European Parliament approves €5-billion loan for Ukraine

European Parliament approves €5-billion loan for Ukraine
Credit: Belga

The European Parliament on Thursday approved the allocation of a €5-billion European loan to Ukraine.

The loan is part of an exceptional package of macro-financial assistance, mentioned in May by the European Commission, that provides up to €9 billion in loans to Kyiv for the year 2022.

This is in addition to a previous “emergency” macro-financial assistance package of €1.2 billion to which the European institutions had agreed shortly before the Russian invasion of Ukraine in late February 2022.

Of the €9 billion promised last spring, a first tranche of €1 billion was released at the beginning of August.

The purpose of this “macro-financial assistance”, in the form of long-term loans on favourable terms (the Commission itself borrows on the markets, then transfers the funds to Ukraine), is to ensure a certain stability in Ukraine by enabling it to meet urgent financing needs and operate essential infrastructure.

The European Parliament noted that Ukraine’s external financing needs had increased rapidly due to the Russian invasion. In addition to extensive damage to roads, bridges, factories, houses, hospitals and other physical infrastructure, the country has also lost access to international financial markets, it pointed out.

The allocation was adopted in plenary on Thursday according to an emergency procedure, with 534 members voting for, 30 against and 26 abstentions. To release the funds, the European Commission will still have to sign a loan agreement with the Ukrainian authorities.

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