BRUSSELS, May 29 - The European Commission, on behalf of the European Union, has approved the disbursement of a EUR 500 million loan to Ukraine as part of its fourth macro-financial assistance (MFA) program, the EC reported.

The loan brings total macro-financial assistance to Ukraine to EUR 3.8 billion, which is the largest amount of such assistance disbursed to any single partner country.

“Ukraine remains high on the European agenda,” Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People, also responsible for MFA to Ukraine, said in a statement. “We continue political, financial and technical support, especially during this time of crisis, to support Ukraine's reform agenda for building a more resilient economy.”

MFA is part of the EU's wider engagement with neighboring countries and intended as an exceptional EU crisis response instrument. It is available to the EU's neighboring countries experiencing balance-of-payments problems. It is complementary to assistance provided by the IMF.

MFA loans are financed through EU borrowing on capital markets. The funds are then on-lent with similar financial terms to the beneficiary countries.

“Under the EU's fourth macro-financial assistance program Ukraine has completed necessary reform benchmarks and we are preparing a disbursement of EUR 500 million,” Dombrovskis said. “As part of helping our neighbors cope with the fallout of the pandemic, we will provide Ukraine with further emergency MFA assistance of EUR 1.2 billion.”

The disbursement of the second and last tranche of the MFA operation has become possible after Ukraine has implemented twelve policy actions agreed with the EU. They included important measures in the fields of fight against corruption and money laundering, public finance management, banking sector, energy, healthcare and social policies. Ukraine is also finalising a new Stand-by Agreement with the International Monetary Fund (IMF) and has implemented the associated prior actions.

MFA funds are made available in the form of low-interest, long-term loans. The first instalment of Ђ500 million under the current program was released in December 2018, after the Ukrainian authorities fulfilled the associated policy conditions.

Paolo Gentiloni, Commissioner for Economy, said: “This latest EUR 500 million loan is further proof of our determination to actively support Ukraine and its people in these challenging times.”

“This crisis knows no borders – and European solidarity does not stop at the borders of the European Union,” Gentiloni said.

The decision – proposed by the Commission on April 22 – was adopted by the co-legislators on May 20. The Commission said it stands ready to disburse the first instalment of this new MFA as swiftly as possible after concluding a Memorandum of Understanding with Ukraine. This Memorandum will lay down the policy actions to which Ukraine commits in order to receive the second instalment of the assistance. (eu/ez)