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Ukraine: €260 million of EU Macro-Financial Assistance disbursed

Today, the European Commission, on behalf of the EU, disbursed paid a loan of €260 million to Ukraine as part of the EU Macro-Financial Assistance (MFA) facility for the country.

This loan disbursement adds to the €600 million extended disbursed since Mayearlier this year under the two ongoing EU MFA programmes. Following’s today’s disbursement, This leaves €750 million remaining available under the two current programmes for Ukraine.

The objective of the MFA programmes is to support Ukraine economically and financially in the current difficult situation the Ukrainian economy is going through, while encouraging structural reforms that will improve governance, raise sustainable economic growth and legislative harmonisation with the EUcritical stage of its development. Specifically, the EU’s MFA supports They MFA support a programme of reformsareis linked in the areas ofto specific conditionality that focusses on, amongst others, public finance management and anti-corruption, trade and taxation, the energy sector and the financial sector reforms.

Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici said: “This disbursement payment is a further concrete sign of Europe’s solidarity with the Ukrainian people. We are helping the country address its urgent financing needs, while supporting an ambitious process of reforms to stabilise the economy and create the conditions for sustainable growth and employment in Ukraine.”

The funding for today’s disbursement was raised by the European Commission on the financial markets on 5 November, when a €660 million benchmark bond was issued with 15-years maturity, and with yields at around 1.5%. These funds were also used to finance a European Financial Stabilisation Mechanism (EFSM) loan to Portugal.

Background

Financial assistance to Ukraine

The EU MFA loan support for Ukraine currently amounts to €1.61 billion. Two disbursements were made earlier this year: €100 million on 20 May and €500 million on 17 June. Further disbursements of €500 million and €250 million are intended to be made by the end of the year and by spring 2015, respectively, provideding Ukraine shows satisfactory progress with the accompanying reforms. The assistance is part of a wider package of support for Ukraine announced by the European Commission on 5 March and endorsed by EU leaders at the European Council on 6 March 2014.

MFA is an exceptional EU crisis-response instrument available to the EU’s neighbouring partner countries experiencing severe balance of payments problems. It is complementary to the assistance provided by the International Monetary Fund (IMF) and other donors in the context of the stabilisation and reform programme launched by the beneficiary countryUkrainian authorities. The MFA loans aim to help Ukraine address its urgent financing needs, while underpinning essential economic reforms.

The EU as a borrower

Since January 2011, the EU has raised in total €48.86 billion from the bond market, used mainly for the EFSM (€46.8 billion) and the remainder for Balance of Payments and and the Macro-Financial Assistance loans.

The EU is rated AAA/Aaa/AA+/AAA by the major rating agencies (Fitch, Moody’s, Standard & Poor’s, DBRS), all rating outlooks are stable.

The EU funds its loans by issuing debt instruments in the capital markets. Funds raised are lent to beneficiary countries under almost exactly the same terms, i.e. with the same coupon, maturity and for the same amount.

Issuances by the EU are carried out by the European Commission’s financial operations department located in Luxembourg.

Further information

EU investor relations website:

http://ec.europa.eu/economy_finance/eu_borrower/

Information on EFSM and financial assistance to Portugal:

http://ec.europa.eu/economy_finance/assistance_eu_ms/index_en.htm

Information on MFA operations, including annual reports:

http://ec.europa.eu/economy_finance/eu_borrower/macro-financial_assistance/index_en.htm

EU investor relations website:

http://ec.europa.eu/economy_finance/eu_borrower/

 

Information on MFA operations, including annual reports:

http://ec.europa.eu/economy_finance/eu_borrower/macro-financial_assistance/index_en.htm

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