Announcing the deal, the commission said it was acting on behalf of the European Union to meet the “urgent financing needs” faced by Ukraine to support the country’s economic stabilisation. It represents the first tranche of the new macro-financial assistance programme that will be worth a total of €1.8bn.
As well as helping to improve public financial management, governance and transparency, the funding is also intended to ensure social safety nets can operate and to support the business environment and the financial sector.
Valdis Dombrovskis, the European Commission vice-president responsible for the Euro and social dialogue, stated the EU was proud to support the reform agenda being pursued by the Ukrainian government.
“I am confident that the implementation of those ambitious reforms will help Ukraine exploit its many assets to the full, so as to foster strong and sustainable economic growth for the benefit of all Ukrainian citizens,” he added.
In June, the International Monetary Fund said that the conflict in the country, which followed the annexation of Crimea by Russia, took a heavier than expected toll on the country’s economy in the first quarter of 2015. As a result, output is expected to shrink by 9% this year.
The IMF agreed a four-year $17.5bn loan programme for the country in March, which included an immediate $5bn disbursement to strengthen public finances and put the economy on the path to recovery.
