European Parliament approves €1.2 billion macro-financial loan to help Ukraine

The European Parliament has approved a €1.2 billion macro-financial loan to help Ukraine cover its external financing needs in 2022.

MEPs backed the resolution under the urgency procedure on Monday to fast-track the European Commission's new package, which was proposed by the European Commission in January amid looming fears of a Russian invasion of Ukraine.

A majority of MEPs supported an emergency procedure for the package, with 598 voting in favour, 52 against and 43 abstaining.

Irish MEPs from Fianna Fáil, Fine Gael, Green and Sinn Féin voted in favour, while Independent MEPs Daly and Wallace voted against, and Independent MEP Flanagan abstained.

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The emergency procedure would allow the package to be prioritised over other items on the Parliament’s agenda.

A vote on the proposal itself took place on Wednesday afternoon in Strasbourg and the result was announced in the evening.

It will be paid out in two instalments.

Foster stability

Half of the €1.2 billion loan can be disbursed immediately to foster stability in Ukraine, if certain preconditions are met.

The loan serves as “swift support in a situation of acute crisis and to strengthen the resilience of the country”, the proposal states.

Ukraine’s external financing has dried up due to Russia’s military threat and the worsening economic situation in the wake of the Covid-19 pandemic.

In order for the money to be disbursed, the country must show progress in implementing a macroeconomic programme set up by the International Monetary Fund (IMF). MEPs emphasize that "effective democratic mechanisms, including a multi-party parliamentary system, and the rule of law, and guarantees respect for human rights" are also preconditions for disbursement.

Green MEP Grace O’Sullivan told The Irish Times that MEPs voted in favour this week of increasing the EU’s cooperation with Ukraine in light of the fear of a possible Russian invasion.

As well as such fears, the Ukrainian people had “experienced a significant impact on their own economy amid ongoing attempts to introduce economic reforms and tackle corruption,” she said. “This is part of a wider diplomatic, rather than miitary, response to the crisis.”

Ms O'Sullivan said she hoped to see an emphasis on de-escalation and cooperation in the coming days, and the full implementation of the Minsk Agreement.