Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing the Ukraine Loan Cooperation Mechanism and providing exceptional macro-financial assistance to Ukraine
Date: 2024-09-20
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EU aid, EU loan, European neighbourhood policy, Russia, Russo-Ukrainian issue, Ukraine, economic aid, economic reconstruction, financial aid, macro-financial assistance

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   EUROPEAN COMMISSION  Brussels, 20.9.2024  COM(2024) 426 final 2024/0234 (COD)  Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing the Ukraine Loan Cooperation Mechanism and providing exceptional macro-financial assistance to Ukraine  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

The  EU  is  steadfast  in  its  support  to  Ukraine,  whose  future  lies  within  the  EU.  The  EU 
supports Ukraine’s independence, sovereignty and territorial integrity within its international 
recognised  borders  and  is  unwavering  in  its  commitment  to  provide  political,  financial, 
economic, humanitarian, military and diplomatic support1. In light of the  escalating Russian 
aggression,  it  is  necessary  to  act  swiftly  to  ensure  Ukraine  has  access  to  the  resources  it 
urgently  needs.  This  proposal  is  designed  to  ensure  the  establishment  of  a  new  mechanism 
before  the  end  of  this  year  to  mobilise  funds  for  Ukraine  and  also  provides  for  exceptional 
Macro-Financial Assistance (MFA) to address those urgent needs. 

On  24  February  2022,  Russia  launched  a  full-scale  military  invasion  of  Ukraine,  with 
devastating consequences for Ukraine and its people. Russia’s recent  escalation of its brutal 
war of aggression against Ukraine confirms its readiness to violate the fundamental rights of 
Ukraine  to  independence,  sovereignty  and  territorial  integrity  within  its  internationally 
recognised  borders,  and  to  destroy  its  viability  as  a  State.  The  bravery,  courage  and 
determination  shown  by  the  Ukrainian  people  to  defend  their  country  deserve  profound 
respect and gratitude. 

The EU, together with its Member States, has unequivocally condemned Russia’s actions and 
has  offered  unprecedented  support  to  Ukraine.  The  EU,  its  Member  States  and  European 
Financial  Institutions  have  together  provided  wide-ranging  assistance  to  Ukraine  and  its 
people since the outbreak of the war, amounting to EUR 118 billion. This reflects the EU’s 
commitment to help Ukraine for as long as it takes and as intensely as needed.  

However, Russia’s intensified aggression has increased Ukraine’s financing needs. It is clear 
that additional sources of funding both from the EU and the international community will be 
needed.  Ukraine’s  financing  needs  for  2025  will  outstrip  existing  projections  by  the 
International Monetary Fund (IMF), whose fourth review of the IMF Programme assumed the 
war  would  conclude  by  the  end  of  2024.  This  assumption  looks  increasingly  unlikely,  and 
Ukraine’s recently adopted budget declaration, developed in cooperation with the IMF, adds a 
projected additional USD 12 billion to its financing needs for 2025, bringing the total to USD 
38 billion. Whilst Ukraine has been implementing measures to increase revenues and reduce 
non-essential expenditure, there is now limited room for additional cuts,  and little scope for 
domestic  measures  to  address  the  additional  needs.  Further  broad-based  tax  increases  could 
harm  economic  activity,  already  at  extra  risk  following  ongoing  attacks  on  key  energy  and 
other infrastructure, and labour shortages caused by the continued displacement of people and 
mobilisation  of  soldiers.  Swift  financial  support  is  vital  to  help  Ukraine  maintain  essential 
state functions, ensure macroeconomic stability and rehabilitate critical infrastructure. These 
needs come on top of significant requirements for medium-term recovery and reconstruction. 

In  their  summit  statement  of  14  June  20242,  G7  Leaders  reaffirmed  their  determination  to 
continue providing military, budget, humanitarian, and reconstruction support to Ukraine. To 
this end, G7 Leaders announced the launch of the Extraordinary Revenue Acceleration Loans 

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European Council Conclusions, 27 June 2024; EUCO 15/24.  
Apulia G7 Leaders’ Communiqué, 14 June 2024. 

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for Ukraine, to make available approximately USD 50 billion in additional funding by the end 
of 2024. 

The proposal put forward today takes this step forward by ensuring that continued support to 
Ukraine can come through a collective approach of the international community. This will be 
enabled by the creation of a mechanism that provides support to Ukraine to service and repay 
loans from G7 partners alongside a new exceptional MFA loan from the EU. 

Leveraging extraordinary revenues to support loans to Ukraine 

As part of the sanctions imposed by the EU on Russia in response to its actions in Ukraine, 
assets of the Central Bank of Russia held by financial institutions in the Member States have 
been immobilised since February 20223. The assets held in the EU, worth approximately EUR 
210 billion, represent the majority of such immobilised assets worldwide. The prohibition of 
transactions on these assets generates an extraordinary and unexpected cash accumulation on 
the balance sheets of central securities depositories4. Depending on the level of interest rates, 
the extraordinary revenues have been estimated at up to EUR 4-5 billion a year.  

These unexpected and extraordinary revenues do not constitute sovereign assets, and do not 
have to be made available to the Central Bank of Russia under applicable rules, even after the 
immobilisation  ends.  As  they  result  from  the  implementation  of  the  restrictive  measures5, 
central securities depositories cannot expect to gain from them.  

Council Decision (CFSP) 2024/5776 provided for measures applying from 15 February 2024, 
laying  down  rules  for  the  setting  aside  of  the  extraordinary  revenues  stemming  from  the 
immobilisation. This was followed in May 2024 by measures for the use of the ensuing net 
profits for the benefit of Ukraine7. These are currently being used in the form of a financial 
contribution  to  support  both  military  and  reconstruction  objectives.  At  present,  Union 
restrictive  measures  provide  that  90%  of  the  financial  contribution  is  allocated  to  the 
European  Peace  Facility  and  10%  to  the  Ukraine  Facility.  This  reflects  Ukraine’s  urgent 
military  needs.  The  relevant  rules  on  restrictive  measures  allow,  however,  for  a  revision  of 
this allocation.  

A Ukraine Loan Cooperation Mechanism  

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Council  Decision  (CFSP)  2022/335  of  28  February  2022  amending  Decision  2014/512/CFSP 
concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine,  OJ L 
57, 28.2.2022, p. 4. 
Central  securities  depositories  are  defined  under  Regulation  (EU)  No 909/2014  of  the  European 
Parliament  and  of  the  Council  of  23 July  2014  on  improving  securities  settlement  in  the  European 
Union  and  on  central  securities  depositories  and  amending  Directives  98/26/EC  and  2014/65/EU  and 
Regulation (EU) No 236/2012, OJ L 257, 28.8.2014, p. 1. 
In particular, the prohibition laid down in Article 1a(4) of Council Decision 2014/512/CFSP of 31 July 
2014 concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine 
and  Article 5a(4)  of  Council  Regulation  (EU)  No  833/2014  of  31  July  2014  concerning  restrictive 
measures in view of Russia's actions destabilising the situation in Ukraine, OJ L 229, 31.7.2014, p. 1. 
Council  decision  (CFSP)  2024/577  of  12  February  2024  amending  Decision  2014/512/CFSP 
concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine, OJ L, 
2024/577, 14.2.2024. 
Council Decision (CFSP)  2024/1470 of 21 May 2024 amending Decision 2014/512/CFSP concerning 
restrictive measures in view of Russia’s actions destabilising the situation in Ukraine, OJ L, 2024/1470, 
22.5.2024. 

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In June 2024, the European Council invited the Commission, the High Representative and the 
Council  to  take  work  forward  to  provide  additional  funding  for  Ukraine  by  the  end  of  the 
year. In line with the results of the G7 summit, this would take the form of loans serviced and 
repaid by future flows of the extraordinary revenues. The European Council made clear that 
this construction was designed to make possible the servicing and repayment not only of an 
EU  loan,  but  also  those  of  other  G7  partners.  The  European  Council  also  concluded  that 
Russia’s assets  should remain immobilised until Russia ceases its war of aggression against 
Ukraine and compensates it for the damage caused by the war. This represents a commitment 
to  maintain  the  immobilisation  of  the  assets  and  therefore  the  collection  of  the  financial 
contribution  raised  on  the  extraordinary  profits,  offering  a  source  of  funds  to  service  and 
repay loans of Ukraine until such time as compensation from Russia is available to pay off the 
loans.  

The  current  proposal  will  support  G7  partners  in  issuing  loans  to  Ukraine  in  parallel  to  the 
EU’s  exceptional  MFA  loan,  with  a  view  to  reaching  the  total  amount  envisaged  at  the  G7 
summit. Specifically, this proposal would create a Ukraine Loan Cooperation Mechanism to 
provide Ukraine with non-repayable financial support to assist it in repaying loans provided 
by  G7  partners.  The  repayment  of  the  loans  would  be  supported  by  proceeds  from  future 
flows of the extraordinary profits stemming from Russia’s immobilised assets in the Union, as 
well  as  being  open  to  other  sources,  including  extraordinary  revenues  generated  in  other 
relevant jurisdictions. 

The  Ukraine  Loan  Cooperation  Mechanism  would  disburse  these  received  amounts  on  a 
regular basis, so that Ukraine can cover the principal and interest of eligible loans to the EU 
and other G7 lenders on a pro-rata basis according to the principal of each loan. 

Residual  risk  is  carried  by  each  lender  for  their  respective  loans.  A  loan  agreement  with 
Ukraine will clarify that once compensation is paid by the aggressor, these funds will ensure 
repayment of the loans by Ukraine. Since the loans are underpinned by the revenues from the 
immobilised Russian assets, they will not add to the debt burden of Ukraine.  

To  operationalise  the  Ukraine  Loan  Cooperation  Mechanism,  the  allocation  of  the  amount 
paid  by  central  security  depositories  as  set  out  in  Council  Decision  (CFSP)  2024/1470  and 
Annex  XLI  to  Council  Regulation  (EU)  No  833/2014  will  have  to  be  adjusted.  The 
Commission and High Representative are preparing the legal proposals for implementing acts 
modifying the allocation. Furthermore, in order to smoothen the payment profile of all Union 
budget  support  to  Ukraine,  the  Ukraine  Facility’s  payment  schedule  may  be  amended.  The 
Commission is monitoring the total level of financial support to Ukraine and may prepare a 
proposal to amend this payment schedule as and if necessary. 

The coming months will be decisive to demonstrate the collective G7 commitment in the form 
of  such  loans,  requiring  a  coordinated  international  effort  and  close  cooperation  among 
international partners. It is urgent to adopt the proposals before end October, so that the Union 
loan  can  be  released  before  the  end  of  2024  for  future  disbursements  in  tranches  and  allow 
using the already granted headroom guarantee.  

EU financial assistance to Ukraine 

This  proposal  will  complement  support  already  under  way.  The  EU,  its  Member  States  and 
European  Financial  Institutions  have  together  provided  over  EUR  118  billion  in  grants  and 
loans supporting the Ukrainian war effort, its economy, helping to maintain basic services and 
offer early reconstruction, humanitarian assistance and help to those fleeing the war. As part 

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of the military assistance, the EU is providing EUR 6.1 billion in military support through the 
European  Peace  Facility,  which  will  increase  in  2024  using  revenues  from  immobilised 
Russian assets. Of the total amount, over EUR 45 billion have been provided or guaranteed by 
the  EU  budget  in  budget  support,  as  well  as  humanitarian  and  emergency  assistance.  This 
includes EUR 25.2 billion of disbursements under four macro-financial assistance operations 
to help Ukraine address urgent financing needs, and EUR 12.2 billion in disbursements thus 
far under the Ukraine Facility.  

The  EU’s  substantial  macro-financial  assistance  to  Ukraine  in  2022  and  2023  has  made  a 
major contribution to Ukraine’s macroeconomic stability. The stabilisation of public finances 
has  allowed  Ukraine  to  maintain  essential  services  for  its  people,  as  well  as  freeing  up 
resources  for  the  imperative  of  military  defence  against  the  Russian  aggression.  It  has  also 
helped  to  advance  the  implementation  of  crucial  economic  reforms.  In  2024,  Ukraine’s 
proven  reform  track-record  paved  the  way  for  the  adoption  of  the  EUR  50  billion  Ukraine 
Facility,  a  medium-term  instrument  to  provide  Ukraine  with  a  continued,  predictable  and 
flexible source of financing to 2027, while ensuring that Ukraine continues essential reforms, 
particularly in view of its accession path. In this context, the Ukrainian authorities adopted the 
Ukraine Plan, the overarching reform agenda for the period 2024-2027. Financing under the 
Facility  will  help  Ukraine  to  keep  its  administration  running,  provide  basic  public  services, 
and  support  recovery  and  reconstruction.  The  Ukraine  Plan  contains  key  reforms  and 
investments  that  can  boost  sustainable  economic  growth  and  attract  investments,  to  amplify 
the  country's  growth  potential  in  the  medium-to-long  term.  In  2024  alone,  the  Facility  is 
expected  to  disburse  EUR  16  billion  under  its  Pillar  I,  mainly  subject  to  the  timely  and 
successful  implementation  of  the  Ukraine  Plan  measures,  making  it  not  only  an  important 
source of financing, but also the key framework underpinning Ukraine’s reform efforts. 

This proposal provides for exceptional MFA to address the increased needs. This assistance 
will  be  delivered  in  a  predictable,  continuous,  orderly,  and  timely  manner  to  finance 
immediate  needs,  rehabilitate  critical  infrastructure,  and  offer  initial  support  for  sustainable 
post-war  reconstruction,  supporting  Ukraine  on  its  path  towards  European  integration. 
Disbursement  will  be  linked  to  preconditions  and  policy  conditions  to  be  set  out  in  a 
Memorandum  of  Understanding  between  the  Commission  and  Ukraine  (‘MoU’).  Those 
conditions  should  be  consistent  with  the  qualitative  and  quantitative  steps  contained  in  the 
Ukraine Plan.  

The  EU  contribution  through  the  exceptional  MFA  will  provide  fiscal  space  to  Ukraine  to 
make  its  spending  choices  according  to  its  most  urgent  needs,  including  its  recovery  and 
reconstruction as well as its self-defence against Russia’s war of aggression. In that context, it 
is appropriate that Ukraine takes a commitment to promote the cooperation with the Union on 
the recovery, reconstruction and modernisation of Ukraine’s defence industry, in line with the 
objectives  of  the  European  Defence  Industry  Programme  (EDIP)  and  other  relevant  Union 
instruments. 

To ensure a sound financial underpinning, the MFA loan to Ukraine should (in the same way 
as  the  MFA+  instrument  and  the  loan  part  of  the  Ukraine  Facility  which  have  provided 
financial  support  to  Ukraine  since  2023)  be  backed  by  a  guarantee  from  the  EU  budget 
headroom,  i.e.,  the  budgetary  space  above  the  ceiling  for  payments  of  the  multiannual 
financial framework (MFF) up to the limit of the own resources ceiling. This would provide a 
high degree of protection and reassurance to investors, and avoid the provisioning of loans or 
establishment of national guarantees, without requiring changes to the size or ceilings of the 

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MFF8. Therefore, the decision on the release of the new MFA loan should be taken before the 
end of this year. 

• 

Consistency with existing policy provisions in the policy area 

The support under the MFA operation will be consistent with and complementary to activities 
financed under Regulation (EU) 2024/7929, Regulation (EU) 2021/94710 and Regulation (EC) 
No  1257/9611  in  line  with  the  respective  objectives,  intervention  logic  and  rules  of  these 
instruments. 

In particular, the MFA loan comes in addition and is complementary to the support provided 
by the EU under the Ukraine Facility. Specific attention is paid to the consistency and mutual 
reinforcement of the MFA operation and the implementation of the Facility. Most notably, the 
release of the MFA loan will be linked to the satisfactory fulfilment of the policy conditions 
laid  down  in  an  MoU,  which  will  be  consistent  with  the  qualitative  and  quantitative  steps 
contained  in  the  Annex  to  the  Council  Implementing  Decision  (EU)  2024/1447  on  the 
approval of the assessment of the Ukraine Plan12, and any amendments thereof until the entry 
into  force  of  the  MoU.  Moreover,  the  sound  financial  management  and  control  mechanism 
established  under  the  Ukraine  Facility  as  well  as  the  rights,  responsibilities  and  obligations 
provided  in  the  Framework  Agreement  under  the  Facility  that  should  ensure  the  Union’s 
financial interest should be applied for the purpose of the MFA loan. 

• 

Consistency with other Union policies 

The  support  under  the  Ukraine  Loan  Cooperation  Mechanism  will  be  consistent  with  the 
application of restrictive measures (sanctions) against Russia. It  will also  be consistent with 
the  European  Council  Conclusions  from  27  June  2024,  inviting  the  Commission,  High 
Representative  and  the  Council  to  take  work  forward  on  providing  additional  funding  to 
Ukraine by the end of the year, in the form of loans serviced and repaid by future flows of the 
extraordinary  revenues,  together  with  G7  partners,  to  support  Ukraine’s  current  and  future 
military, budget and reconstruction needs.  

Furthermore, the candidate status granted by the European Council on 23 June 2022 and the 
decision by the 14-15 December 2023 European Council to open accession negotiations with 
Ukraine anchor Ukraine firmly on its European path. This is why the whole EU response in 
support  of  Ukraine’s  resilience  and  recovery  –  including  through  the  Ukraine  Loan 
Cooperation  Mechanism  and  the  MFA  operation,  which  will  in  turn  be  consistent  with  and 

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This is possible given the amendment to Council Regulation (EU, Euratom) 2020/2093 of 17 December 
2020  laying  down  the  multiannual  financial  framework  for  the  years  2021  to  2027,  OJ  L  433I, 
22.12.2020,  p.  11.  This  allowed  contingent  liabilities  stemming  from  financial  assistance  to  Ukraine 
available for 2023 and 2024 to be treated in the same way as financial assistance for Member States. 
Regulation  (EU)  2024/792  of  the  European  Parliament  and  of  the  Council  of  29  February  2024 
establishing the Ukraine Facility. 
Regulation (EU) 2021/947 of the European Parliament and of the Council of 9 June 2021 establishing 
the  Neighbourhood,  Development  and  International  Cooperation  Instrument  –  Global  Europe, 
amending and repealing Decision No 466/2014/Union of the European Parliament and of the Council 
and repealing Regulation (EU) 2017/1601 of the European Parliament and of the Council and Council 
Regulation (EC, Euratom) No 480/2009, (OJ L 209, 14.6.2021, p. 1). 
Council  Regulation  (EC)  No  1257/96  of  20  June  1996  concerning  humanitarian  aid  (OJ  L  163, 
2.7.1996, p. 1). 
Council Implementing Decision (EU) 2024/1447 of 14 May 2024 on the approval of the assessment of 
the Ukraine Plan, OJ L, 2024/1447, 24.5.2024. 

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supporting the implementation of the Ukraine Facility – will also contribute to the early phase 
of Ukraine’s pre-accession process. 

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LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 212 TFEU is an appropriate legal basis for financial assistance programmes granted by 
the Union for third countries, which are not development countries, and is  a legal basis that 
has been used for previous MFA loans. 

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Subsidiarity (for non-exclusive competence)  

The  subsidiarity  principle  is  respected  as  the  need  for  a  common  response  in  providing 
support to  Ukraine on adequate scale cannot  be sufficiently achieved by  the Member  States 
alone  and,  by  reasons  of  its  scale  and  effect,  can  be  better  achieved  by  the  EU.  The  main 
reasons  are  the  fiscal  capacity  and  budgetary  constraints  faced  at  the  national  level  and  the 
need  for  strong  donor  coordination  in  order  to  maximise  the  scale  and  effectiveness  of  the 
support,  while  limiting  the  burden  on  the  administrative  capacity  of  Ukrainian  authorities, 
which is very stretched in the current circumstances. The EU is in a unique position to deliver 
external  assistance  to  Ukraine  to  cover  urgent  financing  needs,  notably  by  providing 
concessional  short-term  and  long-term  relief  in  the  form  of  loans  and  of  non-repayable 
financial support in a predictable, continuous, orderly and timely manner.  

• 

Proportionality 

The Ukraine Loan Cooperation Mechanism and the MFA operation are proposed as a targeted 
response to the specific circumstances of Ukraine due to the Russian war of aggression.  

The continued unprovoked and unjustified military aggression by Russia requires granting of 
additional financial assistance to Ukraine in line with the objectives and modalities described 
under this proposal. 

The  proposed  financial  support  to  Ukraine  is  considered  adequate  in  size,  based  on  the 
elevated  funding  needs,  while  taking  into  account  the  high  uncertainty  of  the  war 
circumstances.  

The  overall  amount  of  funding  made  available  to  Ukraine  through  the  exceptional  MFA 
operation  and  eligible  bilateral  loans,  that  will  be  serviced  and  repaid  by  future  flows  of 
extraordinary  revenues  through  the  Ukraine  Loan  Cooperation  Mechanism,  conforms  to  an 
initiative  by  the  G7  that  ensures  broad  international  burden  sharing  with  partners,  and  does 
not  go  beyond  what  is  necessary  for  the  sought  purpose  to  support  Ukraine’s  projected 
budgetary needs.  

• 

Choice of the instrument 

A  Regulation  is  the  appropriate  instrument  as  it  provides  directly  applicable  rules  for  the 
implementation  of  the  Ukraine  Loan  Cooperation  mechanism  and  the  macro-financial 
assistance.  

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3. 

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RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Ex-post evaluations/fitness checks of existing legislation 

The  proposal  follows  a  series  of  macro-financial  assistance  operations  provided  to  Ukraine 
since 2015. Past ex-post evaluations of previous MFA operations to Ukraine have shown that 
in general they were highly relevant in terms of their objectives, financial envelope and policy 
conditions. In particular, MFA operations proved 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.  They  allowed  for  fiscal 
savings  and  financial  benefits,  and  acted  as  a  catalyst  for  additional  financial  support  and 
investor  confidence.  The  conditionality  attached  to  the  MFA  operations  was  found 
complementary to the related IMF programmes. It created a politically reinforcing effect that 
contributed  to  the  mobilisation  of  the  Ukrainian  authorities  around  essential  reforms, 
especially  in  structural  policy  areas  that  are  less  covered  by  other  international  donor 
programmes. 

in  maintaining  macroeconomic  stability  and 

The  MFA+  instrument  in  2023  brought  total  financial  support  up  to  the  maximum  level  of 
EUR 18 billion, which helped Ukraine cover its immediate funding needs in 2023 by means 
of  a stable,  predictable  and  sizeable  financial support  instrument.  This  funding  was 
instrumental 
the  underpinning  reform 
conditionality allowed for broad-ranging improvements in the country’s structural economic 
fabric. Notably, this included the strengthening of the independence of the Specialised Anti-
Corruption Prosecutor’s Office, an enhancement of the functioning of legal institutions such 
as through the appointment of a head of the anti-corruption authority and the improvement of 
the selection process for judges. Moreover, Ukraine improved the bankruptcy and insolvency 
framework and also made significant advances towards a more efficient energy system and in 
promoting a better business climate. 

• 

Stakeholder consultations 

The  proposal  delivers  on  the  calls  by  the  international  community  to  remain  strongly 
committed  to  helping  Ukraine  meet  its  urgent  short-term  financing  needs,  as  well  as 
supporting  its  long-term  recovery  and  reconstruction  priorities.  It  follows  up  on  the 
commitment  made  at  the  G7  Summit  in  Apulia  on  14  June  2024  to  launch  “Extraordinary 
Revenue Acceleration (ERA) Loans for Ukraine”, in order to make available approximately 
USD  50  billion  in  additional  funding  to  Ukraine  by  the  end  of  the  year  2024.  In  the 
preparation  of  this  proposal,  the  Commission  services  have  consulted  with  international 
financial  institutions  and  other  bilateral  (including  Member  States  and  G7  members)  and 
multilateral  donors,  with  significant  expertise,  including  as  regards  the  Ukrainian  economy. 
The Commission has also been in regular contact with the Ukrainian authorities.  
A formal stakeholder consultation could not be carried out due to the urgency of preparing the 
proposal  so  that  it  can  be  adopted  in  a  timely  manner  by  the  co-legislators  to  render  it 
operational by end of 2024. This will allow to take advantage of opportunities for financing 
which will expire at the end of 2024, as well as answering the new and growing economic and 
financial needs  caused by Russia’s war of aggression  which will have to be met, as well as 
recovery  and  reconstruction.  The  EU  will  ensure  appropriate  communication  and  visibility 
around  the  objectives  and  the  actions  delivered  within  the  scope  of  the  Ukraine  Loan 
Cooperation Mechanism and the MFA operation, in Ukraine, within the Union, and beyond. 

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• 

Collection and use of expertise 

The proposal builds on thirty years long experience with macro-financial assistance as well as 
on experience with Union’s external action support.  

The  Commission  based  this  proposal  on  a  careful  analysis,  also  building  on  inputs  from 
international  financial  institutions  and  other  competent  international  institutions,  of  the 
financial needs and broader macro-financial situation of Ukraine. This includes discussions on 
a regular basis of the latest projections of Ukraine’s funding needs within international fora, 
such as the G7 and the Ukraine Donor Platform, as well as continuous direct contact with the 
Ukrainian authorities. 

• 

Impact assessment 

Due to the urgent nature of the proposal, which is designed to provide urgent assistance by the 
end of the year to a country at war, no impact assessment could be carried out.  The ex-ante 
assessment of needs proposed to be covered by the loans supported under the Ukraine Loan 
Cooperation Mechanism (including the MFA operation itself) inter alia draw upon recent data 
from  the  International  Monetary  Fund.  The  support  under  the  MFA  operation  should  build 
upon  the  lessons  learned  from  and  the  achievements  of  the  MFA  operations  with  Ukraine 
since  2015,  including  the  Emergency  and  Exceptional  MFA  operations  in  2022  and  MFA+ 
instrument  in  2023  in  the  specific  circumstances  of  the  ongoing  war.  Moreover,  the  policy 
conditionality of the MFA loan should be consistent with  the  steps in  the  Ukraine Plan  and 
further strengthen incentives for its implementation.  

• 

Regulatory fitness and simplification 

The proposal is not linked to regulatory fitness and simplification. 

• 

Fundamental rights 

A precondition for granting support under the MFA loan is that Ukraine continues to respect 
effective  democratic  mechanisms  and  its  institutions,  including  a  multi-party  parliamentary 
system,  and  the  rule  of  law,  and  to  guarantee  respect  for  human  rights,  including  those  of 
persons belonging to minorities. 

The  reform-commitment  and  strong  political  will  by  the  Ukrainian  authorities  is  a  positive 
sign, in particular as evidenced by the European Council granting candidate status to Ukraine 
in  June  2022  and  the  European  Council  decision  of  December  2023  to  open  accession 
negotiations  with  Ukraine,  by  the  renewed  successful  completion  of  the  structural  policy 
conditionality  attached  to  the  recent  MFA  operations  to  Ukraine  and  the  beginning  of 
implementation of the Ukraine Plan. Since the Russian aggression, the Ukrainian authorities 
have shown an impressive degree of resilience and have remained committed to pursue these 
reforms  in  a  transparent  manner  and  working  towards  EU  standards  and  in  line  with  the 
country’s path towards EU integration. 

To that end, the precondition for an MFA operation is considered to be satisfied at present. At 
the  same  time,  the  continuous  adherence  to  this  precondition  will  be  further  ensured  by 
specific  conditions  in  the  future  loan  agreement  for  the  MFA  operation.  The  same 
precondition for support is applicable to the implementation of the Ukraine Plan. 

EN 

9 

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4. 

BUDGETARY IMPLICATIONS 

The  proposal  is  fully  compatible  with  the  ceilings  of  the  2021-2027  multiannual  financial 
framework (MFF). 

The funding of the Ukraine Loan Cooperation Mechanism requires an adjustment of rules for 
the  allocation  of  the  financial  contribution  from  central  securities  depositories  established 
under Union restrictive measures. The amounts transferred to the Ukraine Loan Cooperation 
Mechanism will constitute external assigned revenue in accordance with Article 21(5) of the 
Financial Regulation. Furthermore, the Ukraine Loan Cooperation Mechanism may be funded 
by amounts received as additional financial contributions from Member States, third countries 
or other sources.  Such contributions  will constitute external  assigned revenue in  accordance 
with Article 21(2), point (a)(ii), (d) and (e) respectively of the Financial Regulation.  

The exceptional  MFA loan will make available  support  of up to  EUR  35 billion in loans in 
one  instalment  that  is  available  for  release  until  31  December  2024.  This  requires  that  the 
relevant conditionalities are met by Ukraine in 2024. 

The funds may be disbursed in one or more tranches. The disbursement of all such tranches 
will take place by 31 December 2025 at the latest.  

Further  details  on  the  budgetary  implications  are  provided  in  the  Legislative  Financial 
Statement attached to this proposal. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

For  the  purposes  of  implementing  the  Ukraine  Loan  Cooperation  Mechanism,  the 
Commission  will  enter  into  an  agreement  with  Ukraine  setting  out  the  conditions  and 
obligations to receive and use the non-repayable financial support.  

Additionally,  the  European  Union  should  make  the  exceptional  MFA  loan  available  to 
Ukraine,  thereby  contributing  to  the  efforts  by  Ukraine’s  international  partners,  notably 
expressed  by  the  G7  Leaders  in  June  2024  in  Apulia,  to  cover  its  budgetary  needs.  The 
support will contribute to covering the residual external funding gap of Ukraine in 2024-2025 
and is planned to be disbursed in one instalment that can be disbursed in several tranches. The 
release of the instalment will be conditional on the satisfactory fulfilment of policy conditions 
as agreed in the MoU and referred to in this proposal. The Commission will work closely with 
the  national  authorities  to  monitor  relevant  developments  and  the  application  of  the 
requirements and policy conditions, as agreed in the MoU. The support will be managed by 
the  Commission.  Specific  provisions  on  the  prevention  of  fraud  and  other  irregularities, 
consistent  with  the  Financial  Regulation,  are  applicable,  in  line  with  the  Framework 
Agreement concluded under the Ukraine Facility. Additionally, the management and control 
systems as proposed under the Ukraine Plan established under Regulation (EU) 2024/792 of 
the  European  Parliament  and  of  the  Council  of  29  February  2024  establishing  the  Ukraine 
Facility will be applied for the MFA loan.  

Finally, the Commission will submit to the European Parliament and to the Council a report 
on the implementation of the Union’s support to Ukraine under the Ukraine Loan Cooperation 
Mechanism  and  the  MFA  operation,  including  an  evaluation.  Not  later  than  31  December 
2027,  the  Commission  will  submit  to  the  European  Parliament  and  to  the  Council  an ex-
post evaluation report, assessing the results and efficiency of the completed Union’s support 
under the MFA operation and the extent to which it has contributed to the aims of the support. 

EN 

10 

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• 

Detailed explanation of the specific provisions of the proposal 

Chapter I of the Regulation concerns its general provisions. 

Article  1  provides  the  subject  matter  of  the  Regulation,  which  is  the  establishment  of  the 
Ukraine  Loan  Cooperation  Mechanism  and  the  provision  of  exceptional  macro-financial 
assistance to Ukraine. 

Article 2 provides for the definitions applicable under the Regulation. 

Chapter II of the Regulation concerns the Ukraine Loan Cooperation Mechanism. 

Article 3 defines the purpose of the Ukraine Loan Cooperation Mechanism. 

Article  4  describes  the  financing  of  the  support  under  the  Ukraine  Loan  Cooperation 
Mechanism,  including  how  Member  States  and  interested  third  countries  and  parties  may 
contribute to the Ukraine Loan Cooperation Mechanism. 

Article 5 describes the available support under the Ukraine Loan Cooperation Mechanism. 

Article  6  sets  the  eligibility  criteria  against  which  the  Commission  will  assess  whether  a 
bilateral  loan  is  eligible  under  the  Ukraine  Loan  Cooperation  Mechanism  and  provides  that 
the  Commission  approves  the  eligibility  of  bilateral  loans  to  the  Ukraine  Loan  Cooperation 
Mechanism. 

Article 7 stipulates that the Commission will conclude with Ukraine a ULCM Agreement for 
the  Implementation  of  the  Ukraine  Loan  Cooperation  Mechanism  and  provides  information 
on its content and amendment. 

Article  8  provides  how  the  support  under  the  Ukraine  Loan  Cooperation  Mechanism  is 
released. 

Chapter III of the Regulation concerns the exceptional macro-financial assistance. 

Article  9  describes  the  support  available  under  the  Union’s  macro-financial  assistance, 
including its form, implementation and availability. 

Article 10 sets the amount of the Union’s macro-financial assistance. 

Article 11 provides for compliance with the preconditions necessary for the disbursement of 
macro-financial assistance. 

Article  12  stipulates  that  the  Commission  will  conclude  with  Ukraine  a  Memorandum  of 
Understanding and provides information on its content and timing. 

Article 13 lays out the conditions and process for releasing the MFA loan.  

Article 14 empowers the Commission, on behalf of the Union, to borrow the necessary funds 
on the capital markets or from financial institutions. 

Article 15 regulates the MFA loan agreement and its content.  

Article 16 regulates the governance through committee procedures.  

Chapter IV of the Regulation concerns final provisions. 

Article 17 regulates the information provision to the European Parliament and to the Council. 

Article 18 regulates the entry into force. 

EN 

11 

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2024/0234 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

establishing the Ukraine Loan Cooperation Mechanism and providing exceptional 
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 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) 

(2) 

(3) 

Since  the  start  of  Russia’s  unprovoked  and  unjustified  war  of  aggression  against 
Ukraine  on  24  February  2022,  the  Union,  its  Member  States  and  European  financial 
institutions have mobilised unprecedented support for Ukraine’s economic, social and 
financial resilience. That support combines support from the Union budget, including 
exceptional  macro-financial  assistance  and  support  from  the  European  Investment 
Bank  (EIB)  and  the  European  Bank  for  Reconstruction  and  Development  (EBRD), 
fully or partially guaranteed by the Union budget, as well as further financial support 
by Member States.  

The  provision  by  the  Union  of  macro-financial  assistance  of  up  to  EUR  18  billion 
under  Regulation  (EU)  2022/2463  of  the  European  Parliament  and  of  the  Council13 
was  considered  an  appropriate  response  to  Ukraine’s  financing  gap  for  2023  and 
helped to mobilise significant financing from other donors and international financial 
institutions. This constituted a major contributing factor to Ukraine’s macroeconomic 
and financial resilience at a critical time. 

On 29 February 2024, Regulation (EU) 2024/792 of the European Parliament and the 
Council14 established the Ukraine Facility as an exceptional medium-term instrument 
that brings together the bilateral support provided by the Union to Ukraine, ensuring 
coordination and efficiency. Over the period 2024 to 2027, the Ukraine Facility helps 
address Ukraine’s financing needs and contributes to its recovery, reconstruction and 
modernisation  needs,  while  at  the  same  time  supporting  Ukraine’s  reforms  effort  as 
part  of  its  accession  path  to  the  Union.  The  Ukraine  Facility  has  put  into  action  the 

13 

14 

Regulation (EU) 2022/2463 of the European Parliament and of the Council of 14 December 2022 establishing an 
instrument for providing support to Ukraine for 2023 (macro-financial assistance +) (OJ L 322, 16.12.2022, p. 1, 
ELI: http://data.europa.eu/eli/reg/2022/2463/oj). 
Regulation  (EU)  2024/792  of  the  European  Parliament  and  of  the  Council  of  29  February  2024  establishing  the 
Ukraine Facility (OJ L, 2024/792, 29.2.2024, ELI: http://data.europa.eu/eli/reg/2024/792/oj). 

EN 

12 

  EN 

 
 
(4) 

(5) 

(6) 

(7) 

Union’s unwavering commitment to providing continued financial support to Ukraine 
and its people.  

Russia’s  war  of  aggression  against  Ukraine  has  caused  tremendous  damages  in 
Ukraine, with estimated recovery and reconstruction costs of USD 486 billion as of 31 
December 202315. Moreover, Ukraine has lost access to international financial markets 
and  experienced  a  significant  drop  in  public  revenue,  while  public  expenditure  has 
increased  substantially.  Against  this  background,  substantive  funding  needs  for  the 
coming years can be established. 

On  30  March  2023,  the  International  Monetary  Fund  (IMF)  agreed  with  Ukraine  a 
USD  15.6  billion  four-year  programme  under  the  Extended  Fund  Facility  (EFF)  to 
sustain  economic  and  financial  stability  at  a  time  of  exceptionally  high  uncertainty, 
restore debt sustainability, and promote reforms that support Ukraine’s recovery in the 
post-war  period.  The  programme,  together  with  financing  assurances  from  the  G7 
Leaders,  the  Union  and  other  donors,  is  designed  to  address  Ukraine’s  balance  of 
payments  financing  needs  and  restore  medium-term  external  viability.  To  date, 
Ukraine has successfully completed four reviews under the EFF, thus underscoring the 
Ukrainian authorities’ steadfast commitment to conduct reforms and prudent policies. 
The baseline total financing gap over the programme period is estimated by the IMF at 
USD 121.9 billion.  

In view of the exceptionally elevated uncertainty surrounding the outlook, the IMF has 
also presented an updated downside scenario on the occasion of the fourth programme 
review,  which  factors  in  the  economic  shock  from  a  more  intense  war  running  into 
2025.  As  a  consequence  of  the  adverse  impact  on  economic  sentiment,  migration, 
increasing  pressure  on  energy  supply,  impairment  of  export  capacities,  and  notably 
defence  spending,  the  total  financing  gap  under  this  downside  scenario  would  risk 
increasing to USD 140.7 billion over the IMF programme period. Given the continued 
intensity of the war, and the damage to Ukraine’s critical civilian infrastructure from 
increased  large-scale  attacks  by  the  Russian  aggressor,  Ukraine  needs  to  mobilise 
significant  additional  resources  for  its  budgetary  and  long-term  recovery  and 
reconstruction  priorities.  As  of  this  and  given  that  a  residual  financing  gap  remains 
over  and  above  the  resources  already  provided  by  the  Union  and  other  donors  and 
institutions, including  the  IMF,  the  Union  should  continue  to  provide  an  appropriate 
response. 

The G7 Leaders, in their Communiqué of 14 June 2024, reaffirmed their unwavering 
support for Ukraine, and their strong commitment to helping Ukraine meet its urgent 
short  term  financing  needs  as  well  as  supporting  its  long-term  recovery  and 
reconstruction  priorities.  To  this  end,  G7  Leaders  announced  the  launch  of  the 
“Extraordinary  Revenue  Acceleration”  loans  for  Ukraine,  in  order  to  make  available 
approximately USD 50 billion in additional funding to Ukraine’s military, budget and 
reconstruction  needs  by  the  end  of  2024.  G7  Leaders  announced  their  intention  to 
provide  financing  that  will  be  serviced  and  repaid  by  future  flows  of  extraordinary 
revenues  stemming  from  the  immobilisation  of  Russian  sovereign  assets  held  in  the 
European Union and other relevant jurisdictions.  

(8) 

In its conclusions of 27 June 2024, the European Council invited the Commission, the 
High  Representative  and  the  Council  to  take  work  forward,  while  addressing  all 
relevant legal and financial aspects, in order to provide additional funding for Ukraine 

15 

Ukraine - Third Rapid Damage and Needs Assessment (RDNA3); February 2022 – December 2023. 

EN 

13 

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(9) 

by the end of the year in the form of loans serviced and repaid by future flows of the 
extraordinary  revenues  together  with  G7  partners  as  discussed  by  G7  Leaders,  to 
support  Ukraine’s  current  and  future  military,  budget  and  reconstruction  needs.  The 
European Council also stated that, subject to Union law, Russia’s assets should remain 
immobilised  until  Russia  ceases  its  war  of  aggression  against  Ukraine  and 
compensates it for the damage caused by this war. 

In  the  context  of  Russia’s  continued  aggression  against  Ukraine,  it  is  necessary  to 
ensure  that  Ukraine  is  provided  with  sufficient  and  continuous  financial  support.  To 
that  end,  a  Ukraine  Loan  Cooperation  Mechanism  should  be  established  to  provide 
Ukraine with  non-repayable financial support with a view to  assisting  the country  to 
repay loans provided to support Ukraine. That Ukraine Loan Cooperation Mechanism 
should  receive  resources,  including  from  future  flows  of  the  extraordinary  profits 
stemming from Russia’s immobilised assets, and disburse those resources on a regular 
basis  to  Ukraine  to  cover  the  principal,  interest  and  any  other  related  costs  of  loans. 
Furthermore, in order for the Union itself to directly help Ukraine meet its  financing 
needs, the Union should provide exceptional Macro-Financial Assistance (the ‘MFA’) 
to  Ukraine,  where  that  exceptional  MFA  should  be  supported  by  the  Ukraine  Loan 
Cooperation Mechanism. 

(10)  Council Decision (CFSP) 2024/147016 amending Council Decision (CFSP) 2014/512 
states that “The restrictive measures linked to the prohibition of transactions related to 
the  management  of  the  assets  and  reserves  of  the  Central  Bank  of  Russia  should 
remain  in  place  until  Russia  ceases  its  war  of  aggression  against  Ukraine  and 
compensates Ukraine for the damage caused by this war.” 

(11)  On  21  May  2024,  the  Council  amended  Council  Regulation  (EU)  No  833/201417, 
which  gives  effect  to  certain  measures  provided  for  in  Decision  (CFSP)  2024/1470. 
Those  measures  comprise  the  rules  on  how  the  net  profits  ensuing  from  the 
unexpected and extraordinary revenues accruing to central securities depositories as a 
result of the implementation of the prohibition laid down in Article 1a(4) of  Council 
Decision 2014/512/CFSP18 and Article 5a(4) of Regulation (EU) No 833/2014 should 
be  directed  to  support  Ukraine,  including  through  Union  programmes  which  are 
financed  from  the  Union  budget,  consistent  with  applicable  contractual  obligations, 
and in accordance with Union and international law, in coordination with partners. In 
particular,  central  securities  depositories  holding  assets  and  reserves  of  the  Central 
Bank  of  Russia  with  a  total  value  exceeding  EUR  1  million  are  to  make  a  financial 
contribution  to  the  Union  equivalent  to  99.7  %  of  extraordinary  net  profits  arising 
from the immobilisation of Russian assets and accumulating since 15 February 2024.  

(12)  This contribution is due as long as the restrictive measures linked to the prohibition of 
transactions related to the management of the assets and reserves of the Central Bank 

16 

17 

18 

Council Decision (CFSP)  2024/1470 of 21 May 2024 amending Decision 2014/512/CFSP concerning 
restrictive  measures  in  view  of  Russia’s  actions  destabilising  the  situation  in  Ukraine,  (OJ  L, 
2024/1470, 22.5.2024, ELI: http://data.europa.eu/eli/dec/2024/1470/oj). 
Council  Regulation  (EU)  No  833/2014  of  31  July  2014  concerning  restrictive  measures  in  view  of 
Russia's  actions  destabilising  the  situation  in  Ukraine,  (OJ  L  229,  31.7.2014,  p.  1,  ELI: 
http://data.europa.eu/eli/reg/2014/833/oj). 
Council Decision 2014/512/CFSP of 31 July 2014 concerning restrictive measures in view of Russia's 
13, 
in  Ukraine 
actions 
ELI: http://data.europa.eu/eli/dec/2014/512/oj). 

destabilising 

31.7.2014, 

(OJ  L 

situation 

229, 

the 

p. 

EN 

14 

  EN 

 
of  Russia  are  in  place,  and  thus  until  Russia  ceases  its  war  of  aggression  against 
Ukraine and compensates Ukraine for the damage caused by this war. 

(13)  On  […],  the  percentage  of  the  amounts  of  the  financial  contribution  due  by  central 
securities  depositories  to  be  used  to  support  Ukraine  through  Union  programmes  set 
out  in  Decision  (CFSP)  2014/512  was  adjusted  to  […]%.  On  the  same  date,  the 
allocation  of  the  amounts  of  the  financial  contribution  paid  to  the  Union  budget  as 
external  assigned  revenues,  set  out  in  Annex  XLI  of  Council  Regulation  (EU) 
833/2014,  was  adjusted  to  allocate  […]%  of  that  contribution  to  the  Ukraine  Loan 
Cooperation Mechanism. The Union has therefore taken the necessary steps to ensure 
the  continued  use  of  the  financial  contribution  for  the  Ukraine  Loan  Cooperation 
Mechanism. 

(14)  Extraordinary revenues stemming from the immobilisation of Russian sovereign assets 
held  in  other  relevant  jurisdictions  than  the  European  Union  may  be  provided  to 
support the Ukraine Loan Cooperation Mechanism. To this end, it should be possible 
for  third  countries  or  other  sources  to  contribute  to  the  Ukraine  Loan  Cooperation 
Mechanism. Additionally, Member States may on a voluntary basis contribute towards 
the Ukraine Loan Cooperation  Mechanism, notably  from  revenues that accrue to the 
State  stemming  from  the  immobilisation  of  Russian  sovereign  assets.  Such 
contributions  should  constitute  external  assigned  revenue  within  the  meaning  of 
Article 21(2), points (a)(ii), (d) and (e), of Regulation (EU, Euratom) 2018/1046 of the 
European Parliament  and of the Council19 (the ‘Financial Regulation’).  Furthermore, 
third  countries  may  directly  use  extraordinary  revenues  stemming  from  the 
immobilisation  of  Russian  sovereign  assets  within  their  jurisdiction  to  reduce  the 
repayment  needs  of  any  respective  bilateral  loan  provided  to  Ukraine,  and  thus 
supporting  the  Ukraine  Loan  Cooperation  Mechanism  by  reducing  the  total  level  of 
support that would be required for that loan. 

(15)  Support under the Ukraine Loan Cooperation Mechanism should be available to cover 
the overall amount of principal, interest and any other related costs of the loan taken 
by  Ukraine  through  the  signature  of  the  MFA  loan  agreement,  as  well  as  through 
bilateral  loan  agreements  with  lenders  acting  under  the  auspices  of  the  G7 
“Extraordinary Revenue Acceleration Loans for Ukraine” initiative as enshrined in the 
G7 Communiqué adopted on 14 June 2024 in Apulia.  

(16)  The support under the Ukraine Loan Cooperation Mechanism should be available and 
provided in a manner to ensure equal access both for bilateral lenders and the Union’s 
exceptional  MFA  loan.  The  provision  of  bilateral  loans  through  an  intermediary 
should  not  preclude  their  eligibility  for  the  purposes  of  this  Regulation.  The  non-
repayable financial support should be allocated to Ukraine to repay the MFA loan and 
eligible bilateral loans in proportion of the principal of the respective loan against the 
sum of the principal of the MFA loan and all the eligible bilateral loans. The allocation 
should be readjusted once the respective loans, including interest and any other related 
costs, have been fully repaid by Ukraine, in such a way that any future  resources are 
allocated to remaining loans in proportion to the principal of the MFA loan or eligible 

19 

Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on 
the  financial  rules  applicable  to  the  general  budget  of  the  Union,  amending  Regulations  (EU)  No 
1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) 
No  1316/2013,  (EU)  No  223/2014,  (EU)  No  283/2014,  and  Decision  No  541/2014/EU  and  repealing 
1,  ELI: 
Regulation 
http://data.europa.eu/eli/reg/2018/1046/oj). 

(EU,  Euratom)  No 

30.7.2018, 

966/2012 

(OJ  L 

193, 

p. 

EN 

15 

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(17) 

bilateral loan against the sum of the principal of all remaining loans. The principal of 
each loan should be considered as the initial principal committed in the respective loan 
documentation  and  not  take  into  consideration  other  factors,  such  as  repayments, 
additional financing or any capitalised amounts. 

the  Ukraine  Loan  Cooperation  Mechanism, 

In  order  to  ensure  that  bilateral  loans  provided  by  bilateral  lenders  can  swiftly  and 
efficiently  be  supported  by 
the 
Commission should assess, and where relevant approve for support, the bilateral loans 
to be provided by lenders acting under the auspices of the G7 “Extraordinary Revenue 
Acceleration  Loans  for  Ukraine”.  Where  such  bilateral  loan  agreements  are  in  draft 
form or have not yet entered into force, the Commission should monitor the entry into 
force of such agreements. In order to ensure a timely disbursement of bilateral loans to 
Ukraine, bilateral loan agreements should be submitted to the Commission by 1 June 
2025 and should enter into force by 30 June 2025. 

(18)  The  release  of  support  under  the  Ukraine  Loan  Cooperation  Mechanism  should  be 
contingent  on the  conclusion  of an agreement between the  Commission  and Ukraine 
on  the  detailed  provisions  for  the  implementation  of  that  Mechanism,  and  on  the 
positive  assessment  by  the  Commission  of  a  request  for  non-repayable  financial 
support submitted by Ukraine. Ukraine should provide the Commission the necessary 
information  to  ensure  that  the  Ukraine  Loan  Cooperation  Mechanism  supports 
bilateral  loans  up  to  the  total  amount  due  to  the  bilateral  lender  concerned. 
Exceptionally, the Commission could for duly justified reasons also assess requests for 
payments from bilateral lenders. 

(19) 

In  addition  to  the  support  under  the  Ukraine  Loan  Cooperation  Mechanism,  an 
exceptional  MFA  loan  should  be  provided  to  support  macro-financial  stability  in 
Ukraine, and to ease Ukraine’s external financing constraints, in particular with a view 
to covering the country’s financing needs. Given the urgent nature of those financing 
needs, the MFA loan should be available in 2024. 

(20)  The  MFA  should  provide  support  in  the  form  of  a  loan  of  up  to  EUR  35  billion.  In 
order to cater for the potential requests for support of bilateral loans under the Ukraine 
Loan Cooperation Mechanism whilst ensuring the sound financial management of the 
Union support available under this Regulation, the amount of the MFA loan should be 
adjusted taking into account bilateral loans to Ukraine approved as eligible under the 
Ukraine  Loan  Cooperation  Mechanism,  together  with  the  principal  amount  indicated 
in  stated  intentions  of  third  countries  communicated  to  the  Commission  under  the 
auspices of the G7 “Extraordinary Revenue Acceleration Loans for Ukraine” initiative. 
This adjustment should take place provided that the total amount of all loans for which 
support under this Regulation has been sought would exceed EUR 45 billion. 

(21)  The support to Ukraine under the MFA loan should be additional and complementary 
to  the  Union  support  provided  under  Regulation  (EU)  2024/792.  The  Commission 
should,  wherever  possible,  seek  to  minimise  the administrative  and  reporting  burden 
on Ukraine. 

(22)  The  support  to  Ukraine  under  the  MFA  loan  should  be  made  available  under  the 
precondition  that  Ukraine  continues  to  uphold  and  respect  effective  democratic 
mechanisms, including a multi-party parliamentary system and the rule of law, and to 
guarantee respect for human rights, including those of persons belonging to minorities. 
That  precondition  should  also  apply  to  requests  for  disbursement  from  the  Ukraine 
Loan Cooperation Mechanism as they pertain to the MFA loan. The same precondition 

EN 

16 

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applies to the support provided under Regulation (EU) 2024/792 and the Commission 
should conduct its assessment together for the two instruments. 

(23)  The Commission should duly take into account Council Decision 2010/427/EU20 and 

the role of the European External Action Service where appropriate. 

(24)  The MFA loan provided under this Regulation should be linked to policy conditions to 
be set out in a Memorandum of Understanding between the Commission and Ukraine 
(‘MoU’).  Those  conditions  should  be  consistent with  the  qualitative  and quantitative 
steps contained in the Annex to the Council Implementing Decision (EU) 2024/144721, 
and any amendments thereof made by the time the MoU is adopted. Additionally, the 
MoU should include a commitment by Ukraine to promote cooperation with the Union 
on  the  recovery,  reconstruction  and  modernisation  of  Ukraine’s  defence  industry,  in 
line  with  the  objectives  of  the  European  Defence  Industry  Programme  (EDIP)  and 
other relevant Union programmes. The necessary steps should also be taken to ensure 
coordination  and  complementarity  of  the  bilateral  loans,  including  the  exceptional 
MFA loan, with the other donors. In this regard, the  Ukraine Donor Platform should 
be used as an already established forum for such exchange. 

(25) 

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  of the European Parliament 
and  of  the  Council22.  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  macro-
financial  assistance  to  Ukraine,  the  examination  procedure  should  apply  to  the 
adoption of the MoU, and to any reduction or cancellation of the assistance.  

(26)  The release of the single instalment under the MFA loan should be contingent on the 
positive assessment by the Commission of a request for funds submitted by Ukraine. 
The  assessment  of  the  policy  conditions  set  out  in  the  MoU  should  be  without 
prejudice to the assessment of the fulfilment of aligned conditions under other Union 
programmes and instruments. 

(27) 

20 

21 

22 

In view of the principle of sound financial management, and to facilitate the Ukrainian 
authorities’  liquidity  management  and  ensure  predictability,  the  Commission  should 
ensure that tranches are disbursed throughout the course of 2024 and 2025, avoiding to 
the  extent  possible  significant  deviations  of  disbursed  amounts  from  quarter-to-
quarter. The disbursement of those tranches should where appropriate be aligned with 
the timing of disbursements of loan or non-repayable financial support under Pillar I 
of the Ukraine Facility in accordance with Regulation (EU) 2024/792. Furthermore, it 
is  appropriate to  provide for the possibility to  reassess the funding  needs of Ukraine 
and to reduce or cancel the loan support if those needs decrease fundamentally during 

Action 

Service 

External 

Council  Decision  2010/427/EU  of  26  July  2010  establishing  the  organisation  and  functioning  of  the 
European 
ELI: 
(OJ 
http://data.europa.eu/eli/dec/2010/427/oj). 
Council Implementing Decision (EU) 2024/1447 of 14 May 2024 on the approval of the assessment of 
the Ukraine Plan (OJ L, 2024/1447, 24.5.2024, ELI: http://data.europa.eu/eli/dec_impl/2024/1447/oj).  
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 the Member States 
of  the  Commission’s  exercise  of  implementing  powers  (OJ  L  55,  28.2.2011,  p.  13,  ELI: 
http://data.europa.eu/eli/reg/2011/182/oj). 

3.8.2010, 

201, 

30, 

p. 

L 

EN 

17 

  EN 

 
the  period  of  the  availability  of  the  support  under  the  MFA  compared  to  the  initial 
projections. 

(28)  The  loan  agreement  to  be  concluded  between  the  Commission  and  the  Ukrainian 
authorities  should  contain  provisions  aligned  with  the  rights,  responsibilities  and 
obligations  provided  in  the  Framework  Agreement  referred  to  in  Article  9  of 
Regulation (EU) 2024/792 signed between the EU and Ukraine that entered into force 
on 20 June 2024. This will ensure that that the Union’s financial interests linked to the 
Union’s exceptional macro-financial assistance are protected efficiently, providing the 
appropriate measures relating to the prevention of, and fight against, fraud, corruption 
and any other irregularities linked to the assistance. It will also, in accordance with the 
Financial Regulation, grant the necessary rights and access to the Commission, OLAF, 
the  European  Court  of  Auditors  and,  where  applicable  the  European  Public 
Prosecutor’s  Office,  including  from  third  parties  involved  in  the  implementation  of 
Union funds during and after the availability period of the exceptional macro-financial 
assistance. Ukraine should also report irregularities in relation to the use of the funds 
to the Commission, in line with the procedures provided in the Framework Agreement. 

(29) 

In the context of Ukraine’s financing needs, it is appropriate to organise the financial 
assistance  under  the  diversified  funding  strategy  provided  for  in  Article  220a  of  the 
Financial  Regulation  and  established  as  a  single  funding  method  therein,  which  is 
expected  to  enhance  the  liquidity  of  Union  bonds  and  the  attractiveness  and  cost-
effectiveness of Union issuance. 

(30)  By  way  of  derogation  from  Article  31(3)  of  Regulation  (EU)  2021/947  of  the 
European Parliament and of the Council23, the financial liability from loans under this 
Regulation should not be supported by the External Action Guarantee, established by 
that Regulation. Support in the form of loans under this Regulation should constitute 
financial assistance within the meaning of Article 220(1) of the Financial Regulation. 
Given  that  the  financial  assistance  of  the  MFA  loan  is  available  in  2024  and  is 
authorised  in  accordance  with  Article  220(1)  of  the  Financial  Regulation,  it  is 
appropriate that the guarantee for financial assistance to Ukraine is mobilised over and 
above the multiannual financial framework (MFF) ceilings and up to the limits of the 
ceilings  referred  to  in  Article  3(1)  and  (2)  of  Council  Decision  (EU,  Euratom) 
2020/205324  in  accordance  with  Article  2(3)  of  Council  Regulation  (EU,  Euratom) 
2020/209325.  In  considering  the  financial  risks  and  the  budgetary  coverage,  no 
provisioning  should  be  constituted  for  the  support  in  the  form  of  loans  under  this 
Regulation,  to  be  guaranteed  over  and  above  the  MFF  ceilings,  and,  by  way  of 
derogation  from  Article  211(1)  of  the  Financial  Regulation,  no  provisioning  rate 
should be set. 

23 

24 

25 

(EC, 

Euratom) 

Regulation (EU) 2021/947 of the European Parliament and of the Council of 9 June 2021 establishing 
the  Neighbourhood,  Development  and  International  Cooperation  Instrument  –  Global  Europe, 
amending and repealing Decision No 466/2014/EU of the European Parliament and of the Council and 
repealing  Regulation  (EU)  2017/1601  of  the  European  Parliament  and  of  the  Council  and  Council 
Regulation 
1, 
ELI: http://data.europa.eu/eli/reg/2021/947/oj). 
Council Decision (EU, Euratom) 2020/2053 of 14 December 2020 on the system of own resources of 
the European Union and repealing Decision 2014/335/EU, Euratom (OJ L 424, 15.12.2020, pp. 1, ELI: 
http://data.europa.eu/eli/dec/2020/2053/oj). 
Council  Regulation  (EU,  Euratom)  2020/2093  of  17  December  2020  laying  down  the  multiannual 
to  2027  (OJ  L  433I  22.12.2020,  p.  11,  ELI: 
financial  framework  for 
http://data.europa.eu/eli/reg/2020/2093/oj). 

the  years  2021 

480/2009 (OJ 

14.6.2021, 

209, 

No 

p. 

L 

EN 

18 

  EN 

 
(31)  Given the difficult  situation of Ukraine caused by Russia’s war of aggression  and to 
support  Ukraine  on  its  long-term  stability  path,  it  is  appropriate  for  the  Union  to 
provide  a  loan  to  Ukraine  on  highly  concessional  terms  with  a  sufficiently  long 
duration to accommodate the capacities of the guarantee over and above the ceilings.  

(32)  The  Union’s  support  to  Ukraine  under  this  Regulation  should  be  managed  by  the 

Commission. 

(33) 

(34) 

In order to ensure that the European Parliament and the Council are able to follow the 
implementation  of this  Regulation,  the Commission  should regularly inform them of 
developments relating to that support and provide them with the relevant documents.  

In order to ensure the continued effectiveness of the arrangements established by this 
Regulation, the Commission should regularly review their adequacy and report to the 
European  Parliament  and  to  the  Council,  thereby  guaranteeing  transparency  and 
accountability.  

(35) 

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

(36)  Since the objectives of this Regulation, namely to provide support to Ukraine to cover 
financing needs, notably by providing concessional short-term and long-term relief in 
the  form  of  a  loan  and  of  non-repayable  financial  support,  cannot  be  sufficiently 
achieved by the Member States but can rather, by reasons of their scale and effect, be 
better achieved at Union level, the Union may adopt measures, in accordance with the 
principle  of  subsidiarity  as  set  out  in  Article  5  of  the  Treaty  on  European  Union.  In 
accordance  with  the  principle  of  proportionality  as  set  out  in  that  Article,  this 
Regulation does not go beyond what is necessary in order to achieve those objectives. 

(37) 

In view of the urgency entailed by the exceptional circumstances caused by Russia’s 
unprovoked  and  unjustified  war  of  aggression,  it  is  considered  to  be  appropriate  to 
invoke the exception to the eight-week period provided for in Article 4 of Protocol No 
1 on the role of national Parliaments in the European Union, annexed to the Treaty on 
European Union, to the Treaty on the Functioning of the European Union and to the 
Treaty establishing the European Atomic Energy Community. 

(38) 

In light of the situation in Ukraine, this Regulation should enter into force as a matter 
of urgency on the day following that of its publication in  the  Official Journal of  the 
European Union, 

HAVE ADOPTED THIS REGULATION: 

Chapter I 

General Provisions 

Article 1 

Subject matter 

This Regulation establishes the Ukraine Loan Cooperation Mechanism (‘the Mechanism’) and 
makes available to Ukraine exceptional macro-financial assistance with a view to supporting 
Ukraine in covering its financing needs. 

EN 

19 

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Article 2 

Definitions 

For the purposes of this Regulation, the following definitions apply: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

‘Union support’ means the MFA Loan and non-repayable financial support available 
under this Regulation; 

‘bilateral loan’ means a loan given directly or indirectly by a third country as a lender 
(also ‘bilateral lender’) to the benefit of Ukraine; 

‘eligible  bilateral  loan’  means  a  bilateral  loan  approved  as  eligible  under  the 
Mechanism by the Commission;  

‘MFA Loan’ means the exceptional financial support made available by the Union to 
Ukraine in the form of a loan under Chapter III; 

‘MFA  Loan  Agreement’  means  the  loan  agreement  signed  by  the  Commission,  on 
behalf of the Union, and Ukraine under Chapter III; 

‘other  related  costs’  means  any  costs  or  fees  due  under  the  MFA  Loan  and  the 
respective bilateral loan.  

Chapter II 

Ukraine Loan Cooperation Mechanism 

Article 3 

Purpose 

The  purpose  of  the  Mechanism  shall  be  to  provide  Ukraine  with  non-repayable  financial 
support with a view to assisting Ukraine to repay the MFA Loan and eligible bilateral loans. 
To  achieve  this  purpose,  the  Mechanism  shall  receive  resources  and  disburse  them  on  a 
regular basis to Ukraine to cover the principal, interest and any other related costs of the MFA 
Loan and eligible bilateral loans. In its operations, the Mechanism shall ensure equal  access 
both for bilateral lenders and the Union. 

Article 4 

Financing 

(1) 

The Mechanism shall be endowed with resources made available by: 

(a) 

(b) 

amounts  transferred  in  accordance  with  Annex  XLI  to  Council  Regulation 
(EU)  No  833/2014,  which  shall  constitute  external  assigned  revenue  in 
accordance with Article 21(5) of the Financial Regulation; and 

amounts  received  as  financial  contributions  from  Member  States,  third 
countries or other sources. Such contributions shall constitute external assigned 
revenue in accordance with Article 21(2), points (a)(ii), (d) and (e) respectively 
of the Financial Regulation.  

EN 

20 

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(2) 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(1) 

For all contributions  referred to  in  paragraph 1, point (b), a contribution agreement 
shall  be  concluded  between  the  Commission,  on  behalf  of  the  Union,  and  the 
contributor.  The  contribution  agreement  shall  contain,  in  particular,  provisions 
concerning  the  payment  conditions.  The  Commission  shall  inform  the  European 
Parliament  and  the  Council  simultaneously  and  without  delay  of  the  concluded 
contribution agreements. 

Article 5 

Available support 

The  non-repayable  financial  support  under  the  Mechanism  shall  be  available  under 
the  conditions  set  out  in  Articles  6  to  8  to  assist  Ukraine  to  repay  the  principal, 
interest and any other related costs of: 

(a) 

the MFA Loan; and 

(b) 

the eligible bilateral loans. 

The non-repayable financial support shall be allocated to assist Ukraine to repay the 
loans referred to in paragraph 1 in proportion to the principal of each loan expressed 
in euro against the sum of the principal of the MFA Loan and all the eligible bilateral 
loans expressed in  euro. Once the MFA Loan or an eligible bilateral  loan has been 
fully  repaid  by  Ukraine,  including  interest  and  any  other  related  costs,  such 
allocation  shall  be  adjusted  so  that  any  future  resources  are  allocated  to  remaining 
loans in proportion to the principal of each loan expressed in euro against the sum of 
the principal of all remaining loans expressed in euro.  

The  Commission  shall  adopt  a  decision  establishing  the  allocation  provided  in 
paragraph  2  between  the  MFA  Loan  and  eligible  bilateral  loans.  The  Commission 
shall use the principal of each eligible bilateral loan expressed in euro as referred to 
in  Article  6(5)(b).  The  Commission  shall  amend  this  decision  to  include  each 
bilateral loan without delay upon entry into force of the respective bilateral loan. The 
Commission  may  amend  that  decision  to  proportionally  reduce  the  allocation  to  a 
bilateral loan should that bilateral loan not be fully disbursed within the deadline set 
out in Article 6(2)(c). 

The  overall  amount  of  principal  of  the  loans  referred  to  in  paragraph  1  shall  not 
exceed EUR 45 billion. 

The  non-repayable  financial  support  under  the  Mechanism  shall  be  carried  out  in 
euro. 

All  payments  shall  be  subject  to  the  availability  of  resources  referred  to  in  Article 
4(1). 

The Union shall not  assume any liability for the repayment of the  eligible bilateral 
loans. 

Article 6 

Commission implementing decision on the eligibility of the bilateral loans 

Should Ukraine wish to request support under the Mechanism to assist it to repay a 
bilateral  loan,  Ukraine  shall  submit  to  the  Commission  the  text  of  the  relevant 
bilateral loan agreement by 1 June 2025 at the latest.  

EN 

21 

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(2) 

The Commission shall without delay assess the eligibility of the bilateral loan under 
the Mechanism in accordance with the following criteria: 

(a) 

(b) 

(c) 

the  bilateral  loan  agreement  was  not  signed  before  [date  of  adoption  of  the 
proposal];  

the  counterparty  to  the  bilateral  loan  is  acting  under  the  auspices  of  the  G7 
“Extraordinary Revenue Acceleration Loans for Ukraine” initiative; and 

the  bilateral  loan  is  to  be  fully  disbursed  to  the  benefit  of  Ukraine  before  31 
December 2027. Such disbursements may be linked to the completion of policy 
conditions. 

For  the  purposes  of  the  assessment,  the  Commission  may  seek  additional  information  from 
Ukraine. 

(3) 

(4) 

A  suspensive  condition  in  a  bilateral  loan  agreement  that  provides  that  such 
agreement  does  not  enter  into  force  before  the  approval  by  the  Commission  of  the 
eligibility of the bilateral loan or before the entry into force of the agreement referred 
to in Article 7 shall not prevent the positive assessment of the bilateral loan. 

The Commission shall approve by means of an implementing decision the eligibility 
of the bilateral loan. 

(5) 

The Commission implementing decision under paragraph 4 shall set out: 

(a) 

(b) 

the bilateral lender;  

the principal of the bilateral loan expressed in euro; to the extent necessary, the 
principal  of  the  bilateral  loan  shall  also  be  expressed  in  the  currency  of  the 
respective bilateral loan, where the conversion rate for the bilateral loan to euro 
shall be the daily euro exchange rate published in the C series of the Official 
Journal of the European Union on [date of adoption of the proposal]; and 

(c) 

the justification for the positive assessment of the bilateral loan. 

The  sum  of  principals  of  all  bilateral  loans  approved  by  the  Commission  in 
accordance with this Article and the MFA Loan shall at all times respect the amount 
referred to in Article 5(4). 

The Commission may repeal the implementing decision referred to in paragraph 4 if 
the bilateral loan agreement does not enter into force by 30 June 2025. 

In case of a negative assessment, the Commission shall communicate a duly justified 
assessment to Ukraine. 

Article 7 

Agreement for the Implementation of the Ukraine Loan Cooperation Mechanism 

The non-repayable financial support referred to in Article 5 shall only be granted to 
Ukraine  after  the  Commission  has  concluded  an  agreement  with  Ukraine  (‘the 
ULCM Agreement’).  

(6) 

(7) 

(8) 

(1) 

(2) 

The ULCM Agreement shall contain in particular the following elements: 

(a) 

the  obligation  of  Ukraine  to  use  the  non-repayable  financial  support  for  the 
repayment  of  the  principal,  interest  and  any  other  related  costs  of  the  MFA 
Loan or eligible bilateral loans; 

EN 

22 

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(b) 

(c) 

the  bank  accounts  of  all  bilateral  lenders,  to  which  payments  of  the  non-
repayable  financial  support  related  to  their  respective  bilateral  loans  shall  be 
made by the Commission; 

for  the  payments  of  the  non-repayable  financial  support  related  to  the  MFA 
Loan,  provisions  ensuring  that  the  Union  shall  use  these  amounts  to  directly 
repay the MFA Loan; 

(d)  dedicated  provisions  reflecting  Article  5(7)  and  ensuring  that  the  Union  shall 
not be held liable for any damage caused by Ukraine or by any third parties in 
the implementation  of the eligible bilateral  loans, including as a  consequence 
of the implementation  of the Mechanism,  and specifically where the  amounts 
referred to in Article 4(1) vary over time or cease; 

(e) 

the  obligation  of  Ukraine  to  obtain  from  the  bilateral  lenders  and  provide, 
without delay, to the Commission the proof of: 

(a) 

entry into force of each bilateral loan agreement; and  

(b)  discharge  of  each  repayment  obligation,  including,  to  the  extent 

necessary, the applicable conversion rate used. 

(f) 

the obligation of Ukraine to agree with each bilateral lender that any amounts 
provided  by  Ukraine  to  repay  the  loan  that  do  not  immediately  discharge 
repayment  obligations,  shall  remain  available  until  such  time  as  repayment 
obligations fall due, with any interest accrued on that amount also available to 
be used to discharge obligations under the bilateral loan agreement;  

(g) 

the obligation of Ukraine to accompany each payment request with:  

(a) 

details  of  remaining  amounts  due  under  each  bilateral  loan  agreement; 
and 

(b)  details of amounts referred to in point (f). 

(h) 

the express  authorisation for bilateral  lenders to  exceptionally make a request 
for payment in line with Article 8(6), provided that the information referred to 
in point (g) of this paragraph is submitted by the bilateral lenders; and  

(i) 

any other requirements needed for the implementation of the Mechanism. 

(3) 

To the extent necessary, the ULCM Agreement shall be amended following the entry 
into force of any Commission decision adopted pursuant to Article 6(4). 

Article 8 

Disbursement of the non-repayable financial support 

(1) 

(2) 

Ukraine  may  submit  to  the  Commission  twice  a  year  a  request  for  non-repayable 
financial support in respect of the MFA Loan and eligible bilateral loans.  

The  Commission  shall  assess  Ukraine’s  request  on  the  basis  of  the  following 
requirements: 

(a) 

compliance  with  the  precondition  set  out  in  Article  11,  which  shall  only  be 
applicable as regards the MFA Loan; 

EN 

23 

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(b) 

confirmation that the total value of disbursements in respect of the MFA Loan 
or each eligible bilateral loan, together with any interest accrued thereon, does 
not exceed the total amount due to that lender; and  

(c) 

compliance with the obligations of the ULCM Agreement. 

Subject  to  the  availability  of  resources  referred  to  in  Article  4(1),  where  the 
Commission  makes  a  positive  assessment,  it  shall  adopt  without  undue  delay  a 
decision  authorising  the  disbursement  of  the  non-repayable  financial  support, 
including  the  amount  disbursed  to  support  the  repayment  of  each  eligible  bilateral 
loan and the amount made available to support the repayment of the MFA Loan. The 
amount  disbursed  shall  equal  the  amount  of  resources  available  on  the  basis  of 
Article  4(1).  That  amount  disbursed  shall  be  allocated  in  accordance  with  the 
Commission decision referred to in Article 5(3). 

In the event that the amount made available to Ukraine to support the repayment of 
the MFA Loan is higher than the amount due for repayment, the excess amount may 
be used for early repayment of the loan in accordance with Article 15(2), point (e), or 
may be retained by the Union for the exclusive purpose to support the repayment of 
the MFA Loan in the future. Any interest accrued thereon shall also be available to 
support this purpose. 

Where the Commission gives a negative assessment to the request, it shall, without 
delay, inform Ukraine, giving reasons for its assessment. 

Without  prejudice  to  paragraphs  1  and  2,  the  Commission  may  for  duly  justified 
reasons exceptionally assess requests for payment submitted by the bilateral lenders, 
in particular should the Commission have taken a decision in accordance with Article 
11(4)  or  should  Ukraine  not  be  in  compliance  with  the  obligations  of  the  ULCM 
Agreement.  

Chapter III 

Macro-Financial Assistance 

Article 9 

Making available of the Union’s exceptional macro-financial assistance 

The  Union  shall  make  available  to  Ukraine  exceptional  macro-financial  assistance, 
with  a  view  to  supporting  Ukraine  in  covering  financing  needs.  The  Union’s 
exceptional  macro-financial  assistance  shall  be  provided  to  Ukraine  in  the  form  of 
loans.  The  assistance  shall  contribute  to  covering  Ukraine’s  financing  gap  as 
identified in cooperation with international financial institutions. 

The release of the Union’s exceptional macro-financial assistance shall be managed 
by the Commission based on its assessment of the precondition referred to in Article 
11 and the implementation of the policy conditions included in the Memorandum of 
Understanding (‘MoU’) referred to in Article 12(1). 

The  MFA  Loan  to  Ukraine  shall  be  available  until  31  December  2024.  It  shall  be 
made available by the Commission in one instalment, which may be disbursed in one 
or  more  tranches.  The  disbursement  of  all  such  tranches  shall  take  place  by  31 
December 2025 at the latest. 

(3) 

(4) 

(5) 

(6) 

(1) 

(2) 

(3) 

EN 

24 

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Article 10 

Amount 

(1) 

(2) 

The  MFA  Loan  to  Ukraine  shall  be  for  a  maximum  amount  of  EUR  35  billion. 
However, where, at the moment of the adoption of the Commission decision on the 
release of the instalment referred to in Article 13, the sum of this maximum amount 
and  of  the  principal  amount  of  eligible  bilateral  loans  already  approved  by  the 
Commission in accordance with  Article 6, and of the principal amount indicated in 
stated  intentions  of  third  countries  communicated  to  the  Commission  under  the 
auspices  of  the  G7  “Extraordinary  Revenue  Acceleration  Loans  for  Ukraine” 
initiative, exceed EUR 45 billion, the maximum amount of the MFA Loan shall be 
reduced by the value of the excess. 

If  the  financing  needs  of  Ukraine  decrease  fundamentally  during  the  period  of  the 
availability  of  the  Union’s  exceptional  macro-financial  assistance,  including  in  the 
event of a settlement of Ukraine’s war damages by Russia, the Commission, acting in 
accordance with the examination procedure referred to in Article 16, may reduce the 
amount of the assistance or cancel it. 

(3) 

The MFA Loan shall have a maximum duration of 45 years. 

Article 11 

Precondition for support 

(1) 

(2) 

(3) 

(4) 

(5) 

26 

27 

A precondition  for granting  the exceptional macro-financial assistance shall be that 
Ukraine continues to uphold and respect effective democratic mechanisms, including 
a multi-party parliamentary system and the rule of law, and to guarantee respect for 
human rights, including the rights of persons belonging to minorities. 

The  Commission  services  and  the  European  External  Action  Service  shall  monitor 
the  fulfilment  of  the  precondition  set  out  in  paragraph  1,  in  particular  before  the 
instalment  is  released  and  tranches  are  disbursed,  taking,  as  appropriate,  duly  into 
account  the  Commission’s  regular  enlargement  report.  The  Commission  shall  take 
into  account  the  relevant  recommendations  of  international  bodies,  such  as  the 
Council  of  Europe  and  its  Venice  Commission,  in  this  process.  The  Commission 
shall inform the Council of the fulfilment of the precondition set out in paragraph 1 
before the instalment is released and before tranches are disbursed to Ukraine. 

Paragraphs 1  and 2 of this Article shall apply  in  accordance with  Council Decision 
2010/427/EU26.  

The  assessment  referred  to  in  paragraph  2  shall  be  conducted  together  with  the 
assessment provided for in Article 5 of Regulation (EU) 2024/79227. 

Where the Commission finds that the precondition is not met or is no longer met, it 
shall  suspend  disbursements  of  the  exceptional  macro-financial  assistance  and  the 

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). 
Regulation  (EU)  2024/792  of  the  European  Parliament  and  of  the  Council  of  29  February  2024 
establishing the Ukraine Facility (OJ L, 2024/792, 29.2.2024). 

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release  of  non-repayable  support  referred  to  in  Article  8  as  it  pertains  to  the  MFA 
Loan. 

Article 12 

Memorandum of Understanding 

(1) 

(2) 

The Commission shall agree with Ukraine on policy conditions to which the Union’s 
exceptional macro-financial assistance is to be linked. Those policy conditions shall 
be set out in a MoU.  

The  policy  conditions  in  the  MoU  shall  be  consistent  with  the  qualitative  and 
quantitative  steps  contained  in  the  Annex  to  the  Council  Implementing  Decision 
(EU)  2024/1447  on  the  approval  of  the  assessment  of  the  Ukraine  Plan,  and  any 
amendments thereof. The policy conditions in the MoU shall additionally include a 
commitment to promote cooperation with the Union on the recovery, reconstruction 
and  modernisation  of  Ukraine’s  defence  industry,  in  line  with  the  objectives  of  the 
European  Defence  Industry  Programme  (EDIP)  and  other  relevant  Union 
programmes. 

(3) 

The Commission shall approve the signature of the MoU and of its amendments by 
means  of  implementing  acts.  Those  implementing  acts  shall  be  adopted  in 
accordance with the examination procedure referred to in Article 16(2).  

Article 13 

Decision on release 

(1) 

(2) 

(3) 

(1) 

(2) 

Ukraine  shall  submit  a  request  for  funds  ahead  of  the  release  of  the  instalment, 
accompanied by a report in accordance with the provisions of the MoU. 

The  Commission  shall  decide  on  the  release  of  the  instalment  subject  to  its 
assessment of the following requirements: 

(a) 

compliance with the precondition set out in Article 11; and 

(b) 

satisfactory fulfilment of the policy conditions set out in the MoU. 

The  disbursement  of  tranches  may  be  aligned  with  the  timing  of  disbursements  of 
loan  or  non-repayable  financial  support  under  Pillar  I  of  the  Ukraine  Facility  in 
accordance with Regulation (EU) 2024/792.  

Article 14 

Borrowing and lending operations 

In order to finance the exceptional macro-financial assistance, the Commission shall 
be empowered, on behalf of the Union, to borrow the necessary funds on the capital 
markets  or  from  financial  institutions  in  accordance  with  Article  220a  of  the 
Financial Regulation.  

By  way  of  derogation  from  Article  31(3),  second  sentence,  of  Regulation  (EU) 
2021/947, the financial assistance provided to Ukraine in the form of loans shall not 
be supported by the External Action Guarantee. No provisioning for the MFA Loan 

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(3) 

(1) 

(2) 

shall be constituted and, by way of derogation from Article 211(1) of the Financial 
Regulation, no provisioning rate as a percentage of the amount referred to in Article 
10 of this Regulation shall be set.  

Amounts suspended in accordance with Article 11(4) shall be available, to the extent 
necessary, to support the repayment of Union borrowing operations. The use of such 
resources in this manner shall not release Ukraine from its liability to repay the loan 
in accordance with the terms of the MFA Loan Agreement.  

Article 15 

MFA Loan Agreement  

The  detailed  financial  terms  of  the  Union’s  exceptional  macro-financial  assistance 
shall be laid down in the MFA Loan Agreement. 

In addition to the elements laid down in Article 220(5) of the Financial Regulation, 
the MFA Loan Agreement shall contain requirements:  

(a) 

(b) 

(c) 

that  the  rights,  responsibilities  and  obligations  provided  in  the  Framework 
Agreement referred to in  Article 9 of Regulation  (EU) 2024/792  apply  to the 
MFA Loan Agreement and the funds therein; 

that Ukraine utilises the same management and control systems as proposed in 
the Ukraine Plan established under Regulation (EU) 2024/792; 

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 exceptional 
macro-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; 

(d) 

that Ukraine continues to respect the conditions specified in Article 11(1); 

(e) 

(f) 

that the excess amount referred to in Article 8(4) may be used in full or in part 
for the early repayment of the MFA Loan at the initiative of the Commission 
or, subject to the approval of the Commission, upon request of Ukraine; and 

that define the modalities of repayment, based on a waterfall structure. Firstly, 
that  non-repayable  support  made  available  for  the  MFA  Loan  from  the 
Mechanism  authorised  in  accordance  with  Article  8  is  used  to  directly  repay 
the  MFA  Loan.  Secondly,  if  no  or  only  partial  non-repayable  support  is 
provided for reasons of insufficient amounts, amounts retained by the Union in 
accordance  with  Article  8(4),  shall  be  used  to  directly  repay  the  MFA  Loan. 
Thirdly, if the above amounts are insufficient, that in the event of an agreement 
being  reached  to  provide  Ukraine  with  war  reparations  or  any  equivalent 
financial settlement of war damages, Ukraine shall use such resources for the 
servicing  of  the  MFA  Loan.  Fourthly,  if  the  above  amounts  are  insufficient, 
Ukraine shall remain liable for any remaining amount due. 

(3) 

(4) 

Non-compliance  with  the  terms  of  the  MFA  Loan  Agreement  shall  constitute  a 
ground  for  the  Commission  to  suspend  or  cancel  the  release  of  the  instalment  or 
tranches, or, where warranted, demand early repayment of the MFA Loan. 

The MFA Loan Agreement shall be made available, upon request, simultaneously to 
the European Parliament and the Council. 

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(1) 

(2) 

(1) 

(2) 

(3) 

Article 16 

Committee procedure 

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. 

Chapter IV 

Final Provisions 

Article 17 

Information to the European Parliament and to the Council 

regarding 

The  Commission  shall  inform  the  European  Parliament  and  the  Council  of 
developments 
including 
implementation  of 
disbursements  under  the  Mechanism  and  the  MFA  Loan  and  shall  provide  those 
institutions  with  the  relevant  documents  in  due  time.  This  information  should  be 
provided  in  line  with  the  inter-institutional  arrangements  agreed  under  the  Ukraine 
Facility, including the Ukraine Facility Dialogue. 

this  Regulation, 

the 

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 Regulation in the preceding 
year, including an evaluation of that implementation. That report shall: (a) examine 
progress made in implementing the Union’s exceptional macro-financial assistance; 
and (b) assess the economic situation and prospects of Ukraine, as well as progress 
made  in  implementing  the  policy  measures  referred  to  in  Article  12(1).  Where 
appropriate,  in  particular  after  the  MFA  Loan  and  all  the  eligible  bilateral  loan 
agreements have expired, the Commission shall include in that report a review of the 
adequacy of the arrangements contained in this Regulation. 

Not  later  than  31  December  2027,  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 exceptional macro-financial assistance provided 
under  this  Regulation  and  the  extent  to  which  it  has  contributed  to  the  aims  of  the 
assistance. 

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Article 18 

Entry into force 

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

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

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 

Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  establishing  the 
Ukraine Loan Cooperation Mechanism and providing macro-financial assistance to Ukraine  

1.2 Policy area(s) concerned (Programme cluster) 

Policy area: Economic and Financial Affairs  

Activity: International economic and financial affairs1.3 The proposal/initiative relates to:  

 a new action  
 a new action following a pilot project/preparatory action28  

 the extension of an existing action  

 a merger or redirection of one or more actions towards another/a new action  

1.4 Objective(s) 

1.4.1 General objective(s) 

To establish the Ukraine Loan Cooperation Mechanism and make available to Ukraine macro-
financial assistance with a view to supporting Ukraine in covering its financing needs. 

1.4.2 Specific objective(s) 

To  provide  Ukraine  with  non-repayable  financial  support  with  a  view  to  assisting 
Ukraine to repay the MFA Loan and bilateral loans provided to support Ukraine and 
thus  contribute  to  macro-financial  stability,  and  to  ease  the  Country's  external  and 
internal financing constraints. 

1.4.3 Expected result(s) and impact  

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

• 

Support Ukraine’s economic resilience and stability under the war circumstances. 

• 
Contribute  to  covering  the  external  funding  needs  of  Ukraine,  in  the  context  of  a 
significant  deterioration  of  their  external  accounts  brought  about  by  the  unprovoked  and 
unjustified Russian invasion of Ukraine. 

Alleviate  Ukraine’s  budgetary  financing  needs,  as  a  continuation  of  the  emergency 

• 
assistance already provided.  

Contribute,  through  the  Ukraine  Loan  Cooperation  Mechanism,  to  the  repayment  of 

• 
the MFA loan provided to Ukraine under this Regulation and bilateral loans. 

1.4.4 Indicators of performance 

Specify the indicators for monitoring progress and achievements. 

The  authorities  of  Ukraine  will  be  required  to  provide  a  report  on  the  compliance  with  the 
agreed policy conditions ahead of the disbursement of the instalment of the MFA loan. The 

28 

As referred to in Article 58(2)(a) or (b) of the Financial Regulation. 

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Commission services will remain in close contact with the Ukraine Donor Platform to benefit 
from insights from ongoing activities of the respective donors. 

The Commission services will continue to monitor public finance management, following the 
operational  assessment  of  the  financial  circuits  and  administrative  procedures  in  Ukraine, 
which was delivered in June 2020. 

The EU Delegation will also provide regular reporting on issues relevant for the monitoring of 
the  assistance.  An  annual  report  on  the  implementation  of  this  Regulation,  including 
disbursements  of  the  Ukraine  Loan  Cooperation  Mechanism  and  MFA  loan,  to  the  Council 
and European Parliament is foreseen. An ex-post evaluation of the Union’s completed MFA 
assistance will be carried out by the Commission. 

1.5 Grounds for the proposal/initiative  

1.5.1 Requirement(s) to be met in the short or long term including a detailed timeline for roll-

out of the implementation of the initiative 

For the implementation  of the Ukraine Loan Cooperation Mechanism, the Commission  will 
enter into an agreement with Ukraine setting out the conditions and obligations to receive and 
use the non-repayable financial support. Support to assist Ukraine to repay loans provided by 
third  countries  under  the  Ukraine  Loan  Cooperation  Mechanism  will  be  conditional  on  the 
Commission’s positive assessment of eligibility of the bilateral  loans submitted by Ukraine. 
The  release  of  the  non-repayable  financial  support  under  the  Ukraine  Loan  Cooperation 
Mechanism  will  be  conditional  on  the  Commission’s  approval  of  the  requests  for  non-
repayable financial support submitted by Ukraine or, exceptionally, by bilateral lenders.  

The  MFA  loan  will  be  conditional  on  the  fulfilment  of  the  precondition  as  well  as  policy 
conditions, listed in a Memorandum of Understanding (MoU) between the Commission and 
the  authorities  of  Ukraine.  The  assistance  will  consist  of  one  instalment,  which  may  be 
disbursed in several tranches.  

The  MFA  assistance  will  be  managed  by  the  Commission.  Specific  provisions  on  the 
prevention  of  fraud  and  other  irregularities,  consistent  with  the  Financial  Regulation,  are 
applicable, including the relevant provisions on ensuring the Union’s financial interest as laid 
down in the Framework Agreement under Regulation (EU) 2024/792. The Commission and 
the  Ukrainian  authorities  would  agree  on  the  MoU  setting  out  reporting  requirements.  The 
Commission  will  work  closely  with  the  international  financial  institutions  and  the  national 
authorities,  as  well  as  third  countries  participating  the  Ukraine  Multi-Donor  Coordination 
Platform,  to  coordinate  priorities  and  the  conditionality  of  their  respective  support  and  to 
monitor  relevant  developments  and  the  application  of  the  requirements  and  conditions  as 
agreed in the MoU. 

1.5.2  Added  value  of  Union  involvement  (it  may  result  from  different  factors,  e.g. 
coordination gains, legal certainty, greater effectiveness or complementarities). For 
the purposes of this point 'added value of Union involvement' is the value resulting 
from  Union  intervention  which  is  additional  to  the  value  that  would  have  been 
otherwise created by Member States alone. 

This proposal responds to the need for a common response in providing support to Ukraine on 
an adequate scale, which cannot be sufficiently achieved by the Member States alone and can 
be  better  achieved  by  the  EU.  The  main  reasons  are  the  fiscal  capacity  and  budgetary 
constraints faced at the national level and the need for strong donor coordination in order to 
maximise  the  scale  and  effectiveness  of  the  support,  while  limiting  the  burden  on  the 

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31 

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administrative  capacity  of  Ukrainian  authorities,  which  is  very  stretched  in  the  current 
circumstances.  

The initiative is part of the EU’s objective to provide short term liquidity support to Ukraine. 
It also reinforces actions by the Union for direct humanitarian, economic and defence support, 
as well as the Union’s initiatives to coordinate multilateral actions. 

The key added value of the Ukraine Loan Cooperation Mechanism, compared to other Union 
instruments, is to assist Ukraine to repay the MFA loan and eligible bilateral loans provided to 
support  Ukraine.  In  doing  so,  it  answers  the  call from  the  European  Council  in  conclusions 
from  27  June  2024  to  take  work  forward  while  addressing  all  relevant  legal  and  financial 
aspects, in order to provide additional funding for Ukraine by the end of the year in the form 
of loans serviced and repaid by future flows of the extraordinary revenues.  

The key added value of the MFA loans in comparison to other EU instruments is to swiftly 
alleviate  the  external  financial  constraints  and  to  help  ensure  a  continued  stable  macro-
financial framework, including by promoting a sustained and sustainable balance of payments 
and budgetary situation, within an appropriate framework for reporting requirements. 

1.5.3 Lessons learned from similar experiences in the past 

Macro-financial  assistance  operations  are  subject  to  ex-post  evaluation.  Past  ex-post 
evaluations  of  previous  MFA  operations  to  Ukraine  have  shown  that  in  general  they  were 
highly relevant in terms of its objectives, budget and policy objectives. They proved 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. They allowed for fiscal savings and financial benefits, as well as acted as a catalyst 
for additional financial support and investor confidence. 

Given the innovative nature of the Ukraine Loan Cooperation Mechanism, no lessons learned 
could  be  identified.  1.5.4  Compatibility  with  the  Multiannual  Financial  Framework  and 
possible synergies with other appropriate instruments 

The  proposal  is  compatible  with  the  ceilings  of  the  2021-2027  multiannual  financial 
framework (MFF).  

The Ukraine Loan Cooperation Mechanism will be financed by external assigned revenue. 

The  MFA  support  in  the  form  of  loans  will  be  available  until  31  December  2024,  with  the 
disbursements  of  tranches  taking  place  by  31  December  2025.  The  resources  for  the  MFA 
loan will be financed by borrowing.  

In  considering  the  financial  risks  and  the  budgetary  coverage,  no  provisioning  should  be 
constituted for the support in the form of loans under this Regulation, to be guaranteed over 
and  above  the  ceilings,  and,  by  way  of  derogation  from  Article  211(1)  of  Regulation  (EU, 
Euratom) 2018/1046, no provisioning rate should be set. 

1.5.5  Assessment  of  the  different  available  financing  options,  including  scope  for 

redeployment 

By using loans, this MFA operation increases the effectiveness of the EU budget through the 
leverage effect and provides for the best cost-efficient option. The Commission is empowered 
to  borrow  funds  from  capital  markets  on  behalf  of  both  the  European  Union  and  Euratom 
using the guarantee of the EU budget. The aim is to obtain funds from the market at the best 
available rates due to the top credit status. 

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Further  pressure  on  a  strained  EU  budget  due  to  provisioning  requirements  and  complex 
arrangements,  involving  a  multitude  of  ad  hoc  national  guarantees,  should  be  avoided. 
Therefore, the MFA loan will be guaranteed over and above the MFF ceilings. A unified and 
efficient  system  to  secure  the  best  borrowing  conditions  and  extend  market  access  for  loan 
support has major advantages in the current market context. 

1.6 Duration and financial impact of the proposal/initiative 

 limited duration  

 

in effect from YYYY to YYYY; 

 Financial impact from YYYY to YYYY for commitment appropriations and from 
YYYY to YYYY for payment appropriations. 

 unlimited duration 

Implementation with a start-up period from 01/10/2024 to 30/06/2025, 

followed by full-scale operation. 

1.7 Management mode(s) planned29  

 Direct management by the Commission 

 by its departments, including by its staff in the Union delegations;  

 

by the executive agencies  

 Shared management with the Member States  

 Indirect management by entrusting budget implementation tasks to: 

 third countries or the bodies they have designated; 

 international organisations and their agencies (to be specified); 

 the EIB and the European Investment Fund; 

 bodies referred to in Articles 70 and 71 of the Financial Regulation; 

 public law bodies; 

  bodies  governed  by  private  law  with  a  public  service  mission  to  the  extent  that 
they are provided with adequate financial guarantees; 

 bodies governed by the private law of a Member State that are entrusted with the 
implementation  of a public-private partnership and that are provided  with  adequate 
financial guarantees; 

  persons  entrusted  with  the  implementation  of  specific  actions  in  the  CFSP 
pursuant to Title V of the TEU, and identified in the relevant basic act. 

If more than one management mode is indicated, please provide details in the ‘Comments’ section. 

Comments  

N/A

29 

Details of management modes and references to the Financial Regulation may be found on the 
BudgWeb site: 
https://myintracomm.ec.europa.eu/budgweb/EN/man/budgmanag/Pages/budgmanag.aspx  

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2. MANAGEMENT MEASURES  

2.1 Monitoring and reporting rules  

Specify frequency and conditions. 

The  monitoring  and  reporting  obligations  under  the  Regulation  (EU,  Euratom)  2018/1046 
apply.  

The monitoring of the action by the Commission services will take place on the basis of the 
specific  measures  to  be  agreed  with  the  Ukrainian  authorities  in  a  Memorandum  of 
Understanding (MoU).  

The  MoU  will  include  policy  conditions  that  should  be  consistent  with  the  qualitative  and 
quantitative  steps  contained  in  the  Annex  to  the  Council  Implementing  Decision  (EU) 
2024/1447  on  the  approval  of  the  assessment  of  the  Ukraine  Plan,  and  any  amendments 
thereof. 

The Commission will verify the fulfilment of the policy conditions set out in the MoU. The 
Commission  will  inform  the  European  Parliament  and  the  Council  about  the  results  of  that 
verification. 

By 30 June of each year, the Commission will submit to the European Parliament and to the 
Council a report on the implementation of this Regulation in the preceding year, including an 
evaluation  of  that  implementation.  That  report  will:  (a)  examine  progress  made  in 
implementing  the  Union’s  macro-financial  assistance;  and  (b)  assess  the  economic  situation 
and  prospects  of  Ukraine,  as  well  as  progress  made  in  implementing  the  policy  conditions 
included  in  the  MoU.  Where  appropriate,  in  particular  after  the  MFA  Loan  and  all  the 
bilateral loan agreements have expired, the Commission will include in that report a review of 
the adequacy of the arrangements contained in this Regulation. 

No later than 31 December 2027, the Commission will submit to the European Parliament and 
to  the  Council  an ex-post evaluation  report,  assessing  the  results  and  efficiency  of  the 
completed  Union’s  support  under  the  MFA  operation  and  the  extent  to  which  it  has 
contributed to the aims of the assistance. 

2.2 Management and control system(s)  

2.2.1 Justification of the management mode(s), the funding implementation mechanism(s), the 

payment modalities and the control strategy proposed 

The actions to be financed under this proposal will be implemented under direct management 
by the Commission, as it concerns financial support provided directly to the State.  

The  non-repayable  support  under  the  Ukraine  Loan  Cooperation  Mechanism  will  be  made 
available  by  the  Commission,  subject  to  the  availability  of  amounts  in  the  Ukraine  Loan 
Cooperation Mechanism.  

The release of tranches can be organised flexibly and swiftly in the course of 2024 and 2025. 
To  facilitate  the  Ukrainian  authorities’  liquidity  management  and  ensure  predictability,  the 
Commission  intends  to ensure  that  tranches  are  released  throughout  the  course  of  2024  and 
2025,  avoiding  to  the  extent  possible  significant  deviations  of  amounts  from  quarter-to-
quarter.  The  disbursement  of  tranches  may  be  aligned  with  the  timing  of  disbursements  of 
loan  or  non-repayable  financial  support  under  Pillar  I  of  the  Ukraine  Facility  in  accordance 
with Regulation (EU) 2024/792.  

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The  MFA  loan  should  be  released  subject  to  the  respect  of  preconditions  and  satisfactory 
fulfilment of the policy conditions. 

2.2.2 Information concerning the risks identified and the internal control system(s) set up to 

mitigate them 

There are political, fiduciary and policy risks related to the proposed operation. A key risk to 
the  operation  stems  from  the  continuation  of  the  war  caused  by  the  Russian  unjustified  and 
unprovoked  invasion  of  Ukraine,  which  could  have  a  further  negative  impact  on  Ukraine’s 
macroeconomic stability and administrative capacity. 

Secondly,  future  flows  of  extraordinary  revenues  stemming  from  the  immobilisation  of 
Russian sovereign assets held in the European Union are subject to a number of assumptions. 
Should those assumptions not materialise, the Ukraine Loan Cooperation Mechanism may not 
achieve its full potential impact. 

Thirdly, there is a risk that the loans could be used in a fraudulent way. As the proposal is not 
designated to specific expenses (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.  

Fourthly,  in  the  event  that  non-repayable  support  from  the  Ukraine  Loan  Cooperation 
Mechanism  is  insufficient  to  repay  the  MFA  loan  and  that  other  repayment  sources  are  not 
possible, risk stems from the possibility that Ukraine will fail to service the MFA loan, which 
could  be  caused  for  example  by  a  significant  additional  deterioration  of  the  balance  of 
payments and fiscal position of the partner.  

Internal control systems  

The  operations  will  be  liable  to  verification,  control  and  auditing  procedures  under  the 
responsibility of the Commission, including the European Anti-Fraud Office (OLAF), and by 
the European Court of Auditors as foreseen by Article 129 of the Financial Regulation. The 
payment is subject to monitoring by the Commission’s staff. The disbursement relating to the 
operations may be subject to additional independent ex-post (documentary and/or on-the-spot) 
verifications by officials of the ex-post control team of the relevant Commission department. 
Such verifications may also be initiated at the request of the responsible authorising officer by 
delegation. Interruptions and suspensions of payments, financial corrections (implemented by 
Commission), and recoveries may be practiced where needed (it has not occurred so far) and 
are to be explicitly foreseen in the agreements with Ukraine.  

2.2.3  Estimation  and  justification  of  the  cost-effectiveness  of  the  controls  (ratio  of  "control 
costs ÷ value of the related funds managed"), and assessment of the expected levels 
of risk of error (at payment & at closure)  

The  control  systems  in  place  have  ensured  an  effective  error  rate  for  the  macro-financial 
assistance type of payments so far of 0%. There are no known cases  of fraud, corruption or 
illegal activity. Operations have a clear intervention logic, one that allows the Commission to 
evaluate their impact. The controls enable the confirmation of assurance and of attainment of 
policy objectives and priorities. 

2.3 Measures to prevent fraud and irregularities  

Specify existing or envisaged prevention and protection measures, e.g. from the Anti-Fraud Strategy. 

To  mitigate  the  risks  of  fraudulent  use  several  measures  have  been  and  will  be  taken.  The 
detailed terms of the non-repayable support under the Ukraine Loan Cooperation Mechanism, 

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will be set out in a legal agreement signed between the Commission and Ukraine. The legal 
agreement will establish the obligation of Ukraine to use the non-repayable financial support 
for  the  repayment  of  the  principal,  interest  and  any  other  related  cost  of  the  MFA  Loan  or 
eligible  bilateral  loans,  as  well  as  to  obtain  from  the  bilateral  lenders  and  provide,  without 
delay, to the Commission the proof of discharge of each payment obligation. 

Furthermore, a Loan Agreement is to be concluded between the Commission and Ukraine in 
accordance with Article 220 of Regulation (EU, Euratom) 2018/1046. The Loan Agreement 
will provide a set of provisions on inspection, fraud prevention, audits and recovery of funds 
in case of fraud or corruption. In particular, the Loan Agreement will include  provisions for 
the Commission to carry out checks, for the Court of Auditors to carry out audits and for the 
European Public Prosecutor’s Office to exercise its competences, in accordance with Articles 
129 and 220 of Regulation (EU, Euratom) 2018/1046.  

The MFA operation will be subject the specific provisions for the protection of the financial 
interests  of  the  Union  as  established  under  the  Framework  Agreement  under  the  Ukraine 
Facility. 

EN 

36 

  EN 

3. ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

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

affected  

New budget lines requested  

In order of multiannual financial framework headings and budget lines. 

Heading of 
multiannual 
financial 
framework 

6 

Budget line 

Type of 
expenditure 

Contribution  

Diff./Non-
diff. 

from 
EFTA 
countries 

from 
candidate 
countries 

from third 
countries 

within the 
meaning of 
Article 21(2)(b) of 
the Financial 
Regulation  

Operational expenditure budget line: 
14 11 01 – Ukraine Loan Cooperation 
Mechanism 

Diff 

YES 

YES 

YES 

YES 

EN 

37 

  EN 

 
 
 
 
3.2 Estimated financial impact of the proposal on appropriations  

3.2.1 Summary of estimated impact on operational appropriations  

The purpose of the Mechanism shall be to provide Ukraine with non-repayable financial support with a 
view to assisting Ukraine to repay the MFA Loan and bilateral loans provided to support Ukraine.  

The  Mechanism  shall  receive  resources  and  disburse  them  on  a  regular  basis  to  Ukraine  to  cover  the 
principal, interest and any other related costs of the MFA Loan and bilateral loans.  

Amounts  transferred  to  the  Ukraine  Loan  Cooperation  Mechanism  by  any  potential  amendment  Annex 
XLI  to  Council  Regulation  (EU)  No  833/2014,  as  well  as  amounts  stemming  from  specific  voluntary 
contributions from Member States, third countries or other sources, will be used to provide Ukraine with 
non-repayable  support  with  a  view  to  assisting  Ukraine  to  repay  the  MFA  Loan  and  bilateral  loans 
provided to support Ukraine.  

Ukraine Loan Cooperation Mechanism 

(assumption: commitment appropriations 
equal payment appropriations) 

•  Operational appropriations (of which) 

14  11  01  –  Ukraine  Loan  Cooperation 
Mechanism 

Year 
2024 

Year 
2025 

Year 
2026 

Year 
2027 

pm 

pm 

pm 

pm 

Heading of multiannual 
financial  
framework  

7 

‘Administrative expenditure’ 

This section should be filled in using the 'budget data of an administrative nature' to be firstly introduced 
in the Annex to the Legislative Financial Statement (Annex V to the internal rules), which is uploaded to 
DECIDE for interservice consultation purposes. 

EUR million (to three decimal places) 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as 
necessary to show the 
duration of the impact 
(see point 1.6)  

TOTAL 

DG: <…….> 

 Human resources  

 Other administrative expenditure  

TOTAL DG <…….> 

Appropriations  

TOTAL appropriations 
under HEADING 7 
of the multiannual financial 
framework  

(Total 
commitments  = 
Total payments) 

EN 

38 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.2 Summary of estimated impact on administrative appropriations  

 The  proposal/initiative  does  not  require  the  use  of  appropriations  of  an 
administrative nature  

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

 
nature, as explained below: 

Year 
2024 

Year 
2025 

Year 
2026 

Year 
2027 

TOTAL 

EUR million (to three decimal places) 

HEADING 7 
of the multiannual 
financial framework 

Human resources  

Other administrative 
expenditure  

Subtotal HEADING 7 
of the multiannual 
financial framework  

30

Outside HEADING 7
of the multiannual 
financial framework  

Human resources  

Other expenditure  
of an administrative 
nature 

Subtotal  
outside HEADING 7 
of the multiannual 
financial framework  

TOTAL 

The  appropriations  required  for  human  resources  and  other  expenditure  of  an  administrative  nature  will  be  met  by 
appropriations from the DG that 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. 

30 

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 

39 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Estimated requirements of human resources  

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

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

 
below: 

Estimate to be expressed in full time equivalent units 

2024 

2025 

2026 

2027 

Enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

 Establishment plan posts (officials and temporary staff) 

20 01 02 01 (Headquarters and Commission’s Representation 
Offices) 

20 01 02 03 (Delegations) 

01 01 01 01 (Indirect research) 

01 01 01 11 (Direct research) 

Other budget lines (specify) 

 External staff (in Full Time Equivalent unit: FTE)

31

20 02 01 (AC, END, INT from the ‘global envelope’) 

20 02 03 (AC, AL, END, INT and JPD in the delegations) 

XX 01 xx yy zz 

32

- at Headquarters 

- in Delegations  

01 01 01 02 (AC, END, INT - Indirect research) 

01 01 01 12 (AC, END, INT - Direct research) 

Other budget lines  

TOTAL 

 External staff (in Full Time Equivalent unit: FTE) - AC, AL, 

END, INT and JED 

33

Other budget line: Assigned revenue  

Financed from assigned revenue – at Headquarters 

Financed from assigned revenue – in Delegation 

TOTAL 

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: 

Officials and temporary staff 

External staff 

31 

32 
33 

AC=  Contract  Staff;  AL  =  Local  Staff;  END=  Seconded  National  Expert;  INT  =  agency  staff; 
JPD= Junior Professionals in Delegations.  
Sub-ceiling for external staff covered by operational appropriations (former ‘BA’ lines). 
AC=  Contract  Staff;  AL  =  Local  Staff;  END  =  Seconded  National  Expert;  INT  =  agency  staff; 
JPD= Junior Professionals in Delegations.  

EN 

40 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.3 Compatibility with the current multiannual financial framework  

Loans will be funded from borrowings of the EU on the financial markets.  

can  be  fully  financed  through  redeployment  within  the  relevant  heading  of  the 
Multiannual Financial Framework (MFF). 

requires use of the unallocated margin under the relevant heading of the MFF 

 
and/or use of the special instruments as defined in the MFF Regulation. 

requires a revision of the MFF. 

3.2.4 Third-party contributions  

The proposal/initiative: 
does not provide for co-financing by third parties34 

 provides for the co-financing by third parties estimated below: 

Appropriations in EUR million (to three decimal places) 

Year 
N35 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as necessary 
to show the duration of the 
impact (see point 1.6) 

Total 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

p.m. 

Specify  the  co-financing 
body  

TOTAL appropriations 
co-financed  

34 
35 

Third parties’ contributions will be in the form of assigned revenue presented in the section below. 
Year N is the year in which implementation of the proposal/initiative starts. Please replace "N" by the 
expected first year of implementation (for instance: 2021). The same for the following years. 

EN 

41 

  EN 

 
 
3.3 Estimated impact on revenue  

 

The proposal/initiative has no financial impact on revenue. 

The proposal/initiative has the following financial impact: 

 

on own resources  

on other revenue 

please indicate, if the revenue is assigned to expenditure lines  

EUR million (to three decimal places) 

Appropriations 
available for 
the current 
financial year 

Budget revenue line: 

Item  6642  Ukraine 
Cooperation 
Loan 
Mechanism 
— 
Assigned Revenue 

Impact of the proposal/initiative36 

Year 
N 

Year 
N+1 

Year 
N+2 

p.m. 

p.m. 

p.m. 

p.m. 

Year 
N+3 

p.m. 

Enter as many years as necessary to show 
the duration of the impact (see point 1.6) 

p.m. 

p.m. 

p.m. 

For assigned revenue, specify the budget expenditure line(s) affected. 

See section 3.2.1 above. 

36 

As regards traditional own resources (customs duties, sugar levies), the amounts  indicated must be net 
amounts, i.e. after deduction of 25 % for collection costs. 

EN 

42 

  EN