DHoU Dir. D: Assist the Director in managing the operation, 
liaising  with  Council  and  Parliament  for  the  adoption  of  the 
Decision  and  the  approval  of  the  MoU,  negotiating  with  the 
Ukrainian  authorities  the  MoU  and  Loan  Facility  Agreement 
(together  with  Dir.  L),  reviewing  reports  and  assessing  progress 
with conditionality compliance.  

Desk economists, MFA Sector (Dir. D): Prepare the Decision  and 
MoU,  liaise  with  the  authorities  and  the  IFIs,  conduct  review 
missions,  prepare  Commission  staff  reports  and  Commission 
procedures related to the management of the assistance, liaise with 
external  experts  for  the  operational  assessment  and  the  ex-post 
evaluation.  

Directorate  L  (Units  L4,  L5  and  L6  under  the  supervision  of  the 
Director): Prepare the Loan Facility Agreement (LFA), negotiate it 
with  the  Ukrainian  authorities  and  have  it  approved  by  the 
responsible  Commission  services  and  signed  by  both  parties. 
Follow up the entry into force of the LFA. Prepare the Commission 
decision(s)  on 
the 
submission  of  the  Request(s)  for  Funds,  select  the  banks,  prepare 
and  execute  the  funding  transaction(s)  and  disburse  the  funds  to 
Ukraine.  Carry  out  the  back-office  activities  to  follow  up  the 
reimbursement of the loan(s). Prepare the corresponding reports on 
these activities. 

transaction(s),  follow  up 

the  borrowing 

External staff 

N/A 

EN 

28 

  EN 

 
3.2.4.  Compatibility with the current multiannual financial framework  

X Proposal/initiative is compatible the current multiannual financial framework. 

3.2.5.  Third-party contributions  

X The proposal/initiative does not provide for co-financing by third parties.  

3.3. 

Estimated impact on revenue  

X Proposal/initiative has no financial impact on revenue. 

EN 

29 

  EN