European Parliament supported Macro-Financial Assistance for Ukraine of up to EUR 35 billion, to be repaid from the revenues of frozen russian assets

Today, on October 22, the European Parliament, in a plenary session, endorsed the European Commission's proposal to provide Ukraine with Macro-Financial Assistance (MFA) of up to EUR 35 billion for the years 2024-2025.

The proposed financing is part of the G7 initiative for the Extraordinary Revenue Acceleration for Ukraine mechanism.

The proposal to create the Ukraine Loan Cooperation Mechanism (ULCM), which will provide non-repayable macro-financial aid, was also supported.

The decision still needs to be approved by the EU Council. It is expected that the funds will be available to Ukraine as early as this year. The MFA will not be tied to specific expenditures, allowing it to cover the most urgent needs, including social and humanitarian.

The funds from the EU’s MFA are loans. Repayment will be through future revenues from the frozen sovereign assets of russia in the EU. Thus, Ukraine will not direct internal financial resources to cover any costs related to the loan.

Frozen assets of the russian central bank in the EU amount to EUR 210 billion and represent the majority of such immobilized assets worldwide. Depending on interest rates, the income from these assets is currently estimated at EUR 2.5-3 billion per year.

On June 14, 2024, at the G7 Summit in Italy, G7 leaders agreed to allocate approximately USD 50 billion to Ukraine. These funds will be serviced and repaid from future revenues generated from frozen russian sovereign assets in the European Union and other jurisdictions.