Incomplete Ukraine Corruption Reforms May Delay Next EU Ukraine Facility Tranche of $4.3 Billion
Ukraine Deputy Foreign Minister Yevhen Perebyinis issued a letter to cabinet ministers on Oct. 23 warning that the European Union has notified Ukraine that the next tranche of 4 billion euros ($4.3 billion) from the EU's Ukraine Facility may be delayed until next year unless expected aspects of corruption reforms are completed by the end of this month.
Ukraine risks delay in receiving $4.3 billion instalment from EU's Ukraine Facility due to corruption reform shortcomings, Foreign Ministry says
"The EU stated that if Ukraine does not finish all internal procedures to approve and adopt the law by the end of October 2024, the 4 billion euros financing will be re-allocated for the following year,"Perebyinis wrote in the letter.
The initial payment, scheduled to be dispersed in November, risks delay amid stalled progress on improving regulations for plea agreements in corruption cases.
It was not immediately clear as to when the payment would be postponed until if Ukraine's parliament fails to fully adopt the new changes. Following Russia's full-scale invasion, the European Union created a list of reforms Ukraine must implement as a necessary step toward Kyiv's accession into the alliance.
Last week, President Volodymyr Zelensky signed a bill reforming the State Customs Service and introduced to tackle corruption and save funds otherwise lost to smuggling, with a myriad of other reforms ongoing.
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The legislation also includes audits by external experts, a one-time vetting of all the current employees, and greater independence from the Foreign Ministry. The law aims not only to reform the institution but also to bring more funds into state budget as Ukraine faces a deficit of $35 billion next year. The country has already taken a number of painful steps, such as a recently approved tax hike, to shore up the part of the deficit that won't be covered through external aid.
The Ukraine Facility, approved by the EU in February, allocates 33 billion euros ($36 billion) in loans and 17 billion euros ($18 billion) in grants to Kyiv.
The EU Council approved the framework agreement in mid-May, setting out the Ukrainian government's tasks for recovery, reconstruction, and modernization.
The besieged country received $42.5 billion in external financing from various donors last year, allowing it to function amid the ongoing war.
The International Monetary Fund said Ukraine will need roughly the same sum to support its budget this year.
According to Finance Minister Serhii Marchenko, the current pledges are still not sufficient to cover the country's needs, adding that Ukraine will likely need an additional $12-15 billion in foreign financial support next year.
The ECB last week cut its key interest rate for the second meeting in succession. PHOTO: WOLFGANG RATTAY/REUTERS The eurozone’s economy continues to stagnate, according to business surveys, as policymakers at the European Central Bank consider whether to accelerate interest-rate cuts to spur a recovery. However, the surveys indicate that Germany and France are largely responsible for the weakness, with activity in other countries increasing at the fastest pace in four months during October.
The ECB last week cut its key interest rate for the second meeting in succession. PHOTO: WOLFGANG RATTAY/REUTERS.jfif)
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