Details of Microfinance Tranche €18 Bln EU-Ukraine

by Olha Povaliaieva
Monday, November 21, 2022
Details of Microfinance Tranche €18 Bln EU-Ukraine

Valdis Dombrovskis stated that interest-free loans for 35 years are exempt from mandatory repayments until 2033

Vice-president of the European Commission Valdis Dombrovskis told about the terms of the macro tranche from the EU for Ukraine for €18 billion. According to Dombrovskis, this amount includes three billion of the 9 billion program. It is noteworthy that until 2033 Ukraine is exempt from mandatory payments.

"They (Ukraine ed.) will have a 10-year grace period with a total loan term of 35 years. The program also has a grant component that covers interest payments. That is, in fact, for Ukraine, it is a soft loan (a soft loan at lower than market per cent)," Valdis Dombrovskis.

The memorandum of understanding with the Ukrainian government will fix the terms of Ukraine-EU cooperation. It is these conditions that the EU will be guided by when receiving a quarterly return of funds from Ukraine for €4.5 billion. At the request of the government of Ukraine, the first payment can be divided into 2 parts, the first of which will be allocated in January next year.

"It is at the beginning of the year that tax revenues usually sag. We cannot yet name specific figures. The request voiced by prime minister Denys Shmyhal is €2.5 billion," Dombrovskis.

The macro tranche program is expected to be approved by the European Parliament next week and by the European Council in the first weeks of December. It is known that Hungary officially refused to take part in macro-financial assistance to Ukraine.

Dombrovskis added that there is no specific direction of funds, but "the very name of the macro-financial program suggests that it is aimed at supporting macro-stability in the country and stabilizing financial flows in the economy."

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