Relations between the European Union (the ‘Union’) and Ukraine continue to develop within the framework of the European Neighbourhood Policy (ENP) and the Eastern Partnership. An association agreement between the Union and Ukraine (2) (the ‘Association Agreement’), including a Deep and Comprehensive Free Trade Area (DCFTA), entered into force on 1 September 2017.
(2)
In spring 2014, Ukraine embarked on an ambitious reform programme with the aim of stabilising its economy and improving the livelihoods of its citizens. Ukraine and the Union have jointly defined a reform agenda (the ‘Association Agenda’, which was last updated in March 2015). The fight against corruption as well as constitutional, electoral and judicial reforms are among the top priorities on the agenda.
(3)
In addition to its political support, the Union pledged a financial package of over EUR 11 billion in March 2014 to support economic stabilisation and reform implementation in Ukraine, including EUR 1,6 billion in macro-financial assistance pursuant to Council Decision 2002/639/EC (3), Decision No 646/2010/EU of the European Parliament and of the Council (4) and Council Decision 2014/215/EU (5). In view of Ukraine's substantial external financing needs, an additional EUR 1,8 billion in macro-financial assistance was made available to Ukraine in April 2015 pursuant to Decision (EU) 2015/601 of the European Parliament and of the Council (6).
(4)
Since May 2014, Ukraine has received EUR 2,81 billion in macro-financial assistance from the Union, including EUR 1,2 billion of the EUR 1,8 billion available under Decision (EU) 2015/601. The third and last instalment of EUR 600 million of macro-financial assistance under Decision (EU) 2015/601 was cancelled on 18 January 2018 due to incomplete compliance by Ukraine with the programme of structural reforms attached to that instalment.
(5)
On 11 March 2015, the International Monetary Fund (IMF) approved a four-year Extended Fund Facility (EFF) arrangement for Ukraine in the amount of approximately USD 17,5 billion to support the country's economic adjustment and reform programme, of which USD 8,5 billion were disbursed between 2015 and 2017. That IMF financial assistance has been complemented by substantial support from a number of bilateral partners, including the Union, its Member States, the US, Japan and Canada. Other international financial institutions such as the World Bank, the European Bank for Reconstruction and Development and the European Investment Bank have also significantly scaled up their activity to support Ukraine's economic transition.
(6)
Following its technical mission of November 2017, the IMF revised its estimates of Ukraine's external financing needs, identifying an additional gap of USD 4,5 billion for 2018 and 2019. Those financing needs go over and above the funding committed so far by the international community, which includes the Union's macro-financial assistance pursuant to Decisions 2002/639/EC, No 646/2010/EU, 2014/215/EU and (EU) 2015/601.
(7)
In November 2017, in view of the continued challenging economic and financial situation of Ukraine, the Ukrainian authorities requested additional macro-financial assistance from the Union.
(8)
At the EU-Ukraine Association Council which met on 8 December 2017, the Union reaffirmed its support for Ukraine's substantial reform efforts, including financial assistance linked to concrete reform progress.
(9)
Given that Ukraine is a country covered by the ENP, it should be considered to be eligible to receive macro-financial assistance from the Union.
(10)
The Union's macro-financial assistance should be an exceptional financial instrument of untied and undesignated balance-of-payments support, which aims to address the beneficiary's immediate external financing needs, and should underpin the implementation of a policy programme containing strong immediate adjustment and structural reform measures designed to improve the beneficiary's balance-of-payments position in the short term.
(11)
Given that a residual external financing gap remains in Ukraine's balance of payments over and above the resources provided by the IMF and other multilateral institutions, the provision by the Union of macro-financial assistance to Ukraine is, under the current exceptional circumstances, considered to be an appropriate response to Ukraine's request to the Union to support its economic stabilisation, in conjunction with the IMF programme. The Union's macro-financial assistance would support the economic stabilisation and the structural reform agenda of Ukraine, supplementing resources made available under the IMF's financial arrangement.
(12)
The Union's macro-financial assistance should aim to support the restoration of a sustainable external financing situation for Ukraine, thereby supporting its economic and social development.
(13)
The determination of the amount of the Union's macro-financial assistance is based on a complete quantitative assessment of Ukraine's residual external financing needs, and takes into account its capacity to finance itself with its own resources, in particular the international reserves at its disposal. The Union's macro-financial assistance should complement the programmes and resources provided by the IMF and the World Bank. The determination of the amount of the assistance also takes into account expected financial contributions from bilateral and multilateral donors and the need to ensure fair burden sharing between the Union and other donors, as well as the pre-existing deployment of the Union's other external financing instruments in Ukraine and the added value of the overall Union involvement.
(14)
The Commission should ensure that the Union's macro-financial assistance is legally and substantially in accordance with the key principles and objectives of, and the measures taken within, the different areas of external action and other relevant Union policies.
(15)
The Union's macro-financial assistance should support the Union's external policy towards Ukraine. Commission services and the European External Action Service should work closely together throughout the macro-financial assistance operation in order to coordinate, and ensure the consistency of, Union external policy.
(16)
The Union's macro-financial assistance should support Ukraine's commitment to values shared with the Union, including democracy, the rule of law, good governance, respect for human rights, sustainable development and poverty reduction, as well as its commitment to the principles of open, rule-based and fair trade.
(17)
A pre-condition for granting the Union's macro-financial assistance should be that Ukraine respects effective democratic mechanisms – including a multi-party parliamentary system – and the rule of law, and guarantees respect for human rights. In addition, the specific objectives of the Union's macro-financial assistance should strengthen the efficiency, transparency and accountability of the public finance management systems in Ukraine and should promote structural reforms aimed at supporting sustainable and inclusive growth, employment creation and fiscal consolidation. Both the fulfilment of the preconditions and the achievement of those objectives should be regularly monitored by the Commission and the European External Action Service.
(18)
In order to ensure that the Union's financial interests linked to the Union's macro-financial assistance are protected efficiently, Ukraine should take appropriate measures relating to the prevention of, and fight against, fraud, corruption and any other irregularities linked to the Union's macro-financial assistance. In addition, provision should be made for the Commission to carry out checks and for the Court of Auditors to carry out audits.
(19)
Release of the Union's macro-financial assistance is without prejudice to the powers of the European Parliament and of the Council, as budgetary authority.
(20)
The amounts of provisioning required for the Union's macro-financial assistance should be consistent with the budgetary appropriations provided for in the multiannual financial framework.
(21)
The Union's macro-financial assistance should be managed by the Commission. In order to ensure that the European Parliament and the Council are able to follow the implementation of this Decision, the Commission should regularly inform them of developments relating to the assistance and provide them with the relevant documents.
(22)
In order to ensure uniform conditions for the implementation of this Decision, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council (7).
(23)
The Union's macro-financial assistance should be subject to economic policy conditions, to be laid down in a Memorandum of Understanding. In order to ensure uniform conditions of implementation and for reasons of efficiency, the Commission should be empowered to negotiate such conditions with the Ukrainian authorities under the supervision of the committee of representatives of the Member States in accordance with Regulation (EU) No 182/2011. Under that Regulation, the advisory procedure should, as a general rule, apply in all cases other than as provided for in that Regulation. Considering the potentially important impact of assistance of more than EUR 90 million, it is appropriate that the examination procedure be used for operations above that threshold. Considering the amount of the Union's macro-financial assistance to Ukraine, the examination procedure should apply to the adoption of the Memorandum of Understanding, and to any reduction, suspension or cancellation of the assistance,
