The European Union is finalizing work on a new instrument (single special instrument) “Ukraine Facility”, the aim of which will be to support Ukraine in the process of reconstruction, reconstruction, and modernization. Additionally, this instrument is intended to support Ukraine's efforts related to the status as an EU candidate country.
The total planned budget of the instrument is to amount to EUR 50 billion. Of this amount, EUR 17 billion will be granted in the form of grants, the remaining EUR 33 billion will be granted in the form of loans.
The EU plans that the implementation of the instrument will last from 2024 to 2027.
The implementation of the instrument is divided into three pillars:
- Pillar I: The Government of Ukraine will prepare a “Plan for Ukraine", specifying its intentions regarding the reconstruction, reconstruction, and modernization of the country and the reforms it plans to carry out as part of the EU accession process. Financial support in the form of grants and loans to Ukraine would be provided based on the implementation of the Plan for Ukraine, which will be based on a set of conditions and a payment schedule;
- Pillar II: Under Ukraine's investment framework, the EU will provide support in the form of budget guarantees and a combination of grants and loans from public and private institutions. The Ukrainian guarantee would cover risks related to loans, guarantees, capital market instruments and other forms of financing supporting the objectives of the Pillar;
- Pillar III: EU assistance for Ukraine's accession to the EU and other measures supporting Ukraine in aligning its law with EU law and implementing structural reforms enabling future EU membership;
Grants will be mobilized through a new dedicated instrument proposed in the context of the midterm review of the Multiannual Financial Framework (MFF); The loans will be guaranteed as part of the own funds reserve, similar to the current financing under Macro Financial Assistance Plus (MFA+). Ukraine may apply under Plan Ukraine for an advance payment of up to 7% of the Loan.
A significant part of the investment part of the Plan for Ukraine and the Investment Framework for Ukraine will be allocated to green investments, and part of the Investment Framework for Ukraine will be reserved for SMEs.
The plan will also be aimed at supporting national authorities.
A precondition for Ukraine's support under the Facility will be Ukraine's continued respect for effective democratic mechanisms, including a multi-party parliamentary system and the rule of law; The plan assumes the implementation of 69 reforms and the achievement of 150 indicators. Despite the ongoing hostilities, it is worth planning support for the reconstruction of Ukraine now. Importantly, this support will be provided not only at the institutional level, but also to small entrepreneurs. We encourage all entrepreneurs who have branches or want to start a business in Ukraine to follow the information on this subject.
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