The European Commission, on behalf of the EU, today disbursed a loan of €250 million to Ukraine. This is the last disbursement under the first Macro-Financial Assistance (MFA) operation for Ukraine, which amounts to a total of €610 million.
The objective of the MFA programme is to address Ukraine’s urgent financing needs, while supporting Ukraine’s economic stabilisation and reform agenda. This MFA operation in Ukraine has supported in particular reforms in the areas of public finance management and anti-corruption, trade and taxation, the energy sector and the financial sector. MFA operations are part of the EU’s wider engagement in Eastern Europe and serve as an exceptional crisis-response instrument available to neighbouring countries.
Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue, said: “Europe stands together with Ukraine during these difficult times, both politically and financially. Ukraine is making great efforts to reform the country’s economy and governance in order to strengthen its competitiveness and bring it closer to the EU’s rules and values, while we support the country in its fight for independence and territorial integrity. The EU is also supporting Georgia through Macro-Financial Assistance to help the country develop its economy and strengthen its governance.”
Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs said: “In these times of great political and economic challenges for Ukraine, Europe continues to stand by Ukraine with financial support. Our assistance helps to address Ukraine’s urgent financing needs and will underpin its structural reform agenda. These reforms are essential in order to stabilise the Ukrainian economy and create the conditions for sustainable growth for all Ukrainians.”
The European Commision raised the funding for today’s disbursement on financial markets by a private placement on 14 April 2015. This was done through the issue of a €260 million amortising bond with a final maturity of 15 years, a 10-year grace period and a yield of 0.519%. Of these funds, €250 million have been lent on to Ukraine today on effectively the same terms, offering a long maturity at a very attractive interest rate.
The remaining €10 million have been used to finance an MFA loan to Georgia.
Macro-financial assistance to Ukraine
The first MFA operation for Ukraine, implemented since 2014, amounted to €610 million in loans. It is based on decisions from 2002 and 2010. Prior to today’s payment, the Commission had made two disbursements under this first MFA operation were made in 2014: €100 million on 20 May 2014 and €260 million on 12 November 2014. The second MFA operation for Ukraine, which totals €1 billion, was also disbursed in 2014: a first disbursement of €500 million took place on 17 June 2014, and the second tranche was paid on 3 December 2014. This 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.
A third MFA operation of €1.8 billion, which the Commission proposed on 8 January 2015, was approved by the European Parliament and the Council on 15 April 2015. It will be implemented as soon as agreement has been reached between the EU and Ukraine on a Memorandum of Understanding specifying the policy programme accompanying the assistance. The Commission aims to be able to make the first disbursement of this new MFA operation around mid-2015.
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 country.
The EU as a borrower
The EU borrows on the financial markets for on-lending to sovereign borrowers. Since January 2011, the EU has raised in total €50.135 billion from the bond market, used mainly for the European Financial Stability Mechanism or EFSM (€46.8 billion for Ireland and Portugal, all requested loans have been disbursed) and the remainder for Balance of Payments and Macro-Financial Assistance loans.
For the remainder of 2015, the EU intends to borrow up to €6.5 billion (MFA loans and potential refinancing of the lengthening of maturities under EFSM).
The EU is rated AAA/Aaa/AA+/AAA by the major rating agencies (Fitch, Moody’s, Standard & Poor’s and DBRS), all rating outlooks are stable. The DBRS rating is unsolicited.
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.
European Commission support for Ukraine:
Information on MFA operations, including annual reports:
EU investor relations website: