After that, the final decision – expected on December 6 – must be made unanimously by the Council representing the governments of the member states, so that the European Commission can take out a loan on the financial markets and deliver the resulting support to Ukraine at the beginning of 2023.
According to the European Commission’s proposal, the loan can be used to provide basic public services, such as the operation of schools and hospitals or housing for the displaced, to preserve macroeconomic stability and to restore the vital infrastructure destroyed by Russia. The loan amount will provide about half of the 3-4 billion euros considered necessary for Ukraine per month during 2023.
The Union obtains the source of the loan from the financial markets and makes it available to Ukraine in quarterly installments. The disbursement of the loan is subject to conditions. To pay it, Ukraine must strengthen its institutions and prepare it for recovery and the path to EU membership. The conditions include anti-corruption measures, judicial reforms, respect for the rule of law, “good governance” and the modernization of institutions. The European Commission will check the progress of the reforms before each transfer.
Since the start of the Russian-Ukrainian war on February 24, the EU and its member states have provided 19.7 billion euros in aid to Ukraine, most of which reached the country as macro-level financial support.
Unparalleled support package
As we wrote, on November 9, the European Commission announced that they are proposing an unprecedented support package of up to 18 billion euros to cover Ukraine’s financing for the next year. According to the committee, this regular and predictable financial support – an average of 1.5 billion euros per month – would greatly contribute to covering Ukraine’s financing in 2023, the necessary amount of which is estimated by the Ukrainian authorities and the International Monetary Fund at three to four billion euros per month.
According to preliminary plans, the support would be in the form of discounted, long-term loans, which would be disbursed to Kyiv in installments from 2023. Starting in 2033, Ukraine must repay the loans in a maximum of 35 years, they added.
Hungary does not accept joint EU borrowing
Prime Minister Viktor Orbán said at the Hungarian Standing Conference (MÁERT) meeting in the Várkert Bazaar in Budapest that Hungary will not accept that the European Union member states jointly take out loans to help Ukraine. According to his proposal, the EU member states should look at how much money they want to give for Ukraine’s operation, and distribute it among themselves proportionately and fairly.
This amount, HUF 60-70 billion per year, would be provided by Hungary from the national budget in the framework of the bilateral agreement concluded with the Ukrainians
– explained the prime minister.
In a decision published in the Magyar Közlöny on November 23, the Hungarian government stipulated that the Minister of Finance, Mihály Varga, must take care of “ensuring the 187 million euros of the 18 billion euros loan to our country”, and the Minister of Foreign Affairs and Trade, Péter Szijjártó, was called upon – with immediate effect – to start negotiations with Ukraine “in order to develop the necessary agreement for financial support”.
When Gergely Gulyás was the prime minister, he said: the Hungarian government will not support EU borrowing under any circumstances, even if the EU funds diverted from Hungary arrive. In addition, the minister claimed: there is no question of vetoing the loan.
(Cover photo: Julien Warnand / MTI / EPA)