Article 1 Subject matter
1. This Regulation establishes an instrument for providing Union support to Ukraine (macro-financial assistance +) (the ‘Instrument’) in the form of loans, non-repayable support and an interest rate subsidy. 2. It lays down the objectives of the Instrument, its financing, the forms of Union funding under it and the rules for providing such funding.
Article 2 Objectives of the Instrument
1. The general objective of the Instrument shall be to provide short-term financial relief to Ukraine in a predictable, continuous, orderly and timely manner, financing of rehabilitation and initial support towards post-war reconstruction, where appropriate, with a view to supporting Ukraine on its path towards European integration. 2. To reach the general objective, the main specific objectives shall in particular be to support: (a) macro-financial stability, and to ease Ukraine’s external and internal financing constraints; (b) a reform agenda gearing towards the early preparatory phase of the pre-accession process, as appropriate, including strengthening Ukraine’s institutions, reforming and reinforcing the effectiveness of public administration as well as transparency, structural reforms and good governance at all levels; (c) rehabilitation of critical functions and infrastructure and relief for people in need.
Article 3 Areas of support
To achieve its objectives, the Instrument shall support notably the following: (a) the financing of Ukraine’s funding needs, with a view to maintaining the macro-financial stability of the country; (b) rehabilitation, for instance in restoring critical infrastructure, such as energy infrastructure, water systems, transport networks, internal roads or bridges, or in strategic economic sectors and social infrastructure, such as healthcare facilities, schools, and housing for relocated persons, including temporary and social housing; (c) sectoral and institutional reforms, including anti-corruption and judicial reforms, respect for the rule of law, good governance, and modernisation of the national and local institutions; (d) preparation for the reconstruction of Ukraine; (e) support for the alignment of the regulatory framework of Ukraine to that of the Union and Ukraine’s integration into the single market, as well as strengthening economic development and improving competitiveness; (f) the strengthening of Ukraine’s administrative capacity through appropriate means, including the use of technical assistance.
Article 4 Available support under the Instrument
1. The support under the Instrument in the form of loans, shall be available, subject to Article 5, for an amount of up to EUR 18 000 000 000 for the period from 1 January 2023 to 31 December 2023 with possible disbursement until 31 March 2024. The support shall become available progressively, as Member States’ guarantees enter into force in accordance with Article 5(4), while never exceeding the amounts covered by those guarantee agreements. However, as of the date of application of an amendment to Regulation (EU, Euratom) 2020/2093, or its successor, that provides for a guarantee of the loans referred to in the first subparagraph of this paragraph under the Union budget over and above the MFF ceilings and up to the limits of the ceilings referred to in Article 3(1) and (2) of Decision (EU, Euratom) 2020/2053, the second subparagraph of this paragraph shall cease to apply and the support referred to in the first subparagraph of this paragraph shall become available in full. 2. Additional support under the Instrument for the period from 1 January 2023 to 31 December 2027 shall also be available, subject to Article 7(1), for covering the expenditure pursuant to Article 17. This additional support may be available beyond 31 December 2027 subject to Article 7(1). 3. Additional amounts available in accordance with Article 7(2) and (4) of this Regulation may be implemented as non-repayable support where provided for in the MoU to be concluded in accordance with Article 9 of this Regulation or in accordance with Regulations (EU) 2021/947 and (EC) No 1257/96 to finance measures achieving the objectives referred to in Article 2(2), points (b) and (c), of this Regulation in accordance with the rules of those Regulations. 4. The amounts referred to in paragraph 3 may cover support expenditure for the implementation of the Instrument and for the achievement of its objectives, including administrative support associated with the preparation, follow-up, monitoring, control, audit and evaluation activities necessary for such implementation, as well as expenditure at headquarters and Union delegations for the administrative and coordination support needed for the Instrument, and to manage operations financed under the Instrument, including information and communication actions, and corporate information technology systems.
Article 5 Contributions in the form of guarantees by Member States
1. Member States may contribute by providing guarantees of up to a total amount of EUR 18 000 000 000 in respect of the support under the Instrument in the form of loans referred to in Article 4(1). 2. Where contributions from the Member States are made, they shall be provided in the form of irrevocable, unconditional and on-demand guarantees through a guarantee agreement to be concluded with the Commission, in accordance with Article 6. 3. The relative share of the contribution of the Member State concerned (contribution key) to the amount referred to in paragraph 1 of this Article shall correspond to the relative share of that Member State in the total GNI of the Union, as resulting from heading ‘General Revenue’ of the budget for 2023, Part A (‘Financing of the Union’s annual budget, Introduction’), Table 4, column (1), set out in the general budget of the Union for the financial year 2023, as definitively adopted on 23 November 2022. 4. The guarantees shall become effective in respect of each Member State as of the date of entry into force of the guarantee agreement, referred to in Article 6, between the Commission and the Member State concerned. 5. Amounts resulting from calls on the guarantees shall constitute external assigned revenue in accordance with Article 21(2), point (a)(ii), of the Financial Regulation for the repayment of financial liabilities from the support under the Instrument in the form of loans referred to in Article 4(1) of this Regulation. 6. Before calling on guarantees provided by the Member States, the Commission, at its sole discretion and responsibility, shall examine all measures available under the diversified funding strategy provided for in Article 220a of the Financial Regulation, in accordance with the limits set out in this Regulation. Such examination shall not affect the irrevocable, unconditional and on-demand nature of the guarantees provided pursuant to paragraph 2 of this Article. In the call on guarantees, the Commission shall inform the Member States about the examination, as appropriate. 7. By way of derogation from Article 211(4), point (c), of the Financial Regulation, amounts recovered from Ukraine in respect of the support under the Instrument in the form of loans referred to in Article 4(1) of this Regulation shall be reimbursed to those Member States up to the amount of the guarantee calls honoured by Member States pursuant to Article 6, point (a), of this Regulation.
Article 6 Guarantee agreements
The Commission shall conclude a guarantee agreement with each Member State that provides a guarantee referred to in Article 5. That agreement shall set out the rules governing the guarantee, which shall be the same for all Member States, including, in particular, provisions: (a) establishing the obligation of the Member States to honour guarantee calls made by the Commission in respect of the support under the Instrument in the form of loans referred to in Article 4(1); (b) ensuring that the guarantee calls are made pro rata, applying the contribution key referred to in Article 5(3); on a temporary basis, the contribution key shall be proportionately adjusted until all the guarantee agreements between the Commission and the Member States enter into force in accordance with Article 5(4); (c) providing that the guarantee calls ensure the Union’s ability to repay the funds borrowed, pursuant to Article 16(1), on the capital markets or from financial institutions following a non-payment by Ukraine, including cases of changes to the payment schedule for any reason whatsoever as well as expected and unexpected non-payments; (d) ensuring that where a Member State fails, in full or in part, to honour a guarantee call in time, the Commission, in order to cover for the part corresponding to the Member State concerned, shall have the right to make additional guarantee calls on guarantees provided by other Member States. Such additional calls shall be made pro rata to the relative share of each of the other Member States in the GNI of the Union as referred to in Article 5(3) and adapted without taking into account the relative share of the Member State concerned. The Member State which failed to honour the guarantee call shall remain liable to honour it, and shall also be liable for any resulting costs. The other Member States shall be reimbursed any additional contributions from the amounts recovered by the Commission from the Member State which failed to honour a call. The guarantee called from a Member State shall be limited, in all circumstances, to the overall amount of guarantee contributed by that Member State under the guarantee agreement; (e) regarding the payment conditions; (f) ensuring that the guarantee shall cease to be callable as of the date of application of an amendment to Regulation (EU, Euratom) 2020/2093, or its successor, which provides for a guarantee of the loans referred to in Article 4(1) of this Regulation under the Union budget over and above the MFF ceilings and up to the limits of the ceilings referred to in Article 3(1) and (2) of Decision (EU, Euratom) 2020/2053.
Article 7 Contributions by Member States and third parties
1. Member States may contribute to the Instrument with the amounts referred to in Article 4(2). The relative share of the contribution of the Member State concerned to those amounts shall correspond to the relative share of that Member State in the total GNI of the Union. For the contributions for year n, the GNI-based relative share shall be calculated as the share in the total GNI of the Union, as resulting from the respective column in the revenue part of the last annual Union budget or amending annual Union budget adopted for the year n-1. The support under the Instrument under this paragraph shall become available in respect of any amount set in an agreement between the Commission and the respective Member State after that agreement enters into force. 2. Member States may contribute to the Instrument with additional amounts as referred to in Article 4(3). 3. The contributions referred to in paragraphs 1 and 2 of this Article shall constitute external assigned revenue in accordance with Article 21(2), point (a)(ii), of the Financial Regulation. 4. Interested third countries and parties may also contribute to non-repayable support under the Instrument with additional amounts referred to in Article 4(3), of this Regulation in particular related to the specific objectives referred to in Article 2(2), points (b) and (c), of this Regulation. Those contributions shall constitute external assigned revenue in accordance with Article 21(2), points (d) and (e), of the Financial Regulation.
Article 8 Precondition for the support under the Instrument
1. A precondition for granting the support under the Instrument shall be that Ukraine continue 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. 2. The Commission and the European External Action Service shall monitor the fulfilment of the precondition set out in paragraph 1 throughout the period of the support provided under the Instrument, in particular before disbursements are made, taking, as appropriate, duly into account the Commission’s regular enlargement report. The circumstances in Ukraine and the consequences of the application there of martial law shall also be taken account. 3. Paragraphs 1 and 2 of this Article shall apply in accordance with Council Decision 2010/427/EU ( 15 ) .
Article 9 Memorandum of Understanding
1. The Commission shall conclude a memorandum of understanding (MoU) with Ukraine which shall in particular establish the policy conditions, the indicative financial planning and the reporting requirements as referred to in Article 10 to which the Union support under the Instrument is to be linked. The policy conditions shall be linked, as appropriate, in the context of the overall situation in Ukraine, to the objectives and their implementation referred to respectively in Articles 2 and 3 and to the precondition set out in Article 8. They shall include commitment to the principles of sound financial management with focus on anti-corruption, fight against organised crime, anti-fraud and avoidance of conflict of interests and the establishment of a transparent and accountable framework for the management of rehabilitation and, where appropriate, reconstruction. 2. The MoU may be reviewed by the Commission at mid-term. The Commission may amend the MoU following the review. 3. The MoU shall be adopted and amended in accordance with the examination procedure referred to in Article 19(2).
Article 10 Reporting requirements
1. Reporting requirements for Ukraine shall be included in the MoU and shall ensure, in particular, the efficiency, transparency and accountability of the use of the support provided under the Instrument. 2. The Commission shall verify, at regular intervals, the implementation of the reporting requirements and the progress made towards fulfilling the policy conditions set out in the MoU. The Commission shall inform the European Parliament and the Council of the results of that verification.
Article 11 Release of the support under the Instrument
1. Subject to the requirements referred to in Article 12, the support under the Instrument shall be made available by the Commission in instalments. The Commission shall decide on the timeframe for the disbursement of each instalment. An instalment may be disbursed in one or more tranches. 2. The release of the support under the Instrument shall be managed by the Commission based on its assessment of the implementation of the policy conditions included in the MoU.
Article 12 Decision on release of the support under the Instrument
1. Ukraine shall submit a request for funds ahead of the disbursement of each instalment, accompanied by a report in accordance with the provisions of the MoU. 2. The Commission shall decide on the release of the instalments subject to its assessment of the following requirements: (a) respect for the precondition set out in Article 8; (b) the satisfactory implementation of the reporting requirements agreed in the MoU; (c) satisfactory progress towards the implementation of the policy conditions set out in the MoU. 3. Before the maximum amount of the support under the Instrument is disbursed, the Commission shall verify the fulfilment of all the policy conditions set out in the MoU.
Article 13 Reduction, suspension and cancellation of the support under the Instrument
1. If the funding needs of Ukraine decrease fundamentally during the period of the disbursement of the Union’s support under the Instrument compared to the initial projections, the Commission may reduce the amount of the support, suspend it or cancel it. 2. Where the requirements set out in Article 12(2) are not met, the Commission shall suspend or cancel the disbursement of the support under the Instrument.
Article 14 Assessment of implementation of the support under the Instrument
During the implementation of the Instrument, the Commission shall assess, by means of an operational assessment, which may be conducted together with the operational assessment provided for under Decisions (EU) 2022/1201 and (EU) 2022/1628, the soundness of Ukraine’s financial arrangements, the administrative procedures, and the internal and external control mechanisms which are relevant to the support under the Instrument.
Article 15 Information to the European Parliament and to the Council
The Commission shall inform the European Parliament and the Council of developments regarding the Union support under the Instrument, including disbursements thereof, and developments in the operations referred to in Article 11, and shall provide those institutions with the relevant documents in due time. In case of suspension or cancellation pursuant to Article 13(2), it shall without delay inform the European Parliament and the Council of the reasons for the suspension or cancellation.
Article 16 Borrowing and lending operations
1. In order to finance the support under the Instrument in the form of loans, the Commission shall be empowered, on behalf of the Union, to borrow the necessary funds on the capital markets or from financial institutions in accordance with Article 220a of the Financial Regulation. 2. The detailed terms of the support under the Instrument in the form of loans shall be laid down in a loan agreement in accordance with Article 220 of the Financial Regulation, to be concluded between the Commission and Ukraine. The loans shall have a maximum duration of 35 years. 3. By derogation from Article 31(3), second sentence, of Regulation (EU) 2021/947, macro-financial assistance provided to Ukraine in the form of loans under the Instrument shall not be supported by the External Action Guarantee. No provisioning for the loans under this Regulation shall be constituted and, by derogation from Article 211(1) of the Financial Regulation, no provisioning rate as a percentage of the amount referred to in Article 4(1) of this Regulation shall be set.
Article 17 Interest rate subsidy
1. By derogation from Article 220(5), point (e), of the Financial Regulation and subject to available resources, the Union may bear interest by granting an interest rate subsidy and cover administrative costs related to the borrowing and lending, with the exception of costs related to early repayment of the loan, in respect of the loans under this Regulation. 2. Ukraine may request the interest rate subsidy and coverage of the administrative costs by the Union each year.
Article 18 Financing agreement for non-repayable support
The detailed terms of the non-repayable support referred to in Article 4(3) of this Regulation shall be laid down in a financing agreement to be concluded between the Commission and Ukraine. By derogation from Article 220(5) of the Financial Regulation, the financing agreement shall contain only provisions referred to in Article 220(5), points (a), (b) and (c), thereof. The financing agreement shall include provisions on the protection of the Union’s financial interests, checks, audits, prevention of fraud and other irregularities, and the recovery of funds.
Article 19 Committee procedure
1. The Commission shall be assisted by a committee. That committee shall be a committee within the meaning of Regulation (EU) No 182/2011. 2. Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply.
Article 20 Annual report
1. The Commission shall submit to the European Parliament and to the Council, an assessment of the implementation of Chapter I of this Regulation, including an evaluation of that implementation. That report shall: (a) examine the progress made in implementing the Union’s support under the Instrument; (b) assess the economic situation and prospects of Ukraine, as well as the implementation of the requirements and conditions referred to in Section 2 of Chapter I of this Regulation; (c) indicate the connection between the requirements and conditions set out in the MoU, Ukraine’s ongoing macro-financial situation and the Commission’s decisions to release the instalments of the support under the Instrument. 2. Not later than two years after the end of the availability period, 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 support under the Instrument and the extent to which it has contributed to the aims of the assistance.
Article 21 Final provisions
This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union .