EVOLUTION OF THE FORMS OF FUNDING MFA PROGRAMS FOR UKRAINE
##plugins.themes.bootstrap3.article.main##
##plugins.themes.bootstrap3.article.sidebar##
Abstract
Since the first days of Russia's invasion, the European Union has been supporting Ukraine in the humanitarian, economic, military and financial spheres. The purpose of the article is to trace the changes in the conditions for the use of funds raised by the EU in the financial market and provided to Ukraine during the first years of the war under macro-financial assistance programmes (Emergency, Exceptional, Plus), as well as the recently approved Extended Fund Facility for Ukraine. Methodology. The study is based on a comparative analysis of two interrelated attributes: EU loans and grants provided to Ukraine during the full-scale war, and the design of EU bonds issued in 2022-2024. The results of the analysis show that (i) the fundamental differences from previous EU loans to Ukraine are the increase in the volume and maturity of loans and grants, accompanied by the EU assuming responsibility for debt servicing, which reduces these costs for Ukraine to zero; (ii) two modifications were identified in the way funds are raised: (1) in the financing strategy (from back-to-back to a diversified and unified financing strategy) and (2) in the risk management tools and procedures necessary to protect EU bondholders. Overall, all the changes discussed contributed to the creation of a flexible financial instrument adapted to the challenges of supporting a country at war, while ensuring predictability and accountability of the use of funds. Practical implications. The results of the analysis could help to increase the confidence of (i) EU bondholders in the safety of their securities and (ii) investors in Ukraine in the prospects of participating in Ukraine's recovery. Value/Originality. Given that the events are happening in real time, as far as the authors know, there is no published research on this topic.
How to Cite
##plugins.themes.bootstrap3.article.details##
EU bonds, financing strategy, debt service, MFA, credit line for Ukraine, EU
Begg, I. (2023) EU finances in search of a new approach. Intereconomics, 58(6), 295–299. E-source: https://www.intereconomics.eu/contents/year/2023/number/6/article/eu-finances-in-search-of-a-new-approach.html
Budgetary safeguards protecting investors in EU bills and bonds. #Eubudget#RecoveryEurope. March 2024. E-source: https://op.europa.eu/en/publication-detail/-/publication/116099d8-b67b-11ee-b164-01aa75ed71a1/language-en
COMMISSION IMPLEMENTING DECISION (EU) .../... of 19.12.2022 on establishing the framework for allocating costs related to borrowing and debt management operations under the diversified funding strategy Brussels, 19.12.2022 C(2022) 9701 final.
Decision (EU) 2022/1201 of the European Parliament and of the Council of 12 July 2022 providing exceptional macro-financial assistance to Ukraine. E-source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32022D1201
Explanatory Memorandum to COM(2023)338 – Establishing the Ukraine Facility. 20-06.2023. E-source: https://www.eumonitor.eu/9353000/1/j9vvik7m1c3gyxp/vm44h4mcvhwn
EU debt securities data. An official website of the European Union. 2024. E-source: https://commission.europa.eu/strategy-and-policy/eu-budget/eu-borrower-investor-relations/eu-debt-securities-data_en#eu-bond-syndications
European Commission successfully issues €8 billion in its last syndicated transaction of 2023 Press release 14 November 2023 Brussels. E-source: https://ec.europa.eu/commission/presscorner/detail/en/ip_23_5768
Full text of Annual Report of the Comptroller of the Currency: 1917, Volume 1. December 3, 1917. Washington Government Printing Office. 1918. E-source: https://fraser.stlouisfed.org/title/annual-report-comptroller-currency-56/1917-19134/fulltext
REPORT OF THE COMPTROLLER OF THE CURRENCY. Comparative cost of loan, p. 175. E-source: https://fraser.stlouisfed.org/title/annual-report-comptroller-currency-56/1917-19134/fulltext
Guarantee Fund for External Actions. How the EU budget is spent December 2018. European Parliament.
How EU issuance works. An official EU website. E-source: https://commission.europa.eu/strategy-and-policy/eu-budget/eu-borrower-investor-relations/how-eu-issuance-works_en
Macrofinancial assistance to Ukraine. Summaries of EU Legislation (2024). E-source: https://eur-lex.europa.eu/EN/legal-content/summary/macrofinancial-assistance-to-ukraine.html
Opinion 03/2023 (pursuant to Articles 212 and 322, TFEU) concerning the proposal for a Regulation of the European Parliament and of the Council on establishing the Ukraine Facility. European Court of Auditors, 2023 © European Union, 2023. E-source: https://www.eca.europa.eu/en/publications/OP-2023-03
Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on providing macro-financial assistance to Ukraine {SWD(2022) 25 final} Brussels, 1.2.2022 COM(2022) 37 final 2022/0026(COD). E-source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022PC0037&qid=1643794747486
REPORT (a) FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the common provisioning fund in 2021{SWD(2022) 143 Brussels, 16.5.2022. E-source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri
REPORT (b) FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the implementation of macro-financial assistance to third countries in 2022{SWD(2023) 244 final} Brussels, 11.7.2023 COM(2023) 409 final. E-source: https://eur-lex.europa.eu/legal-content
Rodríguez-Vives, M. (2023). Towards a Common EU Debt: Where Do We Stand? Intereconomics, 58(6), 307. E-source: https://www.intereconomics.eu/contents/year/2023/number/6/article/towards-a-common-eu-debt-where-do-we-stand.html
UKRAINE Third Rapid Damage and Needs Assessment (RDNA3) February 2022 – December 2023 E-source: https://reliefweb.int/report/ukraine/ukraine-third-rapid-damage-and-needs-assessment-rdna3-february-2022-december-2023-enukdejp?gad_source=1&gclid=CjwKCAjwupGyBhBBEiwA0UcqaPpoGyHn-yWgZClnJ5A3bBdPZd2594MGwWnUAMD-Cp3L6i5fq8h5ChoCLoUQAvD_BwE
This work is licensed under a Creative Commons Attribution 4.0 International License.