Ukraine officials outline ambitious reform agenda, development targets required to get €50B from EU
The Ukraine Facility plan, which was approved by the EU, has quite specific steps that Ukraine will have to take, MP Yaroslav Zheleznyak reported on Telegram on Feb. 1.
"Most of the money from the plan — 39 billion euros ($42.4 billion) — is the 'Ukraine Plan'," the lawmaker said.
“Another 8 billion euros ($8.7 billion) is the Investment Fund and 3 billion euros ($3.3 billion) is Technical and Administrative Support (compensation for the loan rate). So, these 39 billion euros will be macro-financial assistance. Conditionally, as an IMF tranche.”
The plan will resemble a large IMF memorandum with quite specific steps, said Zheleznyak.
“Furthermore, it will outline steps (what needs to be done, for example, to pass law number X)," the legislator stated.
Other conditions will include deadlines by when certain items must be completed and the amount of money allocated for the implementation of specific things.
“The plan itself will be for four years until the end of 2027,” he added.
“Each quarter from 2024-2027 will have a conditional list of such steps, for which money will be allocated. From what government officials have said, the review will be tough each time, with a conditional audit commission from the EU. It is not yet known what the mechanism for reviewing the program will look like. The government will appoint a coordinator responsible for monitoring the implementation.”
These reviews will occur quarterly, Zheleznyak said, emphasizing that the EU plan should be synchronized with these documents before it is adopted.
“If the deadline is not met within a year, the program can no longer be fulfilled, and the money for this item will not be given,” he said.
“That is, this is a direct mechanism of ‘money in exchange for reforms.’ It looks even tougher now. And let me remind you that, given our budget needs for 2024, we expect the largest amount from the EU — hopefully 18 billion euros ($19.6 billion). The IMF Memorandum, the World Bank's DPL, and the U.S letter to the donor platform are also included.”
Former Deputy Minister of Infrastructure of Ukraine Viktor Dovhan wrote on Facebook that, in order to receive funds, Ukraine will fulfill the quarterly indicators of the Plan for Reforms and Investments.
Dovhan outlined the different components of the Ukraine Facility Plan:
· Tier I — financial support in the form of grants and loans to the state of 39 billion euros ($42.4 billion)
· Tier II — investment projects of 8 billion euros ($8.7 billion)
· Tier III — technical assistance of 3 billion euros ($3.3 billion)
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“Support will be provided through a combination of both grants of 17 billion euros ($18.5 billion) and loans of 33 billion euros ($36 billion), as well as reserves for budget guarantees. In addition to macro-finance, the most important thing is to develop a plan for investment projects, so cooperation between the state and business is needed.”
Yulia Svyrydenko, First Vice Prime Minister of Ukraine and Minister of Economy of Ukraine, said that, once the document is approved by the government, the Plan will be submitted to the European Commission for consideration.
"The Ukraine Facility plan envisages the implementation of structural reforms in the public sector, a number of economic reforms aimed at developing the business climate and entrepreneurship, as well as steps to develop priority sectors that can ensure rapid economic growth," Svyrydenko said.
“Support under the Ukraine Facility program of the European Union will be provided on a quarterly basis for the fulfillment of the criteria set out in the Plan for the Implementation of the Envisaged Reforms.”
Final regulations should be adopted by the European Parliament during the plenary session scheduled for Feb. 26-29, 2024.
"We expect to receive the first payment of 4.5 billion euros ($4.9 billion) in March," Svyrydenko said.
Ukrainian Finance Minister Sergii Marchenko wrote on Facebook that the decision means, above all, reforms to strengthen the competitiveness of Ukraine's economy.
"What does this decision mean for Ukraine?" Marchenko said.
“Maintaining financial and economic stability. Attracting public and private investment to rebuild Ukraine. Reforms to strengthen the competitiveness of Ukraine's economy on the path to European integration. The decision to approve the Ukraine Facility is not only financial support but also an important signal of confidence in Ukraine as a partner and future EU member.”
All 27 EU member states agreed on Feb. 1 on the four-year 50 billion aid package for Ukraine, which was previously blocked by Hungary.
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