Brussels, 28 April 2014
Memorandum of Understanding on Macro-Financial Assistance Programme for Ukraine signed
European Commission Vice-President Siim Kallas today signed the Memorandum of Understanding on the new €1 billion Macro-Financial Assistance (MFA) loan programme to Ukraine, which was approved by the EU Council of Ministers on 14 April. The new MFA programme is intended to assist Ukraine economically and financially in the current critical stage of its development. It is part of the package to support Ukraine announced by the European Commission on 5 March and endorsed by the European Council on 6 March.
"This assistance, combined with the previously decided €610 million MFA programme, will provide much-needed help to the Ukrainian Government for its financing needs. It is a concrete sign of the EU's support to the Ukrainian people in a difficult situation, along with the other long-term financial assistance," said European Commission Vice-President Siim Kallas.
The EU MFA is designed to help Ukraine cover part of its urgent external financing needs in the context of the stabilisation and reform programme recently prepared by the Ukrianian authorities with the help of the International Monetary Fund (IMF). The assistance is aimed at reducing the economy’s short-term balance of payments and fiscal vulnerabilities.
The disbursement of the assistance will be conditional on specific economic policy conditions outlined in the MoU and on the successful implementation of an IMF Stand-By Arrangement (SBA), which is expected to be approved shortly by the IMF Executive Board. The policy conditions focus on public finance management and anti-corruption, trade and taxation, energy sector and financial sector reforms, along with the provision of increased social subsidies for those in the most vulnerable situation.
The new €1 billion programme will be implemented in parallel with the programme of €610 million, which was approved already in 2010 but was not released because of the non-compliance with the necessary conditions by the then authorities in Kyiv.
MFA is an exceptional EU crisis-response instrument available to EU neighbouring partner countries experiencing severe balance of payments problems. It is complementary to the assistance provided by the IMF. MFA loans are financed through EU borrowings on the capital market. The funds are then on-lent with similar financial terms to the beneficiary countries.
For more information:
Information on past MFA operations, including annual reports, can be found here: