Ukraine Support Loan Agreement
1. The detailed financial terms of the Ukraine Support Loan shall be laid down in the Ukraine Support Loan Agreement.
2. In addition to the elements laid down in Article 223(4) of Regulation (EU, Euratom) 2024/2509, the Ukraine Support Loan Agreement shall require that:
(a)
the Ukraine Support Loan is to be a limited recourse loan that becomes due and payable upon the occurrence of a repayment trigger as defined in subparagraph (j);
(b)
Ukraine provides the Union with a security interest over its claim on Russia for reparations as security for the Ukraine Support Loan. The value of that security interest shall at any given time be equal to the value of disbursed funds under the Ukraine Support Loan;
(c)
the rights, responsibilities and obligation provided for in the Framework Agreement under the Ukraine Facility referred to in Article 9 of Regulation (EU) 2024/792 apply to the Ukraine Support Loan Agreement and the funds therein;
(d)
the amount of assistance referred to in Article 8(2), point (a)(i), of this Regulation is to be implemented in accordance with Chapter III of Regulation (EU) 2024/792, with the exception of rules on the duration and repayment of the loan, including the borrowing costs subsidy, as referred to in Article 22, which are to be governed by this Regulation;
(e)
Ukraine utilises the same management and control systems as proposed in the Ukraine Plan established under Regulation (EU) 2024/792, including beyond the availability period referred to in Article 6(2) of that Regulation;
(f)
the Commission has the right to monitor activities, expenditures and measures under Chapter IV of this Regulation that are carried out by the Ukrainian authorities, along the whole project cycle;
(g)
Ukraine is to immediately notify the Commission should a draft contract or agreement financed through the Ukraine Support Loan not be implemented;
(h)
Ukraine continues to respect the precondition set out in Article 5(1);
(i)
Ukraine does not reverse any measure taken under any other current or previous instruments of support provided by the Union or IMF concerning anti-corruption;
(j)
Ukraine is to be liable for the repayment of the principal of the Ukraine Support Loan within 30 days, if any of the following conditions are fulfilled, each constituting a repayment trigger for the purposes of this Regulation:
(i)
the receipt of cash by Ukraine for war reparations, indemnities or any financial settlement from Russia, up to the amount of such settlement;
(ii)
90 days from the receipt of non-monetary assets by Ukraine for war reparations, indemnities or any financial settlement from Russia, except territory, up to the amount of such settlement which is to be determined by an independent valuation. Upon request of Ukraine, the Commission may grant an extension of this timeframe if strictly warranted;
(iii)
that Ukraine is in breach of point (h); or
(iv)
it has been established that, in relation to the management of the Ukraine Support Loan, Ukraine has engaged in any act of fraud, corruption or any other illegal activity detrimental to the financial interests of the Union.
(k)
Ukraine is liable to repay the Ukraine Support Loan:
(i)
where the conditions set out in point (j)(i) and (ii) are fulfilled, for an amount of the monetary value of the war reparations, indemnities or any financial settlement from Russia equal to the proportion of the Ukraine Support Loan outstanding against the sum of the value of the Ukraine Support Loan outstanding, any outstanding reparations loans provided by G7 members and any outstanding liabilities under ERA Loans;
(ii)
where the condition set out in point (j)(iii) is fulfilled, for the total outstanding amount of the Ukraine Support Loan;
(iii)
where the condition set out in point (j)(iv) is fulfilled, for the value of fraud, corruption or any other illegal activity detrimental to the financial interests of the Union.
(l)
any amounts of the Ukraine Support Loan not covered by the liability referred to in point (k) are to remain in place until future repayment trigger events occur;
(m)
in the case of payments or recoveries, Ukraine is to indicate the relevant payments from the Ukraine Support Loan that are being repaid or recovered;
(n)
the Union has the right to make use of Russian assets immobilised in the Union to repay the loan, in full accordance with Union and international law;
(o)
Ukraine is to ensure that the procurement procedures and contracts for other products for defence purpose resulting from procurement receiving support under the Ukraine Support Loan contain appropriate eligibility conditions to protect the security and defence interests of the Union and its Member States.
The Ukraine Support Loan Agreement shall also include any other requirements needed for the implementation of the Ukraine Support Loan, including those necessary to implement Article 17 of this Regulation.
3. Non-compliance with the terms of the Ukraine Support Loan Agreement shall constitute a ground for the Commission to suspend or cancel, in full or in part, the release of the instalment or tranches. Non-compliance with repayment terms of the Ukraine Support Loan Agreement shall additionally constitute a ground for the total or part of the outstanding amount of the Ukraine Support Loan to become due and payable.
4. The Ukraine Support Loan Agreement shall be made available, upon request, simultaneously to the European Parliament and to the Council.
Request for funds
1. To receive financial and economic assistance, Ukraine shall submit to the Commission a duly justified request for funds. Such a request for funds may be submitted by Ukraine to the Commission, in principle, six times per year.
2. For budget assistance in the form of a loan to be implemented pursuant to Chapter III of Regulation (EU) 2024/792, the request for funds shall be submitted in accordance with Chapter III of Regulation (EU) 2024/792.
3. For macro-financial assistance in accordance with Chapter III of this Regulation, the request for funds shall be accompanied by a report in accordance with the provisions of the MoU.
4. For assistance to support Ukraine’s defence industrial capacities in accordance with Chapter IV of this Regulation:
(a)
the request for funds may cover multiple products. For each covered product, the request for funds shall contain a contract or agreement in compliance with Article 13 and a schedule in accordance with Article 14. Such contracts or agreements may be signed or in a finalised draft form;
(b)
if the request for funds requests funding for an amount greater than 20 % of the amount made accessible in accordance with the Council implementing decision referred to in Article 8, Ukraine shall provide a detailed justification, including on the impact for future requests for funds under that implementing decision.
Borrowing costs subsidy
1. By way of derogation from Article 223(4), point (e), of Regulation (EU, Euratom) 2024/2509 and subject to available resources, the Union may bear the costs arising from the borrowing for a loan to Ukraine that would otherwise be borne by Ukraine (‘borrowing costs subsidy’). Those costs comprise service costs (cost of funding, cost of liquidity management, and cost of service for administrative overheads related to the borrowing and lending).
2. Ukraine may request the borrowing costs subsidy each year. The Commission may award the borrowing costs subsidy for an amount not exceeding the limits of the appropriations made available in the context of the budgetary procedure.
Decision on the release of assistance
1. The Commission shall decide on the release of assistance subject to its assessment of the following requirements:
(a)
for macro-financial assistance:
(i)
compliance with the precondition set out in Article 5(1);
(ii)
the satisfactory fulfilment of the policy conditions set out in the MoU; and
(iii)
compliance with the Ukraine Support Loan Agreement referred to in Article 20;
(b)
for assistance to support Ukraine’s defence industrial capacities:
(i)
compliance with the precondition set out in Article 5(1);
(ii)
confirmation that the contracts or agreements are for products in compliance with Article 13 and that the Commission does not object to the methods of implementation;
(iii)
confirmation that Ukraine broadly respects the qualitative and quantitative steps contained in the Annex to Council Implementing Decision (EU) 2024/1447 ( 30 ) and any amendments thereto;
(iv)
compliance with the obligations referred to in Article 16 and the Ukraine Support Loan Agreement referred to in Article 20; and
(v)
to the extent necessary, the adequacy of the detailed justification of Ukraine, taking into account the situation in Ukraine and the committed and expected external financing available.
For budget assistance in the form of a loan to be implemented pursuant to Chapter III of Regulation (EU) 2024/792, the release of assistance shall be implemented in accordance with Chapter III of Regulation (EU) 2024/792.
2. Subject to compliance with the amount of assistance accessible provided for in the Council implementing decision adopted in accordance with Article 8, where the Commission makes a positive assessment of the request for funds, it shall adopt, without undue delay, a decision authorising the disbursement of the Ukraine Support Loan. For assistance to support Ukraine’s defence industrial capacities, that amount to be disbursed shall be equal to the value of the contracts or agreements included in the request for funds.
3. The Commission may proceed with the decision referred to in paragraph 2 for paragraph 1, points (a) and (b), collectively or individually.
4. Where the Commission gives a negative assessment to the request for funds, it shall, without undue delay, inform Ukraine, giving reasons for its assessment. A negative assessment shall not prevent Ukraine from submitting a new request for funds.
Financing of the Ukraine Support Loan
1. In order to finance the assistance under the Ukraine Support Loan, the Commission shall be empowered, on behalf of the Union, to borrow the necessary funds on the capital markets or from financial institutions under the diversified funding strategy referred to in Article 224 of Regulation (EU, Euratom) 2024/2509.
2. The borrowing and lending operations for the Ukraine Support Loan shall be carried out in euro.
3. By way of derogation from Article 31(3), second sentence, of Regulation (EU) 2021/947, the financial assistance provided to Ukraine under the Ukraine Support Loan shall not be supported by the External Action Guarantee. No provisioning for the Ukraine Support Loan shall be constituted and, by way of derogation from Article 214(1) of Regulation (EU, Euratom) 2024/2509, no provisioning rate shall be set.
Application of the rules on classified information and sensitive information
1. Classified information that is created, handled, stored, exchanged or shared under this Regulation shall be protected in accordance with the security rules set out in Commission Decision (EU, Euratom) 2015/444 ( 31 ) or the Agreement between the Member States of the European Union, meeting within the Council, regarding the protection of classified information exchanged in the interests of the Union, as appropriate.
2. The Commission shall use a secured exchange system in order to facilitate the exchange of classified information and sensitive information between the Commission and Ukraine and, where appropriate, with the Participating Member States.
3. The Commission shall have access to information, including classified information, necessary for the tasks assigned to it under this Regulation, in particular for the purpose of verifying the conditions for disbursement of payments and carrying out the checks, reviews, audits, investigations, reports as well as the controls and audits, as referred to in Article 20.
4. Information received as a result of the application of this Regulation shall be used only for the purpose for which it was requested.
5. The Commission and Participating Member States shall ensure the protection of trade and business secrets and other sensitive information acquired and generated in application of this Regulation in accordance with Union law and respective national law.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
