Availability of the Union’s exceptional macro-financial assistance
1. The Union shall make available to Ukraine exceptional macro-financial assistance, with a view to supporting Ukraine in covering its financing needs. The Union’s exceptional macro-financial assistance shall be provided to Ukraine in the form of a loan (the ‘MFA Loan’). The MFA Loan shall contribute to covering Ukraine’s financing gap as identified in cooperation with international financial institutions.
2. The release of the MFA Loan shall be managed by the Commission on the basis of its assessment of the precondition referred to in Article 11(1) and of the implementation of the policy conditions included in the memorandum of understanding referred to in Article 12(1).
3. The MFA Loan shall be available until 31 December 2024. It shall be made available by the Commission in one instalment, which may be disbursed in one or more tranches. The disbursement of all such tranches shall take place by 31 December 2025.
Amount
1. The MFA Loan shall be for a maximum amount of EUR 35 billion. However, where, at the moment of the adoption of the Commission decision on the release of the instalment referred to in Article 13, the sum of that maximum amount and of the principal amount of eligible bilateral loans already approved by the Commission in accordance with Article 6, and of the principal amount indicated in stated intentions of third countries communicated to the Commission under the auspices of the G7 ‘Extraordinary Revenue Acceleration Loans for Ukraine’ initiative, exceed EUR 45 billion, the maximum amount of the MFA Loan shall be reduced by the value of the excess.
2. If the financing needs of Ukraine decrease fundamentally during the period of availability of the MFA Loan, including in the event of a settlement by Russia of Ukraine’s war damages, the Commission, acting in accordance with the examination procedure referred to in Article 16(2), may reduce the amount of the MFA Loan or cancel it.
3. The MFA Loan shall have a maximum duration of 45 years.
Precondition for support
1. A precondition for granting the MFA Loan 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, including the rights of persons belonging to minorities.
2. The Commission services and the European External Action Service shall monitor the fulfilment of the precondition set out in paragraph 1, in particular before the instalment is released and tranches are disbursed, taking, as appropriate, duly into account the Commission’s regular enlargement report. The Commission shall take into account the relevant recommendations of international bodies, such as the Council of Europe and its Venice Commission, in that process. The Commission shall inform the Council of the fulfilment of the precondition set out in paragraph 1 before the instalment is released and before tranches are disbursed to Ukraine.
3. Paragraphs 1 and 2 of this Article shall apply in accordance with Decision 2010/427/EU.
4. The assessment referred to in paragraph 2 of this Article shall be conducted together with the assessment provided for in Article 5(2) of Regulation (EU) 2024/792.
5. Where the Commission finds that the precondition set out in paragraph 1 of this Article has not been met or is no longer met, it shall suspend disbursements of the MFA Loan and the release of non-repayable support under the Mechanism referred to in Article 8 as it pertains to the MFA Loan.
Memorandum of Understanding
1. The Commission shall agree with Ukraine on policy conditions to which the MFA Loan is to be linked. Those policy conditions shall be set out in a memorandum of understanding (MoU).
2. The policy conditions in the MoU shall be consistent with the qualitative and quantitative steps contained in the Annex to Implementing Decision (EU) 2024/1447 and any amendments thereto. The policy conditions in the MoU shall additionally include a commitment to promote cooperation with the Union on the recovery, reconstruction and modernisation of Ukraine’s defence industry, in line with the objectives of Union programmes aiming at the recovery, reconstruction and modernisation of the Ukraine Defence Technological and Industrial Base and other relevant Union programmes.
3. The Commission shall approve the signature of the MoU and of its amendments by means of implementing acts. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 16(2).
Decision on release
1. Ukraine shall submit a request for funds ahead of the release of the instalment, accompanied by a report in accordance with the provisions of the MoU.
2. The Commission shall decide on the release of the instalment subject to its assessment of the following requirements:
(a)
compliance with the precondition set out in Article 11(1); and
(b)
the satisfactory fulfilment of the policy conditions set out in the MoU.
3. The disbursement of tranches may be aligned with the timing of disbursements of a loan or non-repayable financial support under Pillar I of the Ukraine Facility in accordance with Regulation (EU) 2024/792.
Borrowing and lending operations
1. In order to finance the MFA Loan, 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 224 of the Financial Regulation.
2. By way of derogation from Article 31(3), second sentence, of Regulation (EU) 2021/947, the financial assistance provided to Ukraine under the MFA Loan shall not be supported by the External Action Guarantee. No provisioning for the MFA Loan shall be constituted and, by way of derogation from Article 214(1) of the Financial Regulation, no provisioning rate as a percentage of the amount referred to in Article 10 of this Regulation shall be set.
3. Amounts suspended in accordance with Article 11(5) of this Regulation shall be available, to the extent necessary, to support the repayment of Union borrowing operations. The use of such resources in that manner shall not release Ukraine from its liability to repay the MFA Loan in accordance with the terms of the MFA Loan Agreement.
MFA Loan Agreement
1. The detailed financial terms of the MFA Loan shall be laid down in the MFA Loan Agreement.
2. In addition to the elements laid down in Article 223(4) of the Financial Regulation, the MFA Loan Agreement shall require that:
(a)
the rights, responsibilities and obligations provided for in the framework agreement under the Ukraine Facility referred to in Article 9 of Regulation (EU) 2024/792 apply to the MFA Loan Agreement and the funds therein;
(b)
Ukraine utilise the same management and control systems as proposed in the Ukraine Plan established under Regulation (EU) 2024/792;
(c)
it be ensured that the Union is entitled to early repayment of the MFA Loan where it has been established that, in relation to the management of the MFA Loan, Ukraine has engaged in any act of fraud or corruption or any other illegal activity detrimental to the financial interests of the Union;
(d)
Ukraine continue to respect the precondition set out in Article 11(1);
(e)
the excess amount referred to in Article 8(4) may be used in full or in part for the early repayment of the MFA Loan at the initiative of the Commission or, subject to the approval of the Commission, upon request of Ukraine; and
(f)
detailed arrangements for repayment be defined, based on a waterfall structure where:
(i)
non-repayable support under the Mechanism made available for the MFA Loan authorised in accordance with Article 8 is used to directly repay the MFA Loan;
(ii)
if no or only partial non-repayable support under the Mechanism is provided for reasons of insufficient amounts, amounts retained by the Union in accordance with Article 8(4) shall be used to directly repay the MFA Loan;
(iii)
if the amounts referred to in points (i) and (ii) are insufficient, in the event of an agreement being reached to provide Ukraine with war reparations or any equivalent financial settlement of war damages, Ukraine shall use such resources for the servicing of the MFA Loan; and
(iv)
if the amounts referred to in points (i), (ii) and (iii) are insufficient, Ukraine shall remain liable for any remaining amount due under the MFA Loan.
3. Non-compliance with the terms of the MFA Loan Agreement shall constitute a ground for the Commission to suspend or cancel the release of the instalment or tranches or, where warranted, to demand early repayment of the MFA Loan.
4. The MFA Loan Agreement shall be made available, upon request, simultaneously to the European Parliament and to the Council.
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.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
