REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Evaluation of DECISION (EU) 2015/601 of the European Parliament and of the Council of 15 April 2015 providing further macro-financial assistance to Ukraine
Date: 2021-04-09
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: European neighbourhood policy, International Monetary Fund, Russo-Ukrainian issue, Ukraine, economic reform, economic stabilisation, macro-financial assistance, public debt, structural adjustment

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 9.4.2021  COM(2021) 169 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Evaluation of DECISION (EU) 2015/601 of the European Parliament and of the Council of 15 April 2015        providing further macro-financial assistance to Ukraine         {SWD(2021) 73 final}  
 
 
In April 2015, the European Parliament and Council adopted1 a MFA operation of EUR 1.8 
billion  to  support  Ukraine.  The  aim  was  to  address  Ukraine’s  balance-of-payment  crisis, 
triggered by the economic and political instability which followed the Russian annexation of 
the Crimean peninsula in 2014, and the subsequent conflicts in the eastern part of the country.  

The  aim  of  this  ex-post  evaluation  of  the  third  MFA  operation  (MFA-III)  to  Ukraine  is  to 
assess  its  relevance,  efficiency,  effectiveness,  coherence,  and  EU  value  added.  It  also 
explores  the  social  impact  of  the  programme  and  its  effect  on  Ukraine’s  public  debt 
sustainability. This  evaluation draws on evidence gathered through a variety of quantitative 
and  qualitative  research  techniques,  including  key  stakeholders  consultation.  A  number  of 
methodological  limitations  have  been  identified;  however,  they  do  not  impact  the  overall 
reliability of the evaluation analysis. Risks and limitations identified were mitigated by using 
a  wide  range  of  sources,  different  evaluation  techniques,  alternative  scenarios  and  multiple 
rounds of feedback. 

The purpose of this evaluation is to (1) inform the future use of the MFA instrument; and (2) 
ensure transparency and accountability, in accordance with the Financial Regulation2 and the 
MFA decision for Ukraine.  

The evaluation found that MFA-III was highly relevant in terms of its objectives, financial 
envelope3 and policy conditions.  MFA conditionality  addressed the main reform  challenges 
in  Ukraine,  namely:  public-finance  management;  energy  sector;  business  environment; 
governance  and  transparency;  social-safety  net;  and  financial  sector.  While  the  country 
successfully delivered on most of the agreed reform conditions, difficulties were encountered 
in  implementing  reforms  in  the  field  of  anti-corruption,  trade  and  financial  sector  reforms, 
which led to the non-disbursement of the MFA’s third tranche.  

Given  the  level  of  ambition  of  most  of  the  conditions  concerned,  and  with  the  benefit  of 
hindsight, the number of reform conditions should have been lower4. Although the number of 
conditions in MFA-III reflects the exceptional size of the assistance (more money for more 
reforms), a smaller number may have helped the authorities focus on key priorities and keep 
ownership high. In line with this insight, the Commission chose a more focused approach to 
the  conditionality  in  the  subsequent  MFA-IV  operation.  Nonetheless,  overall,  the  non-
disbursement of the third tranche of MFA-III cannot be primarily explained by the size of the 
conditionality package.  

To secure more efficient results, as also underlined by the external evaluator, the design of 
the MFA-III reform package could have better taken into account: (i) a limited institutional 
capacity; (ii) how political and economic instability that can delay implementation; and (iii) 
the existence of vested interests that undermined the effective implementation of the agreed 
reforms  by  Ukrainian  authorities.  Anti-corruption  conditions  under  MFA-III  were 
subsequently taken forward as part of MFA-IV, underlining the shared intention by the EU 
and the Ukrainian Government to concentrate efforts on pushing for steady progress in this 
critical reform area. 

1    Decision (EU) 2015/601 of the European Parliament and of the Council of 15 April 2015 providing macro-   

financial   assistance to Ukraine:  

      https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1476965532409&uri=CELEX:32015D0601 
2     https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32018R1046 
3     MFA-III to Ukraine was the largest single operation in the history of MFA instrument.  
4     MFA-III contained 36 conditions (46 if sub-conditions are counted).  

1 

 
 
 
 
 
                                                           
MFA-III was effective in supporting fiscal consolidation and helping Ukraine to improve its 
balance-of-payments  position.  The  magnitude  and  favorable  terms  of  the  intervention 
allowed  for  fiscal  savings,  necessary  for  the  implementation  of  structural  reforms,  and 
increased confidence in the Ukrainian economy.  

MFA-III  was  coherent  with  the  broad  policy  framework  guiding  EU-Ukraine  relations. 
There  was  also  a  high  level  of  external  coherence  with  interventions  coming  from  other 
international  donors.  The  MFA  not  only  contributed  to  ‘burden  sharing’  with  the 
International  Monetary  Fund (IMF) and other donors in  financial terms,  but  also  reinforced 
reforms  promoted  by  the  IMF  and  World  Bank  through  the  use  of  cross  conditionality  and 
complementary conditions.  

The ability of the EU to mobilise and coordinate significant financial resources at a relatively 
quick speed was a key rationale for the intervention, in a time when Ukraine’s financing need 
was  still  extremely  high.  MFA  conditionality  created  a  politically  reinforcing  effect  that 
contributed  to  the  mobilisation  of  Ukrainian  authorities  around  crucial  reforms.  The 
programme also added value through its confidence-boosting effect on the private sector.  

A  counterfactual  analysis  on  the  MFA’s  social  impact  suggests  that,  if  MFA  and  IMF 
support had not been provided, the effects on the social situation in Ukraine would have been 
severe.  The  MFA  intervention  had  both  direct  and  indirect  positive  social  impacts  on 
Ukrainian  population,  strengthening  the  social  safety  net  and  protecting  low-income 
households  against  higher  prices  resulting  from  energy  reforms,  through  compensation 
schemes. Overall, the majority of social indicators has improved in the concerned period.   

Finally, MFA-III had a crucial role in the sustainability of Ukraine’s public debt through 
a  variety  of  channels,  including  a  signalling  effect  that  acted  as  a  catalyst  for  additional 
financial  support  and  investor  confidence.  The  programme  allowed  for  fiscal  savings, 
stemming from  the highly  favourable loan terms, helping Ukraine to  smooth  its  adjustment 
path and create fiscal space for reforms and sustained social spending.  

In conclusion, MFA-III was crucial to support Ukraine in addressing its balance-of-payment 
problems and implementing key structural reforms to stabilise the economy and enhance the 
sustainability of its external position. It allowed for fiscal savings and financial benefits, and 
acted  as  catalyst  for  additional  financial  support  and  investor  confidence.  The  MFA 
conditionality  package  was  fully  aligned  with  the  related  IMF  programme  and  created  a 
politically  reinforcing  effect  that  contributed  to  the  mobilisation  of  Ukrainian  authorities 
around  essential  reforms,  especially  in  areas  not  covered  by  other  international  donor 
programmes.  

The  Commission  Staff  Working  Document,  which  informs  this  report,  provides  a  detailed 
and comprehensive assessment of the MFA intervention. A number of the conclusions related 
to the assessment of the evaluation criteria will require further consideration and may benefit 
from cross-comparison with other completed MFA operations. A meta-evaluation is planned 
for end of 2021 and will explore these points in more detail. The meta-evaluation will provide 
a synthesis of the results of the evaluation studies of MFA operations carried out in the last 
ten years and will consider the reliability and relevance of the methodology, process, outputs, 
and outcomes of all the MFA operations undertaken. In addition, the exercise will assess the 
timeline of MFA operations and potential linkages to added value and operational visibility. 

2