Ukraine could receive €850m from EU by mid-year

If IMF-Ukraine deal goes through, EU aims to provide €600m in loans and €250m in grants by the end of June.

Ukraine could receive up to €600 million in loans from the European Union by the end of June, provided the International Monetary Fund and Ukraine agree on a package of reforms, a senior EU official has said.  

He also said that another €250m in the form of non-refundable grants could be released in May to help cover the costs of reforming Ukraine’s state institutions.  

The International Monetary Fund (IMF) announced yesterday (27 March) that it has struck a provisional agreement with Ukraine to provide $14 billion-$18bn (€10.2bn-€13.1bn) in financial support.  

The agreement, which still needs the blessing of the IMF’s board, requires Ukraine to raise energy prices, freeze the minimum wage and increase taxes.  

The EU had already pledged €1.61bn in support.  

Speaking yesterday, the senior EU official said that €100m in loans could be available in late April. A second, €500m tranche of loans could be released in June.  

He said that this was the “realistic” timeline, but added that the Commission would try to accelerate the release of the funds.  

The EU announced in early March that it was willing to provide more than €11bn in support for Ukraine by 2020. The vast majority of this would be in the form of loans, and therefore repayable, or of loan guarantees.  

The EU has also removed tariffs from a range of agricultural, industrial and other goods in a bid to help the Ukrainian economy. This temporary measure could become permanent if the Ukrainian government signs a free-trade agreement with the EU. The deal, which has already been fully prepared, is expected to be signed in the months following Ukraine’s presidential election on 25 May.  

The European Commission sent two commissioners – Stefan Füle, the commissioner for enlargement, and Janusz Lewandowski, the commissioner for budgetary affairs – and 12 other officials to Kiev for talks with the Ukrainian government. The group included Giovanni Kessler, the head of the Commission’s anti-fraud office, OLAF.  

One result was an agreement to post a small group of European Commission officials in ministries in Ukraine, to help the government develop its reform plans. The Commission is, at the same time, reinforcing its Brussels-based team of officials focused on Ukrainian issues.  

The senior EU official also said that OLAF would work with Ukrainian officials to ensure that EU funds are not embezzled.  

In its annual report on Ukraine, published yesterday, the European Commission said that the Ukrainian government needed to step up the fight against conflicts of interest, corruption and fraud in “all areas of public life, including in particular in the judicial system and in the business world”.  

The report also noted some improvement in Ukraine’s anti-corruption legislation last year, based partly on recommendations from the Council of Europe, a 47-country body that describes itself as Europe’s “leading human-rights organisation”.  

The Council of Europe’s secretary-general, Thorbjørn Jagland, will visit Brussels on Monday and Tuesday (31 March-1 April) for talks that will focus, among other things, on co-operation with the EU on reducing corruption in Ukraine.

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