Decision 2022/313 - Macro-financial assistance to Ukraine - Main contents

EN

Official Journal of the European Union

L 55/4

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.

In spring 2014, Ukraine embarked on an ambitious reform programme with the aim of stabilising its economy and improving the livelihoods of its citizens. The fight against corruption as well as constitutional, electoral and judicial reforms are among the top priorities on the agenda. The implementation of those reforms was supported by five consecutive macro-financial assistance programmes, under which Ukraine has received assistance in the form of loans for a total of EUR 5 billion. The latest macro-financial assistance, which was made available in the context of the COVID-19 pandemic pursuant to Decision (EU) 2020/701 of the European Parliament and of the Council (3), provided EUR 1,2 billion in loans to Ukraine and was completed in September 2021.

The economy of Ukraine has been affected by the recession in 2020, which was caused by the COVID-19 pandemic and by prolonged security threats at its border with Russia. The continuous build-up of uncertainty has resulted in a recent loss of confidence, negatively affecting the economic outlook, and, since mid-January 2022, in the loss of access to international capital markets. The deteriorating financing conditions have contributed to a sizable and increasing residual external financing gap and weigh heavily on investment, thereby weakening Ukraine’s resilience to future economic and political shocks.

The Ukrainian government has demonstrated a strong commitment to implement further reforms focusing, at the current critical juncture, in the short term on key policy areas such as economic resilience and stability, governance and rule of law, and energy.

A renewed commitment to carry out such reforms and a strong political will has led the Ukranian authorities to accelerate the implementation of reforms since the summer of 2021. This has also enabled Ukraine to successfully complete the macro-financial assistance operation in the context of the COVID-19 pandemic, as all reform actions agreed with the Union in the Memorandum of Understanding were fulfilled.

To allow for more policy flexibility in the context of the crisis related to the COVID-19 pandemic, the International Monetary Fund (IMF) approved an 18-month Stand-by Arrangement for Ukraine with access equivalent to USD 5 billion in June 2020. That arrangement focuses on four priorities: (i) mitigating the economic impact of the crisis, including by supporting households and businesses; (ii) ensuring continued central bank independence and a flexible exchange rate; (iii) safeguarding financial stability while recovering the costs from bank resolutions; and (iv) moving forward with key governance and anti-corruption measures to preserve and deepen recent gains. Due to an uneven implementation record, the first programme review, which also agreed on an extension of the programme until the...