Assistance for 18 billion: EU announced options for financing Ukraine

The European Commission has prepared options through which EU member states can financially support Ukraine in war conditions.

This was reported by RBC-Ukraine with reference to Politico, which has the text of the European Commission document.

Consideration of the proposals will take place on Thursday, November 3, during a meeting of the heads of the Ministers of Finance.

“Ukraine will continue to experience high short-term funding needs for the foreseeable future. That is why it is essential that additional EU support is mobilized as quickly as possible and delivered on a regular and predictable basis,” the document reads.

As it became known, the EU wants to attract up to 18 billion euros in loans and grants to help finance about half of Ukraine’s expected budget deficit in 2023.

Three ways to support Ukraine

The first option for raising funds, which is called the most advantageous, is to borrow money against a so-called “safety margin”, or the difference between the maximum amount the bloc can raise from EU countries and the EU’s actual expenditures.

However, this option requires the consent of all EU countries and the European Parliament, as well as changes in EU regulations.

The second option is for countries to provide budget guarantees to the European Commission, which is happening now. However, now they will have to cover 100% of the amount, not 61%, because there is no “other budget coverage” in the EU budget.

Option two “may take several months before guarantees are in place,” the Commission warned.

The third option is similar to the second, but without national guarantees. In this case, in the event of a shortage of funds, the European Commission would have to reduce planned EU spending and borrow and lend on a reverse basis.

“EU financial envoys are set to discuss options and pick a way forward at a meeting on Thursday (November 3 – ed.), after which the Commission will present proposals next Wednesday,” Politico adds.

Author – Anastasiya Glotova, 01/11/2022