What changed

PA_LegEvaluation

P10_TA(2024)0021

BUDGETARY ASSESSMENT

Establishing the Ukraine Loan Cooperation Mechanism and providing exceptional macro-financial assistance to Ukraine

for the Committee on International Trade on the draft Establishing the Ukraine Loan Cooperation Mechanism and providing exceptional macro-financial assistance to Ukraine

Committee on International Trade

(COM(2024)0426 – C100106/2024 – 2024/0234(COD))

PE765.025

The Committee on Budgets has carried out a budgetary assessment of the draft under Rule 58 of the Rules of Procedure and has reached the following conclusions:

European Parliament legislative resolution of 22 October 2024 on the proposal for a regulation of the European Parliament and of the Council establishing the Ukraine Loan Cooperation Mechanism and providing exceptional macro-financial assistance to Ukraine (COM(2024)0426 – C10-0106/2024 – 2024/0234(COD))

- having regard to the Regulation (EU) 2024/792 of the European Parliament and of the Council of 29 February 2024 establishing the Ukraine Facility,

(Ordinary legislative procedure: first reading)

- having regard to the Council Regulation (EU, Euratom) 2022/2496 of 15 December 2022 amending Regulation (EU, Euratom) 2020/2093 laying down the multiannual financial framework for the years 2021 to 2027,

– having regard to the Commission proposal to Parliament and the Council (COM(2024)0426),

- having regard to the Council Regulation (EU, Euratom) 2024/765 of 29 February 2024 amending Regulation (EU, Euratom) 2020/2093 laying down the multiannual financial framework for the years 2021 to 2027,

– having regard to Article 294(2) and Article 212 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C100106/2024),

- having regard to the Regulation (EU) 2022/2463 of the European Parliament and of the Council of 14 December 2022 establishing an instrument for providing support to Ukraine for 2023 (macro-financial assistance +),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

- having regard to the Council Decision (CFSP) 2022/335 of 28 February 2022 amending Decision 2014/512/CFSP concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine,

– having regard to the budgetary assessment by the Committee on Budgets,

- having regard to the Council Decision (CFSP) 2024/577 of 12 February 2024 amending Decision 2014/512/CFSP concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine,

– having regard to the undertaking given by the Council representative by letter of 9 October 2024 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

- having regard to the Council Decision (CFSP) 2024/1470 of 21 May 2024 amending Decision 2014/512/CFSP concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine,

– having regard to Rules 60 and 58 of its Rules of Procedure,

- having regard to the Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (the Financial Regulation),

– having regard to the letter from the Committee on Foreign Affairs,

- having regard to the Interinstitutional Agreement (IIA) of 16 December 2020 between the European Parliament, the Council of the European Union and the European Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources,

– having regard to the report of the Committee on International Trade (A10-0006/2024),

A. whereas the European Commission proposed a draft Council Regulation (EU, Euratom) 2022/2496 with a possibility to allow contingent liabilities stemming from the financial assistance to Ukraine to be treated in the same manner as financial assistance for Member States only to 2023 and 2024;

1. Adopts its position at first reading hereinafter set out;

1. Takes note of the proposal for the creation of the new Ukraine Loan Cooperation Mechanism, which will provide non-repayable financial support with view to assisting Ukraine to repay loans provided to its support, endowed mainly by the amounts transferred in accordance with the Annex XLI of the Council Regulation (EU) 833/2014 as well as by any potential amounts stemming from voluntary contributions from Member States, third countries or other sources, up to EUR 45 billion.

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

2. Takes note of the conditions and obligations of Ukraine to receive and use the non-repayable financial support provided by the Ukraine Loan Cooperation Mechanism, particularly the obligation for the repayment of the principal, interest and any other costs of the MFA Loan or eligible bilateral loans.

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

3. Takes note of the proposal for the creation of a new macro-financial assistance instrument to the benefit of Ukraine, providing support of up to 35 billion, pending other contributions in the framework of the G7 agreement on “Extraordinary Revenue Acceleration Loans for Ukraine”, and with a duration of 45 years.

P10_TC1-COD(2024)0234

4. Takes note of the macro-financial assistance does not provide a grace period for the repayment of the principal or interest.

Position of the European Parliament adopted at first reading on 22 October 2024 with a view to the adoption of Regulation (EU) 2024/… of the European Parliament and of the Council establishing the Ukraine Loan Cooperation Mechanism and providing exceptional macro-financial assistance to Ukraine

5. Takes note of the macro-financial assistance does not provide the possibility for Ukraine to request interest rate subsidies covered by Member States, unlike previous instruments.

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Regulation (EU) 2024/2773.)

6. Takes note of the precondition for support, and the consequences of not meeting, or no longer meeting, this precondition.

7. Takes note of the future negotiation between the European Commission and Ukraine on the Memorandum of Understanding, which shall be consistent with the qualitative and quantitative steps contained in the Annex to the Council Implementing Decision (EU) 2024/1447 on the approval of the assessment of the Ukraine Plan and any amendments thereof.

8. Takes note on the derogation of Article 31(3), second sentence, of Regulation (EU) 2021/947, which implies that the External Action Guarantee will note be used to guarantee the borrowing of the amounts to be lent in the framework of this MFA, and consequently provisioning of guarantees for this MFA from the headroom.

9. Takes note of the derogation of Article 211(1) of the Regulation (EU) 2021/947, preventing the establishment of a provisioning rate, due to the use of the headroom for the provisioning of guarantees.

10. Takes note of all the mandatory provisions to be included in the MFA Loan Agreement, particularly those related to the early repayment of the amounts borrowed should it be recognised that Ukraine has engaged in any act of fraud, corruption or any other illegal activity detrimental to the financial interests of the Union.

11. Takes note of the modalities of repayment, particularly of the waterfall structure to be established in the MFA Loan Agreement.

12. Takes note of the provisions on the transmission of information to the European Parliament and Council, specifically within the framework of the annual budgetary procedure.

13. Regrets the lack of clarity of the proposal on the final liability of the Union’s budget particularly in the framework of a loan guaranteed solely by the headroom, independently of the Ukraine Loan Mechanism support, or lack of thereof.

14. Requests the European Commission to clarify the potential overlaps in the complementary funding provided by the Ukraine Facility and the MFA.

15. Requests the European Commission to provide the budgetary authority with details on the aggregation of liabilities to the headroom contingent on borrowing and lending operations.

16. Acknowledges that the needs of Ukraine are greater than foreseen in previous IMF estimates, implying the need for greater sustained budgetary support to Ukraine, making the amounts available in the previous MFAs, the Ukraine Facility and the current MFA insufficient to ensure the required level of support, particularly for the years 2026 and 2027.

17. Recalls that a new amendment of the MFF would be required in order to extend the ability of the Union to treat the financial assistance to Ukraine in the same manner as financial assistance to Member States until the end of the current Multiannual Financial Framework.

18. Regrets the urgency of this Regulation, stemming from the lack of flexibility from the European Commission proposal on the amendment of the Multiannual Financial Framework, in order to be co-decided by the European Parliament and Council within the legal deadline.

19. Concludes that the Committee on Budgets calls on the Committee on International Trade, as the committee responsible, to recommend approval of the proposal for a Regulation establishing the Ukraine Loan Cooperation Mechanism and providing exceptional macro-financial assistance to Ukraine.