Speech - Speaking points by Vice-President Olli Rehn on Macro-Financial Assistance to Ukraine
European Commission - SPEECH/14/232 19/03/2014
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Vice-President of the European Commission and member of the Commission responsible for Economic and Monetary Affairs and the Euro
Speaking points by Vice-President Olli Rehn on Macro-Financial Assistance to Ukraine
Press Room, Brussels
Brussels, 19 March 2014
The College has this morning discussed the latest developments in Ukraine, especially concerning, obviously, the security and political situation but also touching upon economic and financial issues, and we have taken an important decision regarding financial help to the country.
As you are aware, the European Union has made clear that it does not recognise the outcome of the illegal and illegitimate referendum in Crimea and that the EU will not recognise the annexation of Crimea and Sevastopol to the Russian Federation, which indeed goes against the principles of the UN Charter and the CSCE/OSCE Helsinki final Act. The European Council will discuss the situation in Ukraine this week, as you know, and agree on a united European response to the latest developments.
While the focus in recent days has clearly been on these dramatic security and political developments, we should not forget that Ukraine's economic and financial situation has been deteriorating rapidly, which is felt in the everyday lives of Ukrainian citizens. There is a clear need for the international community to step in and provide urgent support. Creating the conditions for economic stabilisation is an essential step in order to help Ukraine to stabilise the political situation.
The Commission has been working intensively to prepare a package of macro-financial assistance to Ukraine, working in close cooperation with the IMF to mobilise the necessary support soon enough to help Ukraine meet its financing needs in the coming weeks and months.
Thus, today we adopted a proposal to provide Ukraine with a further one billion euros in macro-financial assistance, in addition to the already decided available MFA loan of €610 million. This €1.6 billion loan is an immediate and concrete response to Ukraine's difficult financial situation and is part of the package of support announced by the Commission on 5 March.
This loan, apart from aiming at supporting Ukraine in its immediate financial needs, is also aimed at supporting economic reforms in Ukraine, which have been demanded by Ukrainian citizens. The EU conditionality is related to structural reforms aimed at improving the overall macroeconomic management and the conditions for sustainable economic growth, such as improving the public finance management and the social safety net and, especially, intensifying the combat against corruption. These are the sort of decisions and reforms that the Ukrainian citizens have been calling for, for so many months and so many years.
This money comes in parallel to the funds expected to be provided by the IMF, which is currently finalising its negotiations with Ukraine on a programme.
Concerning the European Union support, this MFA, the first tranches of assistance from the EU, €100 million from the existing MFA and €500 million from the new MFA, which has been proposed today, should be ready to be disbursed right after an agreement on an IMF programme for Ukraine has been concluded. The rest of the loan would be disbursed during the course of this year.
A team of Commission experts is ready to return to Kiev in the coming days to finalise a Memorandum of Understanding and a loan agreement in advance of the necessary decisions by the Council. I count on the support of the European Parliament for this proposal, so that we can disburse it without any unnecessary delay and I have had contact with President Martin Schultz and leaders of key committees and political groups, on this regard. The aim is to be ready to mobilise the support very quickly once the decisions are taken.
President Barroso spoke yesterday with the Ukrainian Prime Minister Yatseniuk to inform him about this additional financial assistance, as well as the autonomous trade measures adopted last week. President Barroso reassured the Prime Minister of the Commission's commitment to roll out its assistance package in a rapid manner. The involvement of other actors such as the IMF will be key. Our goal is a united, prosperous and democratic Ukraine.
To conclude, it is in the essential interest of Ukraine and of Europe to maintain peace and political and financial stability in our continent. This financial assistance will help in stabilising the worsening financial situation in Ukraine and therefore will be one vital part of achieving a peaceful, negotiated and internationally legal and legitimate solution to the crisis, one that respects rather than flouts international law.