EU's assistance to Ukraine
1. Technical Assistance
Almost 200 EU technical assistance projects totalling approximately 262.7 million EUR are implemented today in Ukraine (having passed the state registration) through national and regional EU assistance programmes, cross-border co-operation programmes, Twinning mechanism, educational programme Tempus, the Comprehensive Institution Building Programme and Instrument for Nuclear Safety Co-operation.
2. EU Sector Budget Support
Five programmes of EU sector budget support in the amount of 244 million EUR were launched in Ukraine (including 12 million EUR - technical assistance components):
- Promotion of mutual trade by removing technical barriers to trade between Ukraine and the European Union (45 million EUR, beneficiary - Ministry of Economic Development and Trade of Ukraine, Directorate General for Technical Regulation, programme implementation period is 21 December 2009 – 21 December 2016);
- Support to the implementation of the Transport Strategy of Ukraine (65 million EUR, beneficiary - Ministry of Infrastructure, programme implementation period is 21 October 2010 – 21 October 2016);
- Support to the implementation of the Strategy of National Environmental Policy of Ukraine (35 million EUR, beneficiary - Ministry of Ecology and Natural Resources of Ukraine, programme implementation period is 21 December 2010 – 21 October 2015);
- Support to the border management policy in Ukraine (66 million EUR, beneficiary - State Border Guard Service, State Customs Service of Ukraine, programme implementation period is 31 October 2011 – 31 October 2017);
- Further support to the implementation of the Energy Strategy of Ukraine (45 million EUR, beneficiary - Ministry of Energy and Coal Industry of Ukraine, programme implementation period is 20 December 2013 – 20 May 2020).
On 13 May 2014 in Brussels, within the implementation of the package of extended economic and financial assistance to Ukraine, Prime Minister of Ukraine Arseniy Yatsenyuk and European Commission President José Manuel Barroso signed the Financing Agreement for a State Building Contract for Ukraine (State Building Contract). Total amount of grant financing under the programme is 355 million EUR. This programme has been the first case where the EU used general budget support mechanism for a third country (a special approach principle). Assistance package was formed through the redistribution of financial resources of ENPI annual action programmes for 2013 and action programme within the European Neighbourhood Instrument for 2014.
On 13 June 2014 the first disbursement (250 million EUR) was received within the Agreement. The second disbursement of 105 million EUR was transferred on 30 June 2015 after the implementation of performance indicators under the Contract.
In addition to the State Building Contract, Ukraine and the EU also concluded agreements on the financing of:
- Framework Programme in Support of Ukraine-EU Agreements (budget of 21 million EUR);
- Programme for Support of Civil Society in Ukraine (budget of 10.8 million EUR, of which 10 million EUR is a contribution from the EU budget and 0.8 million EUR is co-financing with Ukraine);
- Support Programme for Regional Policy of Ukraine (budget of 55 million EUR).
In May 2015, given the urgent need for additional financial assistance, the EU endorsed an additional package of bilateral technical assistance to Ukraine for 2015 in the amount of 110 million EUR on the following elements:
- Replenishment of the budget of a newly established Loan Guarantee Facility for Ukrainian SMEs to be implemented by the EBRD and EIB (with Ukrainian banks being intermediaries) both with the use of its own resources and of EU regional technical assistance programmes (DCFTA Facility, Neighbourhood Investment Facility);
- Reimbursement of 50% of the cost of an “entry ticket” for Ukraine’s participation within the framework of the EU’s Horizon 2020 and COSME programmes;
- Consultative support to Ukrainian SMEs (on the access to the EU market, energy efficiency, economic activity optimization, etc.), which is to be implemented on the basis of the existing EBRD Small Business Support (SBS) facility through its extension to 15 regions of Ukraine.
- Expert assistance to the Government in the implementation of reforms to improve the business climate.
3. Financial assistance
In 2014 the European Commission approved the Strategic Priorities of the Neighbourhood Investment Facility (NIF) for 2014-2020. Three main areas of financing were determined in the Strategic Priorities:
- Improvement of the interconnection of energy and transport networks between the EU and Neighbourhood countries (including between the Neighbourhood countries themselves), energy efficiency or use of renewable sources of energy. Support for investments related to the implementation of EU agreements, including agreements on deep and comprehensive free trade area (Ukraine, Georgia, Moldova);
- Environmental protection, including in the context of climate change;
- Ensuring sustainable growth by supporting small and medium-sized enterprises, social sector and development of municipal infrastructure.
Within the NIF in September 2014 for countries participating in the Eastern Partnership initiative which concluded Association Agreements with the EU (Ukraine, Georgia, Moldova), the European Commission approved a new Facility to implement DCFTA (DCFTA Facility), aimed at improving the financing of small and medium-sized enterprises in these states in the process of integration into the EU single market.
The budget of the DCFTA Facility is about 150 million EUR and will focus on the financing of the following priorities:
- Financial incentives - to provide direct investment grants to SMEs (including reimbursement of part of the loan or its rate) for the access to the EU market;
- Currency risk insurance - to cover damages caused by fluctuations in the exchange rate to encourage banks to grant loans in local currency (this component is used mainly in Ukraine);
- Technical assistance - to finance advisory services on the access of SMEs to the EU market, in particular the EBRD Small Business Support project;
- Partial cover of credit granting risks – to reimburse loans due to a loss of solvency of the debtor.
This Facility will be implemented involving resources of European financial institutions (EBRD, EIB and financial intermediaries from national banks of the EaP countries designated by the former).
4. Macro-Financial Assistance
In order to maintain macroeconomic stability of Ukraine, the European Union provides our state with Macro-Financial Assistance (MFA). Funds under MFA are allocated for direct budget support (to cover the current deficit of the consolidated budget), replenishment of gold and foreign exchange reserves of the National Bank of Ukraine.
Today Ukraine has been allocated funds within three MFA programmes of the EU. The first programme in the amount of 610 million EUR (MFA I) was concluded in April 2013, the second programme (MFA II) in the amount of 1 billion EUR - in May 2014, the third programme in the amount of 1.8 billion EUR - in May 2015.
Granting the EU’s MFA to Ukraine is subject to successful co-operation of our country with the International Monetary Fund and implementation of the requirements of previous IMF financial support programmes. Besides, as part of MFA, a separate package of preconditions is being agreed upon which provide for carrying out reforms in a number of sectors of the economy and public administration - from public finance management system reform to energy sector, tax system reforms, etc. Payments under these programmes shall be made in equal tranches provided that the Ukrainian side implements preconditions of MFA programmes.
5. Humanitarian aid
In the context of involvement of EU humanitarian aid for the citizens of Ukraine, internally displaced from temporarily occupied territories and ATO area, as well as the aid aimed at restoring the infrastructure in the Donbas, cooperation with relevant services and divisions of the European Commission (Humanitarian Office and the Emergency Response Coordination Centre) is being carried out to regularly inform them on the list of needs of the Ukrainian side and receive targeted humanitarian aid for the affected population.
Currently, the total volume of EU assistance to Ukraine which has been provided since July 2014 is about 399 million euro. Assistance of the European Union (by EU Member States and the European Commission) is provided:
- To meet urgent needs of people displaced from the east of Ukraine: food, drinking water, psychosocial rehabilitation, medical and social aid and a number of household and logistic activities;
- To meet the needs for social adaptation and integration of IDPs, restoration of social infrastructure and health facilities in the regions of Ukraine.
In order to support Ukrainian citizens affected by the Russian aggression in eastern Ukraine, European Commissioner for Humanitarian Aid and Crisis Management Christos Stylianides paid his fourth visit to Ukraine on 19-21 February 2017, during which he visited the contact line and announced the allocation of 18 million euro of additional humanitarian aid.