The European Commission and the European Investment Bank (EIB) have agreed to make available an EU guarantee enabling the EIB to provide €100 million of new loans to Ukraine for fast recovery, such as for municipal or energy infrastructure repairs. This EU guarantee is one of the elements of the EU for Ukraine (EU4U) Initiative that the EIB approved in March 2023 and which also includes the EU4Ukraine Fund and a €100 million technical assistance and advisory package from the EIB’s own funds.
Commission President Ursula von der Leyen said: “The EU is stepping up support to address Ukraine’s fast recovery needs. In addition to our €1 billion for fast recovery to support critical sectors, the agreed EU guarantee allows EIB to lend to Ukraine an additional €100 million on very favourable terms. We are determined to bring back life to all the communities in Ukraine that suffer from Russia’s aggression.”
EIB President Werner Hoyer said: “Ukraine cannot wait. Investments are needed today to keep the economy of Ukraine running, repel Russia and bring the EU and Ukraine closer together. The cooperation with the European Commission is vital for the EIB to operate in Ukraine as the EU Bank and deliver on the EU commitments. The guarantee will enable us to provide EUR 100 million of long-term financing and will enhance the impact of our Initiative, which we are implementing with a strong pipeline of projects also under the EU4Ukraine Fund and technical assistance. We will help Ukraine rebuild and restore essential services, enable businesses to invest and survive, and support the path towards EU accession.”
The Commission will use the European Fund for Sustainable Investment Plus (EFSD+), the financing arm of the Neighbourhood Development and International Cooperation (NDICI) -Global Europe to guarantee up to €100 million of new EIB loans to Ukraine.
The loan agreements, made possible under the €26.7 billion guarantee agreement signed between the European Commission and the EIB in May 2022, are expected to be signed later in 2023 and then disbursed as soon as requested by Ukraine. These loans will contribute to help closing Ukraine’s financial needs for fast recovery priorities in 2023 in light of the updated Ukraine recovery and reconstruction needs assessment.
Russia’s aggression against Ukraine continues to cause terrible human suffering, massive destruction of infrastructure, towns and communities and major disruption of the economy. Russia’s strikes against civilian targets, energy infrastructure and other utilities have resulted in widespread damage. Destruction of housing and productive capacity has been substantial, and access to electricity, water, and heating is at risk.
The EU and the EIB have provided substantial financing for the modernisation of Ukraine and relief support since the start of Russia’s war. Overall, the EU has made available €70 billion in support for Ukraine and its people, including - with this latest agreement - €2.4 billion of EIB financing to Ukraine, backed by an EU guarantee.
In the conclusions of its meeting of 15 December 2022, the European Council invited the EIB to step up its support for Ukraine’s most urgent infrastructure needs, in close cooperation with the Commission and International Financial Institutions (IFIs).
The EIB Board of Directors approved on 29 March 2023 a new support package for Ukraine (the EU for Ukraine (EU4U) Initiative), envisaging inter alia the set-up of a trust fund (“EU4Ukraine Fund”) that would provide a risk-sharing mechanism between the EIB Group and donors. This will enable the EIB Group to provide new loans to Ukraine and other relevant products, notably partial portfolio guarantees for Ukrainian banks.
The EU guarantee to enable the EIB to lend an additional €100 million to Ukraine will be complementary to the EU4Ukraine Fund.
For More Information
European Fund for Sustainable Development Plus (EFSD+)
European Council conclusions, 15 December 2022
EU for Ukraine initiative