EU proposes $9.5bn short-term funding for Ukraine

The European Union has proposed to help Ukraine with a £9 billion ($9.5 billion) short-term fund to pay its bills through the rest of 2022.

The commission made this proposal for the first time since the war began in February 2022.

In a statement on Wednesday, Ursula von der Leyen, European Commission president, said the fund comes on top of a €1.2 billion ($1.262 billion) loan this spring.

According to Leyen, the fund will be used to help Volodymyr Zelensky, Ukraine’s president to pay debts and to provide basic services for Ukrainians amid the Russian invasion.

“We are proposing to top up the significant short-term relief provided until now, with a new exceptional macro-financial assistance for Ukraine of up to EUR 9 billion in 2022,” the statement reads.

The EU president said the commission would start work on a long term reconstruction plan for Ukraine, which international institutions believe could cost at least $500 billion.

She also said the commission would set up a reconstruction platform jointly with the Ukrainian government to begin making plans.

“We also need to think about the day after for the wider reconstruction effort. The EU has a responsibility and a strategic interest in leading this reconstruction effort,” she added.

“The reconstruction principles should combine investment with reforms. In time, they will support Ukraine in pursuing its European path. It should be a future-proofed plan, fully reflecting the needs identified by Ukraine.

“The plan would tackle key reforms in areas such as anti-corruption, administrative capacity, rule of law, and independence of the judiciary. And it should be firmly anchored in the green and digital transitions and fundamental European values. But of course, the EU would and should not be the only one contributing to this effort. 

“That is why we propose a reconstruction platform as part of this plan jointly led by Ukraine and the Commission and bringing together the EU Member States, other bilateral or international donors, international financial institutions, and other like-minded partners.”

Von der Leyen added that the commission is also looking to partner with the U.S. and other Western partners on a reconstruction fund, adding that said the money would be tied to economic and political reforms in Ukraine.

“These investments will help Ukraine to emerge stronger and more resilient from the devastated caused by Putin’s soldiers,” she said.

The International Monetary Fund (IMF) estimated that Ukraine needs around $5 billion a month to keep the country running amid a massive economic slump caused by the war. 

In addition to the EU proposal, the IMF has agreed to a new $5 billion loan for Ukraine.