The European Commission today offered to provide EUR 1 billion in macro-financial assistance loans to Ukraine, as part of the first tranche of a EUR 9 billion aid package announced more than a month.
“This first part of the aid announced in May will allow us to respond immediately to Ukraine’s urgent needs,” said Commission President Ursula von der Leyen.
Ukraine needs $5 billion a month to keep its economy afloat, and it has warned a financial crisis is looming if aid is not provided. According to three EU officials.
This figure would be backed by a guarantee covering 70% of the principal, including 9% of the EU budget and 61% of EU countries. The latter would be distributed according to their contributions to the EU budget based on gross national income, with richer countries contributing more.
But Germany – which separately provided a billion-euro grant to Ukraine through the International Monetary Fund – refuses to provide guarantees, arguing the loans would add to the country’s already hefty budget. It is therefore reluctant to offer a similar amount to support the EU program, officials in Brussels said.
The German finance ministry declined to comment.
Amid this stalemate, after weeks of haggling, the Commission has opted to move forward with an amount it can guarantee through the bloc’s budget to funnel money to Ukraine in July.
In parallel, it will continue talks with EU countries for the rest of the package, officials said.