War In Ukraine
Ukraine gets EU offer of new financial aid for immediate needs
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BRUSSELS • The European Commission is set to propose tomorrow a new package of financial aid to Ukraine, including new loans to provide immediate liquidity to Kyiv and commitments for the long-term financing of the country's reconstruction, officials said.
The size of the short-term financial support is still being defined but two officials told Reuters they expected it to cover Ukraine's financial needs for roughly two months, largely through loans.
A third official said the money would come from the European Union budget and EU governments, dismissing earlier talk that the funds could be raised in the market with the issuance of joint bonds backed by the EU budget.
The International Monetary Fund last month estimated Ukraine needed US$5 billion (S$6.97 billion) a month for at least three months to plug the immediate financial shortfall caused by Russia's invasion. IMF chief Kristalina Georgieva has called for this support to come in the form of grants rather than loans.
The scale of EU support will depend also on how much the Group of Seven countries are willing to contribute. A meeting of finance ministers of the G-7 major economies is scheduled later this week, just after the commission is expected to unveil its proposals.
EU states will have to sign off on the commission's plan, and could try to tweak it. Governments are divided over how to support Ukraine, with many favouring loans despite the IMF's views and Ukraine's likely inability to repay them.
Germany is among a number of EU governments that support grants, EU diplomats said. The package could end up being a mix of grants and loans, officials said. The money would be used to pay salaries, pensions and hospitals' costs.
The new package would come on top of EU emergency loans to Kyiv worth €1.2 billion (S$1.74 billion) that the bloc agreed to in January, of which half has already been disbursed, with the remainder expected to be paid shortly, a spokesman for the commission said.
REUTERS
