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From · opinion letter parliamentary committee · 2023-08-08 CONT-AL-751858 Opinion on the Regulation establishing the Ukraine Facility
To · agreement provisional · 2024-02-15 CJ15-AG-759049 Proposal for a regulation of the European Parliament and of the Council on establishing the Ukraine Facility
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8.8.2023

15.2.2024

Mr David McAllister

PROVISIONAL AGREEMENT RESULTING FROM INTERINSTITUTIONAL NEGOTIATIONS

Chair

Subject: Proposal for a regulation of the European Parliament and of the Council on establishing the Ukraine Facility

Committee on Foreign Affairs

(COM(2023)0338 – C90210/2023 – 2023/0200(COD))

BRUSSELS

The interinstitutional negotiations on the aforementioned proposal for a regulation have led to a compromise. In accordance with Rule 74(4) of the Rules of Procedure, the provisional agreement, reproduced below, is submitted as a whole to the Committee on Foreign Affairs and the Committee on Budgets for decision by way of a single vote.

Mr Johan Van Overtveldt

2023/0200 (COD)

Chair

Proposal for a

Committee on Budgets

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

BRUSSELS

▌ establishing the Ukraine Facility

Subject: Opinion on the Regulation establishing the Ukraine Facility (COM(2023)0338 – C9-0210/2023 – 2023/0200(COD))

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Dear Chairs,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 212 and Article 322(1) thereof,

Under the procedure referred to above, the Committee on Budgetary Control has been asked to submit an opinion to the Committee on Foreign Affairs and to the Committee on Budgets. At its meeting of 18 July 2023, the committee decided to send the opinion in the form of a letter. It considered the matter at its meeting of 4 September 2023 and adopted the opinion at that meeting.

Having regard to the proposal from the European Commission, Having regard to the opinion of the Court of Auditors,

The opinion consists of the following amendments, which, in accordance with the usual treatment of opinions under Rule 56, I kindly ask you to put to the vote during the vote on the report in your committees:

Acting in accordance with the ordinary legislative procedure, Whereas:

CONT 1

(2) Since the beginning of Russia’s unprovoked and unjustified war of aggression against Ukraine on 24 February 2022, the Union, its Member States and European financial

Recital 88

institutions have mobilised unprecedented support to Ukraine’s economic, social and financial resilience, combining support from the Union budget, including the exceptional macro-financial assistance and support from the European Investment Bank and the European Bank for Reconstruction and Development, fully or partially guaranteed by the Union budget, as well as further financial support by Member States.

In particular, in accordance with Regulations (Euratom, EC) No 2185/96 and (EU, Euratom) No 883/2013, the European Anti-Fraud Office (OLAF) should be in a position to carry out administrative investigations, including on-the-spot checks and inspections, with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union. OLAF should be provided with sufficient administrative capacities to conduct these investigations.

(3) The European Council of 23 June 2022 decided to grant the status of candidate country to Ukraine, which expressed a strong will to link reconstruction with reforms on its European path. Ongoing strong support to Ukraine is a key priority for the Union and an appropriate response to the Union’s strong political commitment to support Ukraine for as long as necessary.

CONT 2

(4) The provision by the Union of macro-financial assistance of up to EUR 18 billion for 2023 under Regulation (EU) 2022/2463 of the European Parliament and of the Council was considered an appropriate response to Ukraine’s financing gap for 2023 and helped to mobilise significant financing from other donors and international financial institutions.

Recital 89

This constituted a major contributing factor to Ukraine’s macroeconomic and financial resilience at a critical time.

In accordance with Regulation (EU, Euratom) 2018/1046, the necessary rights and access should be granted to the Commission, OLAF, the European Court of Auditors and, where applicable, the European Public Prosecutor’s Office (EPPO) where relevant, including from third parties involved in the implementation of Union funds. Ukraine should also use the Early Detection and Exclusion System and report irregularities in relation to the use of the funds to the Commission.

(5) The Union has also provided significant financial support through an additional package combining funds under the Neighbourhood, Development and International Cooperation Instrument – Global Europe (NDICI) established under Regulation (EU) 2021/947 of the European Parliament and of the Council and loans by the European Investment Bank. In addition, continuous support is being provided by Member State authorities,

CONT 3

communities, NGOs and volunteers’ groups.

Recital 90

(6) In addition, in its Decision (CFSP) 2021/509, the Council decided on off-budget assistance measures to support the Ukrainian armed forces under the European Peace Facility, in the amount of EUR 6,1 billion, and in its Decision (CFSP) 2022/1968 established a military assistance mission in support of Ukraine with EUR 0,1 billion for the common costs. The Union and its Member States have also delivered unprecedented in- kind emergency response via the Union Civil Protection Mechanism under Decision No 1313/2013/EU of the European Parliament and of the Council, as amended by Regulation (EU) 2021/836 of the European Parliament and the Council, constituting the largest emergency operation since the creation of that mechanism.

The reinforcement of internal control systems, the fight against corruption, the promotion of transparency, good administration, (and) efficient public financial management, and verification by an independent external auditor are important reform priorities for Ukraine and should be supported by the Facility.

(7) Furthermore, the EU-Ukraine Solidarity Lanes established in May 2022 have contributed to generating an estimated export value of EUR 31 billion for the Ukrainian economy until end May 2023.

CONT 4

(8) Russia’s war of aggression against Ukraine has caused Ukraine damages amounting to more than EUR 270 billion as of 24 February 2023, and reconstruction costs being estimated at EUR 384 billion, as well as a loss of access to financial markets and a significant drop in public revenue, while public expenditure to address the humanitarian situation and to maintain the continuity of State services has increased markedly. Such estimates, as well as the analytical information from all other appropriate and subsequent sources, provide a relevant basis to establish the respective funding needs for the coming years, including regional and sectoral considerations.

Recital 91

(9) On 30 March 2023, the International Monetary Fund (IMF) estimated the State financing gap up to 2027 at EUR 75.1 billion and agreed with Ukraine a EUR 14.4 billion four-year programme to anchor policies that sustain fiscal, external, price and financial stability and support economic recovery, while enhancing governance and strengthening institutions to promote long-term growth in the context of post-war reconstruction and Ukraine’s path of accession to the European Union.

The Commission should ensure that the financial interests of the Union are effectively protected under the Facility. To this end, an independent Audit Board should be set up to provide the Commission with information on possible mismanagement of funds and guarantee that the correct level of assurance is obtained through an independent external audit. Such information should be made available to OLAF and where appropriate to the relevant Ukrainian authorities. The Commission, with the assistance of the Union delegation, should be entitled to perform checks on how Ukraine implements funds along the whole project life cycle. The Audit Board should ensure regular dialogue and cooperation with the European Court of Auditors.

(10) In light of Russia’s war of aggression against Ukraine, a residual gap remains in Ukraine’s financing needs. Therefore, significant and flexible support to the Ukrainian

CONT 5

government is needed for it to maintain its functions, provide public services, as well as to support the recovery, reconstruction and modernisation of the country ▌ .

Article 9 - Paragraph 1

(11) Given the damage caused by Russia’s war of aggression to the Ukrainian economy, society and infrastructure, Ukraine will require significant support and institutional capacity to maintain its functions, as well as short-term relief and assistance for fast recovery, reconstruction and modernisation of the country. Ukraine will require comprehensive support to ”build back better” through a people-centred recovery that creates the foundations for a free, culturally vibrant and prosperous country with a resilient economy well integrated into the European and global economy, anchored in European values and progressing towards accession to the European Union.

The Commission shall conclude a framework agreement with Ukraine for the implementation of the Facility setting out specific arrangements for the management, control, supervision, monitoring, evaluation, reporting and audit of funds under the Facility, as well as to prevent, detect, investigate and correct irregularities, fraud, corruption and conflicts of interest. The framework agreement shall be complemented by financing agreements in accordance with Article 10 and loan agreements in accordance with Article 21, setting out specific provisions for the management and implementation of funding under the Facility.

(12) In this context, it is necessary to set up an exceptional medium-term single instrument that brings together the bilateral support provided by the Union to Ukraine, ensuring

CONT 6

coordination and efficiency. To that end, it is necessary to establish a Ukraine Facility (‘the Facility’) for the period 2024-2027, providing a balance between flexibility and programmability of the Union’s response to address Ukraine’s financing gap, recovery, reconstruction and modernisation needs, while at the same time supporting Ukraine’s reforms effort as part its accession path to the Union.

Article 9 - Paragraph 4 (a)

(13) Given the exceptional nature of the Ukraine Facility, it should be underpinned by a coherent and prioritised plan for reconstruction (the ‘Ukraine Plan’), prepared by the Government of Ukraine with due involvement of the Verkhovna Rada, representatives of civil society organisations, providing a structured and predictable framework for the recovery, reconstruction and modernisation of Ukraine ▌ clearly articulated with Union accession requirements.

the commitment of Ukraine to progress towards more efficient and effective control systems, and to strengthen the fight against money laundering, terrorism financing, tax avoidance, tax fraud or tax evasion, misuse of public funds and corruption;

(14) Union support to Ukraine from 2024 to 2027 should be provided primarily and mainly under the Ukraine Facility, avoiding any potential overlap with other programmes, in particular the Instrument for Pre-Accession assistance, and ensuring a consistent approach through a unified instrument, by replacing or, where appropriate, complementing activities under the existing instruments. Support under the Ukraine Facility should not prejudge future assistance to Ukraine and its possibility to participate in Union programmes under the multiannual financial framework post-2027.

CONT 7

(15) In this regard, Union support under the Facility should replace the bilateral support provided under the Neighbourhood, Development and International Cooperation Instrument – Global Europe (NDICI-GE) established under Regulation (EU) 2021/947 of the European Parliament and of the Council. It is nevertheless important to ensure that Ukraine can continue to benefit from regional, thematic, rapid response, and other forms of support under NDICI, in particular cross-border cooperation programmes, and more generally continue to advance regional, macro-regional and cross-border cooperation and territorial development, including through the implementation of Union macro-regional strategies.

Article 16 - Paragraph 2 (h)

(16) Humanitarian aid, defence or support to Member States providing protection for people fleeing the war in Ukraine should be adequately and consistently provided outside the Facility. ▌Ukraine may continue to benefit from relevant existing Union programmes within the EU budget, such as NDICI-GE for actions referred to in recital 15, the European Instrument for International Nuclear Safety Cooperation, Humanitarian Aid, and activities under the Common Foreign and Security Policy, as well as measures under the European Peace Facility outside the EU budget. Furthermore, Ukrainian entities may participate in internal policy Union programmes such as Horizon Europe, EURATOM Research and Training Programme, Digital Europe Programme, Cooperation in the field of taxation (Fiscalis), Cooperation in the field of Customs (Customs), Erasmus+, EU4Health Programme, Creative Europe, LIFE, Single Market Programme, Union Civil Protection Mechanism, Connecting Europe Facility (CEF), Union Anti-Fraud Programme as well as other relevant programmes in accordance with their respective rules, objectives and the relevant association agreements.

an explanation of Ukraine’s system to effectively prevent, detect and correct irregularities, fraud, corruption and conflicts of interests, when using the funds provided under the Facility, and of the arrangements (that aim) to avoid double funding from the Facility and other Union programmes or donors;

(17) The Facility should contribute to closing the funding gap of Ukraine until 2027, by providing non-repayable support and highly concessional loans in a predictable, continuous, orderly and timely manner. The assistance should support macro-financial stability in Ukraine, and ease Ukraine’s external financing constraints.

CONT 8

(18) Under the new Facility, investment in Ukraine’s sustainable recovery, reconstruction and modernisation should start as a matter of urgency to help providing decent living conditions for the Ukrainian population and reconstruct critical infrastructure, where possible, to ensure generation of employment and revenues and progressively lower the volume of international assistance needed, while also mitigating environmental damage to the extent possible in a war-torn country, and supporting Ukraine in the green transition.

Article 16 - Paragraph 2 (h) new

(19) ▌

an explanation how Ukraine shall ensure an adequate level of protection of the EU financial interests by applying at least the same standards as provided for in the Financial Regulation and other related EU legislation;

(20) The medium-term perspective provided by the Ukraine Plan through a single instrument should also encourage Ukraine to channel investments and reforms towards the transition to a green, sustainable, digital and inclusive economy, and help mobilise like-minded donors, including from the private sector, for multiannual contributions to support Ukraine. Investments should be aligned, to the extent possible, with the Union climate and environmental acquis, and be consistent with the implementation of the Ukrainian National Climate and Energy Plan.

CONT 9

(21) The recovery, reconstruction and modernisation effort should build on Ukraine’s ownership, close cooperation and coordination with supporting countries and organisations, and Ukraine’s path towards accession to the Union. Regional and local administrations as well as Ukrainian civil society organisations are also expected to play an important role in this process by participating in its design and scrutiny. Peer-to-peer cooperation and programmes embedded in partnerships between cities and regions in the Union and those in Ukraine have already facilitated the delivery of humanitarian aid, and other forms of assistance, to Ukraine and thus provide a basis to enrich and accelerate the recovery, reconstruction and modernisation process.

Article 26 Paragraph 1

(22) The Union should also foster close consultation and association of local and regional authorities, which embrace a large variety of sub-national levels and branches of government, including regions, municipalities, rayons and hromadas and their associations, as well as close consultation and participation of Ukrainian civil society organisations. The Union should encourage their meaningful▌participation in the recovery, reconstruction and modernisation of Ukraine, based on sustainable development and through the implementation of the Sustainable Development Goals at local and regional level. The Union should recognise and support the multiple roles played by the local and regional authorities as promoters of an inclusive territorial approach to local development, including decentralisation processes, participation of civil society organisations and local communities, transparency and accountability, and further enhance its support for local authorities’ capacity building, including for the implementation of projects under the Facility, in line with the principle of local self- government as defined in the European Charter of Local Self-Government, to which Ukraine is a signatory.

Ukraine shall publish data on persons and entities that receive(ing) amounts of funding exceeding the equivalent of EUR (500 000) 300 000 for the implementation of reforms and investments specified in the Ukraine Plan referred to in this Chapter. Ukraine shall update those data twice a year, in June and December.

(23) The Union should provide support to the transition towards accession for the benefit of Ukraine, drawing on the experience of the Member States. Such cooperation should focus particularly on the sharing of experience that was acquired by the Member States during their own reform processes.

CONT 10

(24) Support under the Facility should also build on and maximise synergies with key organisations supporting Ukraine’s reforms and reconstruction, such as the European Investment Bank Group, international financial institutions including the World Bank, the Organisation for Economic Co-operation and Development, and the International Monetary Fund; and European multilateral finance institutions, including the European Bank for Reconstruction and Development and the Council of Europe Development Bank; and bilateral finance institutions such as development banks and export credit agencies.

Article 32 - Paragraph 4

(25) Given the uncertainties linked to the war, it is appropriate that the Facility should be able to provide support to Ukraine in duly justified exceptional circumstances, in particular in the event of a significant deterioration of the war, and in order to maintain its macro- financial stability and to ensure the achievement of the objectives of the Facility. Such exceptional financing should be provided for individual periods of up to three months and should only be provided, through a Council implementing decision upon a proposal by the Commission, if it is concluded that it is impossible for Ukraine to fulfil the conditions attached to the forms of support under this Regulation, when it is the beneficiary of the support, and should cease as soon as the fulfilment of the conditions becomes possible again. Such financing should not affect funding from other specific Union instruments which should be mobilised in case of natural disasters or other humanitarian or civil protection emergencies. If necessary, exceptional financing could be available under the Facility before the adoption of the Ukraine Plan and the conclusion of the Framework Agreement. It could be additional to exceptional bridge financing, as applicable.

Assistance under this Chapter shall support the creation and strengthening of Ukrainian authorities responsible for ensuring appropriate use of funds, audit and effective fight against mismanagement of public funding, in particular fraud, corruption, conflict of interests and irregularities incurred in relation to any amount spent to achieve the objectives of the Facility.

(26) The enlargement policy framework defined by the European Council and the Council, the association agreement, partnership and cooperation agreement, multilateral agreements to which the Union is a party and other agreements that establish a legally-binding relationship with Ukraine, as well as resolutions of the European Parliament, communications of the Commission and joint communications of the Commission and the High Representative of the Union for Foreign Affairs and Security Policy should constitute the overall policy framework for the implementation of this Regulation. The Commission should ensure coherence between the assistance under the Facility and the enlargement policy framework.

CONT 11

(27) Article 49 of the Treaty on European Union provides that any European State which respects the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities, and is committed to promoting those values may apply to become a member of the Union. Those values are common to Member States in a society in which inclusiveness, pluralism, non-discrimination, tolerance, justice, solidarity and gender equality prevail.

Article 33 - Paragraph 2 (b)

(28) A European State which has applied to join the Union can become a member of the Union only where it has been confirmed that it fully meets the accession criteria established at the Copenhagen European Council in June 1993 (the ‘Copenhagen criteria’) and provided that the Union has the capacity to integrate the new member. The Copenhagen criteria relate to the stability of institutions which guarantee democracy, the rule of law, human rights and respect for and protection of minorities, the existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the Union, and the ability to assume not only the rights but also the obligations under the Treaties, including the pursuit of the aims of political, economic and monetary union.

to take appropriate measures to prevent, detect and correct fraud, corruption, conflicts of interests and irregularities affecting the financial interests of the Union, to detect and avoid double funding and to take legal actions to recover funds that have been misappropriated, including in relation to any measure for the implementation of reforms and investment projects under the Ukraine Plan;

(29) It is in the common interest of the Union and Ukraine to advance the efforts of Ukraine to reform its political, legal and economic systems with a view to Union membership. Granting EU candidate status to Ukraine is a geostrategic investment of the Union in peace, security, stability and prosperity in Europe and allows the Union to be better positioned to address global challenges. It also provides increased economic and trade opportunities to the mutual benefit of the Union and Ukraine, while supporting a gradual transformation of the country. The prospect of Union membership has a powerful transformative effect, embedding positive democratic, political, economic and societal change.

CONT 12

(30) Embracing and committing to core European values is a choice and is essential for Ukraine’s aspiration to Union membership. In line with this, Ukraine should take ownership and fully commit to European values as well as to upholding a global order

Article 33 - Paragraph 2 (c)

based on rules and values and vigorously pursuing the necessary reforms in the interest of its people.

to accompany a request for payment as set out in Chapter III by a declaration that the funds were used in accordance with the principle of sound financial management and for their intended purpose and managed appropriately in particular in accordance with Ukrainian rules complemented by international standards, on prevention, detection and correction of irregularities, fraud, corruption and conflicts of interests, accompanied by a declaration of assurance by the Ukrainian authorities;

(31) Reconstruction from the damage caused by the war of Russian aggression cannot be limited to rebuilding what was destroyed as it was before the war. The reconstruction offers an opportunity to support Ukraine in its process of integration into the Single Market and in accelerating its sustainable green and digital transitions, in line with Union policies, while fostering economic integration with the Union and promoting socio-economic development and cross-border cooperation. The Facility should therefore promote reconstruction in a way that modernises and improves Ukraine’s economy ▌ , building on Union rules and standards, ▌ investing in the transition of Ukraine towards a sustainable green, digital, inclusive economy, thereby benefitting society as a whole, with particular attention to the needs of vulnerable groups. Reconstruction of cultural heritage should be based on national, international and European norms, on standard-setting texts, principles (such as New European Bauhaus) and lessons learned, and be consistent with the European quality principles for Union-funded interventions with potential impact on cultural heritage. Particular attention should be paid to ensuring the sustainability and adequate protection of activities financed under the Facility in light of cybersecurity risks and the overall threat landscape.

CONT 13

(31a) In line with the need to support the recovery and reconstruction of Ukraine in a sustainable and future-proof way, the Facility should not support activities or measures which promote investments in fossil fuels, or that do not respect the principle of "do no significant harm” , including biodiversity, or the climate, unless such activities or measures are strictly necessary to achieve the objectives of the Facility, to the extent possible in a war-torn country. Such activities or measures would concern for example the continuation of economic activities, or addressing urgent recovery and reconstruction needs. They should take into account the need to rebuild and modernise infrastructure and rehabilitate nature damaged by the war in a resilient way. They should be accompanied, where relevant, by appropriate measures to avoid, prevent or reduce and, if possible, offset these effects.

Article 33 - Paragraph 2 (c) new

(32) The Facility should contribute to the adherence to the Paris Agreement and the United Nations Framework Convention on Climate Change, the United Nations Convention on Biological Diversity and the United Nations Convention to Combat Desertification and should not contribute to environmental degradation or cause harm to the environment or climate. In particular, funding allocated in the context of the Facility should be coherent with the long-term goal of holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1,5°C. It should also be coherent with the objective to increase the ability to adapt to the adverse effects of climate change and foster climate resilience, and with the support of biodiversity conservation, circular economy and zero-pollution. Particular attention should be given to actions that create co-benefits and meet multiple objectives, including for climate, biodiversity and the environment. In light of the enormous environmental damage caused by Russia's war of aggression, the Facility could contribute to addressing the challenges resulting therefrom. The Facility should, to the extent possible, contribute to climate change mitigation and adaptation, environmental protection, to the green transition, including biodiversity, or to addressing the challenges resulting therefrom, and should aim to account for an amount that represents at least 20

to use the Early Detection and Exclusion System;

% of the overall amount corresponding to support under the Ukraine Investment Framework and to investments under the Ukraine Plan. Such amount should be calculated building on, as applicable and appropriate, coefficients used in existing methodologies for climate and biodiversity, such as in particular Annex VI of Regulation (EU) 2021/241 and additional intervention fields, as adjusted in the context of the Ukraine Facility.

CONT 14

(32a) The Facility should strive to improve the awareness of and fight against environmental crime in Ukraine, supporting the implementation of the Kyiv Protocol on Pollutant Release and Transfer Registers and ensuring compliance with nature protection laws.

Article 33 - Paragraph 2 (e) new

(33) In this context, measures funded under the Facility should be consistent, to the extent possible in a war-torn country, with the climate and environmental standards of the Union. Those measures should also mainstream climate change, environmental protection, human rights, peace, democracy, gender equality and non-discrimination, and where relevant, disaster risk reduction, as well as progress towards the Sustainable Development Goals. Support under this Facility should also be guided by the principle of “leaving no one behind”, and strive to ensure a balanced and needs-based allocation and use of resources.

to provide a similar level of access to information and authority to carry out on-the-spot controls as the Commission and the Court of Auditors to the independent external auditor appointed by the Audit Board;

(34) The implementation of this Regulation should be guided by the principles of equality, inclusivity and non-discrimination, as elaborated in the Union of Equality strategies. It should prevent and combat violence against women, gender-based violence and domestic violence. It should encourage women’s meaningful participation in decision-making processes, promote and advance gender equality, the empowerment of women and girls, and the protection and promotion of their rights taking into account the EU Gender Action Plans and relevant Council conclusions and international conventions. The Facility should help address the social health challenges, including mental health as a necessity for a healthy post-war society, with a particular focus on children. The implementation of the Facility should be in line with the United Nations Convention on the Rights of Persons with Disabilities and ensure relevant stakeholder involvement in decision-making processes as well as accessibility in its investments and technical assistance. The Facility should also also be in line with the United Nations Convention on the rights of the child and support children and youth as key agents of change and as contributors to the realisation of the 2030 Agenda.

CONT 15

(35) Strengthening the rule of law, including the independence of the judiciary; support deoligarchisation efforts, the fight against corruption and in particular high-level corruption, money laundering, tax avoidance, tax evasion, tax fraud and organised crime; strengthening transparency, including public access to information; good governance at all levels, and the participation of civil society organisations, including human rights organisations; safeguarding the free and pluralistic media; strengthening public administration reform, including in the fields of public procurement, competition and State aid ▌. In view of the longer-term nature of the reforms pursued in those areas and the need to build up track records, support under the Ukraine Facility should address those issues as early as possible.

Article 33 - Paragraph 3

(36) In accordance with the principle of participatory democracy and for the purpose of checks and balances, the Union should encourage the strengthening of parliamentary capacities, parliamentary oversight, democratic procedures and fair representation in Ukraine as well as meaningful participation of regions and municipalities, as well as of civil society at all stages of the democratic process allowing for enhanced democratic scrutiny. The Ukraine Plan should demonstrate how meaningful participation of stakeholders was planned and conducted via consultations, with sufficient timeframes and transparency, and clear follow-up procedures to input given. In accordance with Ukrainian constitutional order, the Verkhovna Rada of Ukraine should be informed and consulted at all the stages of the Facility life cycle. The outcomes of any debates held or opinions issued concerning the Ukraine Plan by the Verkhovna Rada should be taken into account.

The Commission shall (strive to) make available to Ukraine an integrated and interoperable information and monitoring system including a single data-mining and risk-scoring tool to access and analyse the relevant data, including the data listed in paragraph 2(d). Where such a system is available, Ukraine shall use and feed the relevant data into the system, including with support referred to under Chapter V. Data shall be inserted in English to allow the Commission and other audit authorities to fulfil their duties without undue delay. The system shall allow for downloads in a machine-readable format.

(37) Enhanced strategic and operational cooperation between the Union and Ukraine on security is pivotal to addressing effectively and efficiently the threats of security, including hybrid threats such as cyber threats, as well as resilience against disinformation, foreign information manipulation and interference, organised crime and terrorism.

CONT 16

(38) Actions under the Ukraine Facility should also, in line with point c of Article 21(2) of the TEU and in accordance with the purposes and principles of the UN Charter, support, where appropriate, confidence-building measures and processes that promote justice, truth- seeking, comprehensive post-conflict rehabilitation for an inclusive, peaceful society and reparations and guarantees of non-recurrence as well as collection of evidence of crimes committed during the war and making available the relevant findings, as appropriate. Particular attention should be given to supporting formal, informal and non-formal peace education.

Article 34 - Paragraph 3 a new

(39) The support under the Facility should be made available under the precondition that Ukraine continues to respect effective democratic mechanisms and institutions, including a multi-party parliamentary system, and the rule of law, and to guarantee respect for human rights, including the rights of persons belonging to minorities.

the Audit Board shall appoint an independent external auditor that provides an annual statement of assurance on the declarations by the Ukrainian authorities that accompany a request for payment. It shall also approve the annual work plan of the independent external auditor;

(40) The support under the Ukraine Facility, including to Ukraine’s path toward accession, should be provided to meet general and specific objectives, based on established criteria and with clear conditionalities.

CONT 17

(41) The general objectives of the Ukraine Facility should be inter alia to assist Ukraine in addressing the social, economic, psychological and environmental consequences of the war, contributing to the reconstruction, including peaceful recovery, restoration and modernisation of the country, fostering social and territorial cohesion, and democratic, economic ▌ environmental resilience, and a progressive integration into the Union and global economy and markets as well as an upward economic, social and environmental convergence towards Union standards, preparing Ukraine for future membership of the Union by supporting its accession process. Such objectives should be pursued in a mutually reinforcing manner.

Article 34 - Paragraph 3 b new

(42) In line with the European Pillar of Social Rights, the Facility should support solidarity, integration, and social justice with the aim of creating and sustaining quality employment and sustainable and inclusive growth, ensuring equality of, and access to, opportunities, education and social protection, protecting ▌ groups in vulnerable situations,and improving living standards. The Facility should also contribute to fighting poverty and tackling unemployment and lead to quality job creation, the inclusion and integration of disadvantaged groups. The Facility should provide for investment opportunities in skills including through vocational education and training aiming to prepare the workforce to the digital and green transitions. It should also enable the strengthening of social dialogue, infrastructure and services.

the Audit Board shall decide on recommendations to the Commission and the Ukrainian authorities on amounts to be recovered following the findings of the independent external auditor, and inform the Commission and the Ukrainian authorities of these recommendations;

(43) The Facility should ensure consistency with, and complementarity to, the general objectives of Union external action as laid down in Article 21 of the Treaty on European Union, including respect for fundamental rights and principles as well as the protection and promotion of human rights, democracy and fundamental principles of the rule of law, including on anti-corruption, judiciary, public administration, good governance and transparency and accountability.

CONT 18

(44) Given the uncertainties linked to Russia’s war of aggression, the Facility should be a flexible instrument enabling the Union to address Ukraine’s needs through a diversified toolbox which provides financing of the Ukrainian State, support to short-term recovery and reconstruction priorities, support to investments and access to finance, as well as technical assistance and capacity building and other relevant activities.

Article 34 - Paragraph 7

(45) Union support should be organised around three pillars, namely (i) financial support to the Ukrainian State for the implementation of reforms and investments, as well as to maintain macro-financial stability of the country, as set out in the Ukraine Plan; (ii) a Ukraine Investment Framework to mobilise investments and enhance access to finance; (iii) accession assistance to mobilise technical expertise and capacity building.

For that purpose, the Audit Board shall regularly report to the Commission, and the relevant committees of the Council and Parliament, and transmit to the Commission without delay any information it obtains or is made aware of, on any identified cases of, or serious concerns in relation to, mismanagement of public funding incurred in relation with any amount spent to achieve the objectives of the Facility, including its performance.

(46) As the recovery, reconstruction and modernisation needs are substantial, and cannot be covered by the Union budget alone, both public and private investments should play a role. The Facility should enable the timely mobilisation of both public and private investments and should allow for the possibility to scale up support for investments in long-term reconstruction when circumstances allow, also considering implementation and absorption capacity of Ukraine. The mobilisation of private investment via the Facility should contribute to the long-term competitiveness and the innovative capacity of Ukraine.

In addition, the Audit Board shall adopt recommendations to Ukraine on all cases where in its views competent Ukrainian authorities have not taken the necessary steps to prevent, detect and correct fraud, corruption, conflict of interests and irregularities that have affected or seriously risk affecting the sound financial management of the expenditure financed under the Facility and in all cases where it identifies weaknesses affecting the design and functioning of the control system put in place by Ukrainian authorities. A summary of the recommendation shall be published by the Audit Board. Ukraine shall implement such recommendations, or provide a justification on why it has not done so. The information provided by the Ukrainian authorities on the recommendations shall also be published by the Audit Board.

(46a) Russia must be held fully accountable and pay for the massive damage caused by its war of aggression against Ukraine, which constitutes a blatant violation of the UN Charter. The Union and its Member States should, in close cooperation with other international partners, continue to work towards this goal, in accordance with EU and international

The reports of, and information from, the Audit Board shall also be sent to OLAF and may be shared with the relevant Ukrainian authorities, especially in case they need to take steps to prevent, detect and correct fraud, corruption, conflict of interests and irregularities.

law, taking into account Russia’s serious breach of the prohibition on the use of force enshrined in Article 2(4) of the UN Charter and the principles of State responsibility for internationally wrongful acts, including the obligation to compensate for the financially assessable damage caused. Inter alia, it is important that progress is made, in coordination with international partners, on how extraordinary revenues held by private entities stemming directly from immobilised Russian assets could be directed to support Ukraine and its recovery and reconstruction, consistent with applicable contractual obligations, and in accordance with EU and international law.

CONT 19

(47) The overall maximum amount for the Union support to the Facility should be EUR 50 billion in current prices for the period from 2024 to 2027, for all types of support. In light of the evolving circumstances and of the objectives of the Facility itself, the Union support needs to provide a balance between flexibility and programmability.

Article 34 - Paragraph 10

(48) As for the Union support, other than in the form of loans, this Regulation should be financed by and in accordance with the Ukraine Reserve, as proposed in the amendment to Council Regulation (EU, Euratom) 2020/2093, up to EUR 17 billion for the period 2024 to 2027. Such maximum amount does not constitute the prime reference amount, within the meaning of point 18 of the Interinstitutional Agreement of 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, for the European Parliament and the Council during the annual budgetary procedure. Potential revenues could be generated under the relevant legal acts, concerning the use of extraordinary revenues held by private entities stemming directly from the immobilised Central Bank of Russia assets.

The functioning of the Audit Board shall be funded under Chapter V, including the funding for the appointed independent external auditor.

(49) In accordance with Article 10b of the proposed amendment to Council Regulation (EU, Euratom) 2020/2093 the mobilisation of the Ukraine Reserve should enable the provision of an annual maximum amount for support, other than in the form of loans, of EUR 5 billion, . The unused portion of the annual maximum amount of the support other than loans should remain available for the remaining part of the period for which the Facility is established.

Yours sincerely,

(50) In the framework of the Union’s restrictive measures, adopted on the basis of Article 29 of the Treaty on European Union (TEU) and 215(2) of the Treaty on the Functioning of the European Union (TFEU), no funds or economic resources may be made available, directly or indirectly, to or for the benefit of designated legal persons, entities or bodies. Such designated entities, and entities owned or controlled by them, therefore cannot be supported by the Facility.

Monika Hohlmeier

(51) The commitment appropriations and corresponding payment appropriations from the Ukraine Reserve should be mobilised annually in the budget over and above the ceilings of the Multiannual Financial Framework.

(52) For the part of the Ukraine Facility support provided in the form of loans, it is appropriate to extend the Union budget guarantee to cover the financial assistance which is made available to Ukraine, authorised in accordance with Article 220(1) of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council. As a consequence, Council Regulation XXX amending Council Regulation (EU, Euratom) 2020/2093 mobilises the necessary appropriations in the Union budget over and above the ceilings of the Multiannual Financial Framework for financial assistance to Ukraine available until the end of 2027.

(53) While respecting the principle that the Union budget is set annually, the possibility to apply the flexibilities in accordance with Regulation (EU, Euratom) 2018/1046 for other policies should be ensured, namely for carry overs and re-commitments of funds, to ensure efficient use of the Union funds, thus maximising the Union funds available under the Facility.

(54) Restrictions of eligibility in award procedures under the Facility should be allowed on account of the specific nature of the activity or when the activity affects security or public order.

(55) In order to ensure an efficient implementation of the Facility, Ukraine should provide public access to the information on funding opportunities under this Facility, as well as free and fair competition during tendering process and grant allocation under the Facility. It should also contribute to the facilitation of Ukraine’s integration in European value chains, all supplies and materials financed and procured under this Facility should originate from Member States, Ukraine, Western Balkan partners, Georgia and Moldova, contracting parties to the Agreement on the European Economic Area, and countries which provide a level of support to Ukraine comparable to the one provided by the European Union taking into account the size of their economy and for which reciprocal access to external assistance in Ukraine is established by the Commission, unless the supplies and materials cannot be sourced at reasonable conditions in any of those countries. In the latter, case, the Commission should keep the Council informed.

(56) The Union should seek the most efficient use of available resources in order to optimise the impact of its external action. That should be achieved through coherence, consistency and complementarity with the other Union’s external financing instruments, as well as through synergies with other Union policies and programmes. In order to maximise the impact of combined interventions to achieve a common objective, it should be provided that the Facility should be able to contribute to actions under other programmes, without causing duplication of support measures.

(57) The Union should promote a multilateral, rules-based and values-based approach to global goods and challenges and should cooperate with Member States, partner countries, international organisations and other donors in that respect.

(58) In view of the need to coordinate international support to the recovery, reconstruction and modernisation of Ukraine, it should be possible for Member States, third countries, international organisations, international financial institutions or other sources to contribute to the implementation of the Facility. Such contributions should be implemented in accordance with the same rules and conditions and should constitute external assigned revenue within the meaning of Article 21(2)(a)(ii), (d), and (e) of Regulation (EU, Euratom) 2018/1046. Support under the Facility should, as far as possible, be integrated into international efforts towards a financial architecture for the recovery of Ukraine and be coordinated with relevant donors and international financial institutions.

(59) The Commission and the Member States should ensure the ▌ coherence, consistency, complementarity and transparency of their assistance, in particular through regular consultations and frequent exchanges of information during the different phases of the assistance cycle with relevant stakeholders, including at local and regional level. In light of the presence of various international donors, the necessary steps should also be taken to ensure better coordination and complementarity with other donors, including through regular consultations and strategic outreach. In this regard, the Multi-Agency Donor Coordination Platform should be used as an already established forum for such exchange.

(60) Horizontal financial rules adopted by the European Parliament and the Council on the basis of Article 322 TFEU should apply to this Regulation. Those rules are laid down in Regulation (EU, Euratom) 2018/1046 and determine in particular the procedure for establishing and implementing the budget through grants, prizes, procurement, indirect management, financial instruments, budgetary guarantees, financial assistance and the reimbursement of external experts, and provide for checks on the responsibility of financial actors.

(61) The types of financing and the methods of implementation under this Regulation should be selected on the basis of their ability to achieve the objectives of the Facility and to deliver results, taking into account, in particular, the costs of controls, administrative burdens, and the expected risk of non-compliance. That should include consideration of the use of lump sums, flat rates and unit costs, as well as financing not linked to costs as referred to in Article 125(1) of Regulation (EU, Euratom) 2018/1046.

(62) A Framework agreement should be concluded with Ukraine to set up the principles of the financial cooperation between the Union and Ukraine, including necessary mechanisms to control and audit expenditures, and should ensure that Ukraine achieves a high level of protection of the financial interests of the Union, comparable to the one provided for in Regulation (EU, Euratom) 2018/1046 and other related Union legislation. Financing and loan agreements should also be concluded with Ukraine, where appropriate depending on each pillar, to define conditions for releasing funds.

(63) By way of derogation from the first, second, and fourth subparagraphs of Article 209(3) of Regulation (EU, Euratom) 2018/1046, it is appropriate that repayments and revenues generated by a financial instrument should constitute internal assigned revenue to the Facility or its successor programme.

(64) By way of derogation from Article 213(4)(a) of Regulation (EU, Euratom) 2018/1046, it is appropriate that surplus from the provisions for the Ukraine Guarantee should constitute internal assigned revenue to the Facility or its successor programme.

(65) Under pillar I of the Facility, financing should be provided to support the implementation of the Ukraine Plan setting out the reform and investment agenda of Ukraine towards the achievement of the general and specific objectives of the Facility, which should also be integrated in an economic and fiscal policy framework. Financing under this pillar should be provided upon satisfactory fulfilment of conditions set out in the Plan.

(66) Ukraine should prepare the Plan as a coherent, comprehensive and adequately balanced response to rebuilding and modernising Ukraine, supporting its economic, social and environmental recovery, sustainable development and its progress towards accession to the Union. As such, the Ukraine Plan would also provide a basis for other donors to identify the priority funding areas for the reconstruction of Ukraine and foster ownership, coherence and additional contributions to that end. For that purpose, Ukraine should ensure that the Plan as prepared covers its recovery, reconstruction and modernisation needs in an integrated manner, identifying to what extent the measures of the Plan are expected to be financed by the Union through the Facility. In preparing the Plan, Ukraine should take into account support provided under other Union programmes as well as from other donors. Ukraine should develop its Plan ensuring that other donors are able to contribute to supporting the measures of the Plan, including by increasing the funding available under the Facility. The Plan should ensure there is a proper coordination and complementarity with relevant donors and international financial institutions.

(67) While the Ukraine Plan should constitute the basis for the support provided under the first pillar of the Facility, it should also provide a reference for the support to be provided under the second and third pillars of the Facility. The measures financed under the second and third pillar should support the objectives and the implementation of the Plan.

(68) The Ukraine Plan should include reform and investment measures, along with the qualitative and quantitative steps that warrant satisfactory fulfilment of those measures, and an indicative timetable for the implementation of those measures. Measures started from 1 January 2023 onwards should be exceptionally eligible.

(69) The Plan should set out conditions reflecting progress expected to be made in the implementation of the measures it contains. Those conditions should take the form of qualitative or quantitative steps. Those steps should be planned for no later than 31 December 2027, although the overall completion of the measures to which such steps refer may extend beyond 2027. Given the need to ensure the macro-financial stability of Ukraine while supporting its recovery, reconstruction and modernisation efforts in view of the accession to the Union, the Plan should, in particular, include conditions linked to (i) essential requirements, such as macro-financial stability, budget oversight, and public financial management, which may be defined so as to reflect satisfactory progress towards fulfilment; and (ii) sectoral and structural reforms and investments set out in the Plan. Payments should be structured accordingly around such categories of conditions, reflecting the objectives of the Facility.

(70) The preparation and implementation by Ukraine of the Plan should take particular account of the situation in Ukraine’s regions and municipalities, having regard to their specific needs for recovery and reconstruction, reform, modernisation and decentralisation, and should be done in meaningful consultation with regional, local, urban and other public authoritiesas well as civil society organisations in accordance with the multi-level governance principle and taking into account a bottom-up approach. When available, local recovery plans should be taken into account. In this context, the Plan should in particular enhance the economic, social, environmental and territorial development of Ukraine’s regions and municipalities, support the decentralisation reform across Ukraine and convergence towards the Union’s standards; it should also ensure the involvement of sub- national authorities, in particular municipalities, in decision-making on the use of support in the reconstruction process at local level, and that the reconstruction projects selected and implemented by such sub-national authorities constitute an adequately substantial share of the support.

(70a) The completion of the decentralisation reform as a sustainable and irreversible element of multi-level governance in Ukraine is an important priority. This should include a clear delineation of powers between central and local levels, appropriate internal structures for municipal administrations, and a proportionate framework of supervision of local authorities in line with the European Charter of Local Self-Government, as well as continuing the work on granting legal personality to municipalities under public law based on European practice and in line with the constitutional order of Ukraine.

(71) The Plan should also include a detailed explanation of Ukraine’s system and planned measures to effectively prevent, detect and correct irregularities, corruption and in particular fraud, all forms of corruption, including high-level corruption, or any other illegal activity affecting the Union's financial interests, and conflicts of interests, as well as to effectively investigate and prosecute offences affecting the funds provided under the Facility, and of the arrangements that aim to avoid double funding from the Facility and other Union programmes or donors. ▌Measures under the Plan should, where appropriate, contribute to ensuring an efficient and transparent management and control system. Such measures should be implemented by Ukraine by an indicative date which should be set, as appropriate depending on each measure, over the course of the lifetime of the Facility.

(72) The Commission should assess the Ukraine Plan based on the list of criteria set out in this Regulation. In ▌ case of a positive assessment of the Plan, the Commission should submit a proposal for the approval of the Plan by the Council.

(73) Given the uncertainties and the need for flexibility in the implementation of the Facility, it should be possible for Ukraine to make a reasoned request to the Commission to make a proposal to amend the Council implementing decision, where the Ukraine Plan, including relevant qualitative and quantitative steps, is no longer achievable by Ukraine, either partially or totally, because of objective circumstances. The Commission may, in agreement with Ukraine, also make a proposal to amend the Council implementing decision, in particular to take into account changes in the circumstances allowing for an increase in ambition or a change of the amounts available. Ukraine should also be able to make a reasoned request to amend the Plan, including by proposing addenda where relevant, to take into account additional funding available from other donors or from other sources ▌.

(74) Financial support for the Ukraine Plan should be possible in the form of a loan. In the context of Ukraine’s urgent financing needs, it is appropriate to organise the financial assistance under the diversified funding strategy provided for in Article 220a of Regulation (EU, Euratom) 2018/1046 and established as a single funding method therein, which is expected to enhance the liquidity of Union bonds and the attractiveness and cost- effectiveness of Union issuance.

(75) Given the situation of Ukraine caused by Russia’s war of aggression and to support Ukraine on its long-term stability path, it is appropriate to provide loans to Ukraine on highly concessional terms with a maximum duration of 35 years and to not start the repayment of the principal before 2034. It is also appropriate to derogate from Article 220(5), point (e), of Regulation (EU, Euratom) 2018/1046 and to allow the Union the possibility to cover, for the period from 1 January 2024 to 31 December 2027, the interest rate costs (cost of funding and cost of liquidity management) and to waive the administrative costs (cost of service for administrative overheads) that would otherwise be borne by Ukraine. The borrowing costs subsidy should be granted as an instrument deemed appropriate to ensure the effectiveness of the support under the Facility within the meaning of Article 220(1) of Regulation (EU, Euratom) 2018/1046.

(76) It should be possible for Ukraine to request the interest rate subsidy and the waiver of administrative costs each year.

(77) The financial liability from loans under this Regulation should not be supported by the External Action Guarantee, by derogation from Article 31(3), second sentence, of Regulation (EU) 2021/947. Loans type of support under the Facility should constitute financial assistance within the meaning of Article 220(1) of Regulation (EU, Euratom) 2018/1046. In considering the financial risks and the budgetary coverage, no provisioning should be constituted for the financial assistance in the form of loans under the Facility, as proposed to be guaranteed over and above the ceilings, and, by derogation from Article 211(1) of Regulation (EU, Euratom) 2018/1046, no provisioning rate should be set.

(78) It is important to guarantee both flexibility and programmability as well as stability in providing Union support to Ukraine. For that purpose, payments under the Facility should occur according to a fixed quarterly schedule, subject to availability of funding, based on a payment request submitted by Ukraine and following the assessment by the Commission of the satisfactory fulfilment of the relevant conditions. In case of a positive assessment, the Commission should submit without undue delay a proposal for a Council implementing decision establishing the satisfactory fulfilment of the conditions for payments. On the basis of the Council implementing decision, the Commission should adopt a decision authorising the disbursement. In case a condition is not fulfilled in accordance with the indicative timeline set in the decision approving the Plan, the Commission should deduct from the payment an amount corresponding to those conditions following a methodology for partial payment. The disbursement of the corresponding withheld funds could take place during the next payment window and up to twelve months after the original deadline set out in the indicative timeline, provided the conditions have been fulfilled.

(79) In order to ensure that Ukraine has access to sufficient financing to cater for its macro- financial stability needs and initiate the recovery, reconstruction and modernisation of the country, Ukraine should have access to up to 7% of the loan support ▌ in the form of a pre-financing, subject to availability of funding and to the respect of the precondition for the support to Ukraine under the Facility.

(80) By way of derogation from Article 116(2) and (5) of Regulation (EU, Euratom) 2018/1046, it is appropriate to set the payment deadline starting from the date of the communication of the decision authorising the disbursement to Ukraine and to exclude the payment of default interest by the Commission to Ukraine.

(80a) In light of the need to ensure the continued macro-financial stability of Ukraine, it is appropriate that, if the Framework Agreement is not signed or the Ukraine Plan is not adopted, exceptional support should be provided to Ukraine for a period of up to six months starting from 1 January 2024. The support should be subject to having made satisfactory progress on the preparation of the Ukraine Plan and to conditions to be agreed in a Memorandum of Understanding between the Commission and Ukraine. The MoU should establish in particular policy conditions, indicative financial planning and the reporting requirements, proportionate to the duration of the financing. The policy conditions should include commitment to the principles of sound financial management with focus on anti-corruption and anti-money laundering, as well as measures to improve revenue management, and should build on the measures already implemented by Ukraine under previous macro-financial assistance programmes.

(81) Transparency in the implementation of the Facility is an important requirement of Union support. Ukraine should publish twice a year data on persons, entities receiving amounts of funding cumulatively exceeding the equivalent of EUR 100 000 for the implementation of reforms and investments specified in the Ukraine Plan. The information should not be published, if duly justified, where disclosure risks threatening the rights and freedoms of the persons, entities concerned or seriously harming the commercial interests of the recipients. The framework agreement should include precise rules and a timeframe on the collection of data by Ukraine and the access for the Commission and the European Anti- Fraud Office (OLAF), the European Court of Auditors and, where applicable the European Public Prosecutor’s Office (EPPO) including as regards the format of the information.

(82) Under pillar II of the Facility, an investment framework should be set up, aiming to support recovery and reconstruction investments undertaken by the Ukranian authorities, private sector companies, municipalities, state-owned enterprises or other actors. The Ukraine Investment Framework should address priorities identified in the Ukraine Plan, and support its objectives and its implementation. The Ukraine Investment Framework should involve Ukrainian authorities in its governance as appropriate.

(83) The investment framework should constitute an integrated financial package supplying financing capacity in the form of financial instruments, budgetary guarantees and blending operations in Ukraine. Support under the Ukraine Investment Framework should be implemented in indirect management, notably drawing on the financial and technical capacities of international financial institutions, European development finance institutions, bilateral European finance institutions and export credit agencies, including their participation to the risk linked to investments with their own resources. Given the scale of recovery and reconstruction investments in Ukraine that will require risk-sharing, it is necessary for the Union to establish a dedicated guarantee capacity, the Ukraine Guarantee. Operations covered by the Ukraine Guarantee will be implemented in accordance with Article 208(4) of Regulation (EU, Euratom) 2018/1046. Export credit agencies and other financial institutions providing trade facilitation support may act as financial intermediaries. In implementing and managing the Ukraine Guarantee, the Commission should ensure close coordination with support implemented in the framework of the European Fund for Sustainable Development Plus established under Regulation (EU) 2021/947. The Ukraine Guarantee should benefit sovereign, sub-sovereign, non- commercial and commercial entities and the private sector.

(83a) Given its role under the Treaties, the EIB should be a partner in the implementation of operations under the Ukraine Guarantee. For this reason, the EIB Group should be entrusted until 31 December 2025 with the implementation of a 25% dedicated indicative minimum amount of the Ukraine Guarantee for operations with sovereign counterparts and non-commercial sub-sovereign counterparts. In order to ensure the full use of the Ukraine Guarantee, after that date the unused part of the dedicated amounts should become available to all eligible counterparts for all types of operations.

(83b) The eligible counterparts should also, upon request, provide the Commission with any additional information necessary to fulfil the Commission’s obligations pursuant to this Regulation, together with information regarding compliance with human rights, and social, labour and environment standards.

(83c) All eligible counterparts and eligible entrusted entities should take utmost care to avoid, report and counter any corrupt practices, favouritism or undue regional or sectoral concentration of resource allocation or use and require dedicated reporting and auditing on those aspects, where relevant.

(84) The flexibility of the support under the Facility should be enhanced by providing for flexible implementation of the Ukraine Guarantee, which might be granted gradually. It is appropriate to derogate from Article 211(2), second sentence, of the second subparagraph of Regulation (EU, Euratom) 2018/1046 to allow the constitution of provisioning until 31 December 2027 to be equal to the amount of provisioning corresponding to the guarantee granted instead of the amount of global provisioning. As part of the derogation, it should also be possible to constitute the provisioning gradually to reflect the progress in selection and implementation of the financing and investment operations supporting the objectives of the Facility, instead of reflecting the financial statement referred to in Article 211(2), second sentence, of the second subparagraph of Regulation (EU, Euratom) 2018/1046.

(85) In order to efficiently use the funds under this pillar, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of amending the provisioning rate for the Ukraine guarantee. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level. The Commission, when preparing and drawing up delegated acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and to the Council.

(85a) To facilitate the private investment and the development of small and medium businesses, it is necessary to dedicate at least 15% of the guarantees provided by the Ukraine Guarantee to start-ups, Small and Medium-sized Enterprises (SMEs), as defined in Article 2 of the Annex to Recommendation 2003/361/EC, and to report and track the allocation of such portion of funds.

(86) Under pillar III of the Facility, support should mainly aim at progressively aligning to Union rules, standards, policies and practices (‘acquis’) with a view to future Union membership, thereby contributing to the implementation of the Ukraine Plan. Relevant recommendations of international bodies, such as the Council of Europe and the Venice Commission should also be taken into account in this process. Support should also aim at strengthening democratic and judicial institutions, including courts, and the capacities of stakeholders, including local authorities, social partners, civil society organisations, including their public scrutiny role.

(86a) The resources from Pillar III should also be used to finance the borrowing costs of the Facility as well as identified borrowing costs and provisioning of budgetary guarantees deriving from previous support for Ukraine.

(87) In accordance with Regulation (EU, Euratom) 2018/1046, Regulation (EU, Euratom) 883/2013 of the European Parliament and of the Council and Council Regulations (EC, Euratom) No 2988/95, (Euratom, EC) No 2185/96 and (EU) 2017/1939, the financial interests of the Union are to be protected by means of effective measures, including measures relating to the prevention, detection, correction and investigation of irregularities, fraud, corruption, conflict of interest, double funding, to the recovery of funds lost, wrongly paid or incorrectly used, and measures to effectively investigate, prosecute and bring to judgment the criminal offences affecting the funds provided under the Facility. The European Public Prosecutor’s Office (EPPO) is empowered, in accordance with Regulation (EU) 2017/1939, to investigate and prosecute criminal offences affecting the financial interests of the Union. The Ukrainian competent authorities should treat, without delay, mutual legal assistance requests and extradition requests issued by EPPO and Member States’ competent authorities concerning criminal offences affecting the funds under the Facility.

(88) In particular, in accordance with Regulations (Euratom, EC) No 2185/96 and (EU, Euratom) No 883/2013, the European Anti-Fraud Office (OLAF) should be in a position to carry out administrative investigations, including on-the-spot checks and inspections, with a view to detecting and establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union and to reporting any criminal conduct to the EPPO, in accordance with Article 24(1) of Regulation (EU) 2017/1939.

(88a) The Commission should strive to make available to Ukraine an integrated and interoperable information and monitoring system including a single data-mining and risk-scoring tool to access and analyse the relevant data in compliance with EU data protection principles and with applicable data protection rules. Where such a system is available, Ukraine should use and feed the relevant data into the system, including with support under Pillar III. The data should allow the Commission and relevant Ukrainian authorities in charge of implementing and controlling the funds to assess risks and prevent irregularities.

(89) In accordance with Regulation (EU, Euratom) 2018/1046, the necessary rights and access should be granted to the Commission OLAF, the European Court of Auditors and, where applicable the European Public Prosecutor’s Office (EPPO) where relevant, including from third parties involved in the implementation of Union funds. Ukraine should also report irregularities in relation to the use of the funds to the Commission.

(90) The reinforcement of internal control systems, including ex-ante controls, the fight against any forms of corruption, favouritism or fraud, the promotion of transparency, robust, accountable and transparent administration, and efficient public financial management, are important reform priorities for Ukraine and should be supported by the Facility.

(91) The Commission should ensure that the financial interests of the Union are effectively protected under the Facility. To this end, an independent Audit Board should be set up to provide the Commission with information on possible mismanagement of funds. Such information should be made available to OLAF, and where appropriate to the relevant Ukrainian authorities. The Commission, with the assistance of the Union delegation, should be entitled to perform regular checks on how Ukraine implements funds along the whole project life cycle. The Audit Board should ensure a regular dialogue and cooperation with the European Court of Auditors as well as with the Accounting Chamber of the Verkhovna Rada.

(92) While it is primarily the responsibility of Ukraine to ensure that the Facility is implemented in compliance with applicable standards, taking into account the principle of proportionality and the specific conditions under which the Facility will operate, the Commission should be able to receive sufficient assurance from Ukraine in that regard. To that end, Ukraine should commit in the Plan to improve its current management and control system and to recovering amounts misused. Ukraine should establish a monitoring system feeding into an annual progress report. Ukraine should collect data and information allowing the prevention, detection and correction of irregularities, fraud, corruption and conflicts of interests, in relation to the measures supported by the Facility. The framework agreement and the financing and loan agreements should provide for the obligations of Ukraine to ensure the collection of, and access to, in compliance with EU data protection principles and with applicable data protection rules, adequate data on persons and entities receiving funding, including beneficial ownership information, for the implementation of measures of the Ukraine Plan.

(93) The Union financial interests should also be protected when the funds are implemented in direct management through grants and procurement and indirect management with pillar assessed entities, in particular under the second and third pillar of the Facility. Only pillar assessed entities should be selected to implement Union funding under indirect management under the Ukraine Facility.

(94) Assistance under the Facility should be implemented by work programmes referred to in Article 110 of Regulation (EU, Euratom) 2018/1046.

(95) The communication capacities of Ukraine should be enhanced in order to ensure ▌and public support for and understanding of Union values and the benefits and obligations of potential Union membership, while addressing disinformation, foreign interference, and safeguarding strong and free pluralistic media. Visibility of the Union funding should also be ensured.

(96) The Commission should ensure clear monitoring and evaluation mechanisms are in place in order to provide effective accountability and transparency in implementing the Union budget, and to ensure effective assessment of progress towards the achievement of this Regulation’s objectives.

(97) The Commission should assess each year the implementation of support under the Ukraine Facility. It should allow the Committee established by this Regulation to have adequate information to assist the Commission. For the effective monitoring of implementation, Ukraine should report once a year in an annual progress report on the implementation. This report should also be made available to the European Parliament and the Council. Such reports prepared by the government should be appropriately reflected in the Ukraine Plan. Proportionate reporting requirements should be imposed on recipients of Union funding implemented under the second and third pillars of the Facility.

(98) In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council13.

(98a) In view of the importance of the financial effects of the support to Ukraine under the Facility and of the consequences of certain decisions to be taken for the implementation of the Facility in light of the specific situation of Ukraine, implementing powers should be exceptionally conferred on the Council in the cases identified by this Regulation.

(99) The Commission should duly take into account Council decision 2010/427/EU and the role of the EEAS where appropriate, and in particular when monitoring the fulfilment of the precondition for Union support, in its assessment of the Ukraine plan and while gathering advice on the Ukraine investment framework.

(100) Since the objectives of this Regulation cannot be sufficiently achieved by the Member States but can be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 TEU. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary to achieve those objectives.

(101) In order to ensure continuity in providing support in the relevant policy area, this Regulation should enter into force as a matter of urgency on the day following that of its publication in the Official Journal of the European Union,

HAVE ADOPTED THIS REGULATION:

CHAPTER I

General provisions

Article 1 Subject matter

1. This Regulation establishes the Ukraine Facility (the ‘Facility’) for the period 2024 to 2027.

It lays down the objectives of the Facility, its financing, the budget for the period 2024- 2027, the forms of Union funding under it and the rules for providing such funding.

2. The Facility shall provide assistance to Ukraine under the following three pillars:

(a) Pillar I: financial support to be provided to Ukraine for the delivery of reforms and investments to implement the Ukraine Plan as well as to maintain macro-financial stability of the country, as set out in Chapter III;

(b) Pillar II: a specific Ukraine Investment Framework to support investments and provide access to finance as set out in Chapter IV;

(c) Pillar III: technical assistance and related support to Ukraine to design and implement EU accession-related reforms and to foster Ukraine’s administrative capacity, borrowing cost subsidies and provisioning, as well as other relevant activities, as set out in Chapter V.

Article 2

Definitions

For the purposes of this Regulation, the following definitions apply:

2. ‘Measures’ means reforms and investments under the Ukraine Plan set out in Chapter III.

3. ‘Conditions’ means qualitative or quantitative steps relating to ensuring the maintenance of economic and financial stability or relating to the implementation of the reforms and investments set out in the Ukraine Plan set out in Chapter III.

4. ‘Blending operation’ means an operation supported by the Union budget that combines non-repayable forms of support or repayable forms of support or both, from the Union budget with repayable forms of support from development or other public or commercial finance institutions, including export credit agencies, or from investors.

Article 3

Objectives of the Ukraine Facility

1. The general objectives of the Facility shall be to support Ukraine to:

(a) address the social, economic and environmental consequences of Russia's war of aggression, thereby contributing to the peaceful recovery, reconstruction, restoration and modernisation of the country and to the post-war recovery of Ukrainian society, including by creating the social and economic conditions for Ukrainian Internally Displaced Persons and persons under temporary protection to return;

(b) foster social and territorial cohesion, ▌ and democratic, economic, environmental resilience and progressive integration into the Union and global economy and markets and upward economic, social and environmental convergence towards EU standards;

(c) adopting and implementing the political, institutional, legal, administrative, social and economic reforms required to comply with Union values and to progressively align to Union rules, standards, policies and practices (‘acquis’) with a view to future Union membership, thereby contributing to mutual stability, security, peace, prosperity and sustainability.

2. The specific objectives of the Facility shall include:

(a) help maintain the macro-financial stability of the country and ease Ukraine’s external and internal financing constraints, to ensure the continued functioning of the Ukrainian State;

(b) rebuild and modernise infrastructure damaged by the war, such as energy infrastructure, water systems, internal and cross-border transport networks including rail, roads and bridges and border crossing points, educational and cultural infrastructure, and foster modern, improved and resilient infrastructures; contribute to the demining and other mine action efforts; restore food production capacities; help address social and health challenges, including mental health, and improve and strengthen the social care systems and their accessibility, in particular for specific groups, such as ▌ veterans, Internally Displaced Persons, single parents, war widows and widowers, children, especially those without parental care, persons with disabilities, minorities, young and elderly people, and other persons in vulnerable situations;

(ba) strengthen security against hybrid threats, such as cyber threats, as well as resilience against disinformation, foreign information manipulation and interference;

(c) (c) foster the transition to a sustainable , climate neutral and inclusive economy and a stable investment environment; support the integration of Ukraine into the Union’s Single Market; repair, rebuild, safeguard and improve social infrastructure, such as housing, social, sports, youth and healthcare facilities, schools and higher education institutions ▌ ; strengtheneconomicand social development and inclusion, with particular attention to women, as well as youth, including through quality education, training, reskilling and upskilling, and employment policies, including for researchers; promote science and research; support the creative sector and independent media;support culture and cultural heritage including cultural infrastructure; strengthen strategic economic sectors; foster an institutional framework for investment and competition to enable individuals, and businesses, with a focus on SMEs and innovation, inter alia, by promoting , equal opportunities of access to funding regardless of the size of companies, to develop modern, competitive and sustainable products and services.; support for sustainable agriculture and rural development, aquaculture and fisheries, including the alignment with EU standards and control systems concerning food safety, animal and plant health, as well as animal welfare; reform Ukraine’s financial and banking sector, improving access to loans and insurance coverage;

(d) further strengthen the rule of law, democracy, the respect of human rights and fundamental freedoms, including through strengthening democratic institutions, in particular the Verkhovna Rada, as well as regional and municipal representative bodies, and their powers of oversight and inquiry over the distribution of and access to public funds; promote an independent judiciary, to support deoligarchisation efforts, strengthen the fight against fraud, all forms of corruption, including high level corruption,organised crime, tax evasion and tax fraud, tax avoidance, and illicit trafficking of firearms and cultural property; strengthen compliance with international law; strengthen freedom and independence of media and artistic and academic freedom as well as an enabling environment for civil society; foster social dialogue and civil society involvement; promote non-discrimination ▌ , to ensure and strengthen respect for the rights of persons belonging to all minorities, and the promotion of gender equality, the overall empowerment of women and girls, as well as, the rights of children and persons with disabilities; reinforce the effectiveness of public administration, encourage access to information and the participation of civil society in decision making processes and public scrutiny, and support transparency, structural reforms and good governance at all levels, including in the areas of public financial management and public procurement, competition and State aid; support initiatives and bodies and organisations involved in supporting and enforcing democracy, international justice and anti-corruption efforts in Ukraine;

(e) develop and strengthen environmental protection, a sustainable and just green transition in all economic sectors, including Ukraine’s transition towards climate neutrality, in accordance with the Paris Agreement; improve the awareness of and fight against environmental crime; promote the digital transformation as an enabler for sustainable development and inclusive growth; support ecological rehabilitation following the environmental damages inflicted by military operations and contribute to decontamination, the demining effort and clearance of other explosive remnants of war as well pollution caused by military activity

(f) support political and administrative decentralisation and local development, especially by supporting meaningful consultation and a level playing field for all levels of government when accessing funds via open, fair, neutral, and transparent procedures;

(fa) support cross-border cooperation with the Member States bordering with Ukraine in the areas such as trade, environment protection and fight against international crime, provided that Ukraine remains the sole beneficiary of the funding.

Article 4 General principles

1. Cooperation under the Facility shall be based on and shall promote the development effectiveness principles, where applicable, across all modalities, namely ownership of development priorities by Ukraine, a focus on results, inclusive development partnerships, transparency and mutual accountability. The Facility shall strive to ensure a balanced and needs-based allocation and use of resources and an appropriate geographical balance of projects.

2. Support from the Facility shall be additional to the support provided under other Union programmes and instruments. Activities eligible for funding under this Regulation may receive support from other Union programmes and instruments provided that such support does not cover the same cost.

3. In order to promote the complementarity, coherence and efficiency of their action and initiative, the Commission and the Member States shall cooperate and shall strive to avoid duplication between assistance under this Regulation and other assistance provided by the Union, the Member States, third countries, multilateral and regional organisations and entities, such as international organisations and the relevant International Financial Institutions, agencies and non-Union donors, in line with the established principles for strengthening operational coordination in the field of external assistance, including through enhanced coordination with Member States at local level and through the harmonisation of policies and procedures, in particular the international principles on development effectiveness. In order to avoid duplication, increasing ownership from the Ukrainian authorities and simplifying administrative work, support under the Facility shall, as far as possible, be integrated into the international efforts towards a financial architecture for the recovery of Ukraine and coordinated with relevant donors and international financial institutions.

4. Activities under the Facility shall comply, to the extent possible in a war-torn country, with the climate and environmental standards of the Union. Those activities shall mainstream climate change mitigation and adaptation, environmental protection, and biodiversity conservation, human rights, democracy, gender equality and non- discrimination, where relevant, disaster risk reduction and energy infrastructure safety, and shall support progress towards the Sustainable Development Goals, promoting integrated actions that can create co-benefits and meet multiple objectives in a coherent way, contributing to poverty reduction and promoting peaceful and inclusive societies. They shall, to the extent possible, avoid stranded assets, be compatible with the principles of ‘do no harm’ ▌ , as well as with the sustainability mainstreaming approach underpinning the European Green Deal and shall be also guided by the ‘leaving no one behind” principle.

5. The Facility shall not support activities or measures which are incompatible with Ukraine’s National Energy and Climate Plan, if available, with Ukraine’s Nationally Determined Contribution under the Paris Agreement, or that promote investments in fossil fuels, or that cause significant adverse effects on the environment or the climate or biodiversity, unless such activities or measures are strictly necessary to achieve the objectives of the Facility, taking into account the need to rebuild and modernise infrastructure and rehabilitate nature damaged by the war in a resilient way, and they are accompanied, where relevant, by appropriate measures to avoid, prevent or reduce and, if possible, offset these effects.

6. In line with the principle of inclusive partnership, ▌ the Commission shall strive to ensure, as appropriate, democratic scrutiny in the form of consultation by the Ukrainian government of the Verkhovna Rada in accordance with the constitutional order of Ukraine, as well as of relevant stakeholders, including local and regional authorities, social partners and civil society, including vulnerable groups, so as to allow them to participate in shaping the design, implementation of activities eligible for funding under this Facility, and in the related monitoring, scrutiny and evaluation processes, as relevant. The involvement referred to in this paragraph shall seek to represent the pluralism of the Ukrainian society and business community and the inclusion of different communities in Ukraine. All consultations shall duly take into account the participation of women. The Commission shall encourage coordination among the relevant stakeholders and contribute to strengthening the capacity of civil society organisations. In addition, the Commission shall ensure that civil society in Ukraine, including non-governmental organisations, is able to directly report any irregularities it may detect to the Commission via appropriate standing channels, as well as to send to the Commission opinions on the implementation of the Ukraine Plan and the evaluation of its measures by the Government, based on the information flow referred to in the previous subparagraph.

7. The Commission, in close cooperation with the Member States and Ukraine, shall ensure the implementation of Union commitments to increased transparency and accountability in the delivery of assistance, including by promoting the implementation and reinforcement of internal control systems and anti-fraud policies. The Commission shall make information on the volume and allocation of assistance publicly available through a single webportal, and shall ensure that data are up-to-date, easily accessible, available in machine-readable format.

Article 5 Precondition for Union support

1. A precondition for the support to Ukraine under the Facility shall be that Ukraine continues to uphold and respect effective democratic mechanisms, including a multi-party parliamentary system, and the rule of law, and to guarantee respect for human rights, including the rights of persons belonging to minorities.

2. The Commission shall monitor the fulfilment of the precondition set out in paragraph 1 before disbursements to Ukraine under the Facility are made and throughout the period of the support provided under the Facility taking duly into account the Commission’s regular enlargement report. The Commission shall take into account the relevant recommendations of international bodies, such as the Council of Europe and its Venice Commission in this process. The Commission shall inform the Council of the fulfilment of the precondition set out in paragraph 1 before disbursements to Ukraine. Where the Commission finds that the precondition is not met or no longer met, it shall submit to the Council a proposal for an implementing decision suspending the payments referred to in Article 25, irrespective of the fulfilment of conditions referred to in Article 15(2). In its assessment, the Commission shall also take into account the context in Ukraine, and the consequences of the application there of martial law. The Commission's assessment shall be transmitted simultaneaously to the European Parliament and to the Council. Where, at the request of Ukraine or on its own initiative, the Commission considers that the precondition is met again, it shall submit to the Council a proposal for an implementing

decision lifting the suspension. In the cases foreseen by this paragraph the Council shall act, as a rule, within one month of receiving the Commission’s proposal.

CHAPTER II

Financing and implementation

Article 6 Budget

1. The resources for the implementation of the Ukraine Facility shall be available through the Ukraine Reserve to be mobilised in the framework of the annual budgetary procedure in accordance with Article 10b of Council Regulation (EU, Euratom) 2020/2093, with the following indicative distribution:

(a) 31 % in the form of non-repayable financial support pursuant to Chapter III of this Regulation.

(b) 41 % for expenditure pursuant to Chapter IV;

(c) 26 % for expenditure pursuant to Chapter V;

(d) 2 % for expenditure pursuant to paragraph 5 of this Article. In exceptional circumstances, this expenditure may be increased and shall not in any event exceed 2.5%.

The total resources under this paragraph shall be available for an amount of up to EUR 17 000 000 000. The allocation of the available resources under this paragraph shall take into account in particular the need to cover expenditure in accordance with Article 22.

2. The financial support pursuant to Chapter III in the form of a loan, shall be available for an amount of up to EUR 33 000 000 000 for the period from 1 January 2024 to 31 December

2027.

3. The sum of the resources made available pursuant to paragraphs 1 and 2 shall not exceed EUR 50 000 000 000 for the period 2024 to 2027.

4. Additional contributions for financing the support referred to in paragraph 1 may be provided in accordance with Article 7.

5. The resources referred to in ▌ paragraphs 1(d) and 4 may be used for technical and administrative assistance for the implementation of the Facility, such as preparatory actions, monitoring, control, audit and evaluation activities, which are required for the management of the Facility and the achievement of its objectives, in particular studies, meetings of experts, consultations with the Ukrainian authorities, conferences, consultation of stakeholders, information and communication actions, including inclusive outreach actions, and corporate communication of the political priorities of the Union, insofar as they are related to the objectives of this Regulation, expenses linked to IT networks focusing on information processing and exchange, corporate information technology tools, and all other technical and administrative assistance expenses incurred by the Commission for the management and costs of the Facility at headquarters and in Union delegations. Expenses may also cover the costs of other supporting activities such as quality control and monitoring of projects on the ground and the costs of peer counselling and experts for the assessment and implementation of reforms and investments.

5a. The resources not allocated or used for expenditure under point (d) of paragraph 1 and under Article 22 shall be made available for other operational expenditure under paragraph 1, without prejudice to the prerogatives of the budgetary authority and subject to the last sub- paragraph of paragraph 1.

Article 7

Additional financial resources for the Facility

1. Member States, third countries, international organisations, international financial institutions or other sources may provide additional financial contributions to the Facility without being bound by the indicative distribution referred to in Article 6(1). Such contributions shall constitute external assigned revenue within the meaning of Article 21(2), points (a)(ii), (d), and (e) of Regulation (EU, Euratom) 2018/1046.

Additional amounts received as external assigned revenue within the meaning of Article 21(5) of Regulation (EU, Euratom) 2018/1046 under the relevant Union legal acts ▌shall be added to the resources referred to in Article 6.

2. The contributions referred to in paragraph 1 shall be implemented in accordance with the same rules and conditions as the amount referred to in Article 6(1).

3. The contributions to the Ukraine Guarantee and to the financial instruments under Chapter IV shall be made in accordance with Article 28.

Article 8

Implementation and forms of Union funding

1. The Facility shall be implemented in accordance with Regulation (EU, Euratom) 2018/1046, either in direct management or in indirect management with any of the entities referred to in Article 62, first subparagraph, point (c) of Regulation (EU, Euratom) 2018/1046.

2. Union funding may be provided in any of the forms laid down in Regulation (EU, Euratom) 2018/1046, in particular grants, prizes, procurement, budget support, financial instruments, budgetary guarantees, blending operations and financial assistance.

3. Financial instruments, budgetary guarantees and blending operations combining support from financial instruments or budgetary guarantees under the Facility shall be implemented in accordance with the principles laid down in Title X, and in particular Articles 208 and 209(1), (2) and (4), of Regulation (EU, Euratom) 2018/1046. Depending on the required operational and financial capacity, the counterpart of the budgetary guarantee, or the entrusted entity implementing financial instruments, may be the European Investment Bank group, a multilateral European finance institution, such as the European Bank for Reconstruction and Development, or a bilateral European finance institution, such as development banks or the World Bank Group. Whenever possible, non-European multilateral finance institutions may participate in the Facility through joint operations with European finance institutions. The implementation of financial instruments, budgetary guarantees and blending operations under the Facility may be complemented by additional forms of financial support, from either Member States or third parties.

Article 9 Framework agreement

1. The Commission shall conclude a framework agreement with Ukraine for the implementation of the Facility setting out specific arrangements for the management, control, supervision, monitoring, evaluation, reporting and audit of funds under the Facility, including avoiding double funding, as well as to prevent, detect, investigate and correct irregularities, fraud, corruption or any other illegal activity affecting the Union’s financial interests and conflicts of interest, including the effective investigation and prosecution of offences affecting the funds provided under the Facility. The framework agreement shall be complemented by financing agreements in accordance with Article 10 and loan agreements in accordance with Article 21, setting out specific provisions for the management and implementation of funding under the Facility. That framework agreement, including any related documentation, shall be made available, upon request, to the European Parliament and the Council simultaneously and without delay.

2. With the exception of bridge financing referred to in Article 24, funding shall only be granted to Ukraine after the framework agreement and the applicable financing and loan agreements, have entered into force.

3. The framework agreement, the financing agreements and the loan agreement concluded with Ukraine, taken as a whole, and contracts and agreements signed with person or entities receiving Union funds, shall ensure that the obligations set out in Article 129 of Regulation (EU, Euratom) 2018/1046 can be fulfilled.

4. The framework agreement shall ensure the commitment of Ukraine to achieve a high level of protection of the financial interests of the Union and shall lay down, in particular, detailed provisions concerning, in particular:

(a) the commitment of Ukraine to make decisive progress towards a robust framework to fight fraud, and establish more efficient and effective control systems, including appropriate mechanisms for the protection of whistle blowers as well as appropriate mechanisms and measures to effectively prevent, detect and correct irregularities, fraud, corruption and conflicts of interests as well as to strengthen the fight against money laundering, organised crime, to support the deoligarchisation efforts, misuse of public funds, terrorism financing, tax avoidance, tax fraud or tax evasion, and other illegal activities affecting the funds provided under the Facility;

(b) the activities related to control, supervision, monitoring, evaluation, reporting and audit of Union funding under the Facility, as well as detections, investigations, prosecutions, antifraud measures and cooperation, including mutual legal assistance in criminal matters and extradition;

(c) control requirements for release of the funding to Ukraine;

(d) rules on taxes, duties and charges in accordance with Article 27(9) and (10) of Regulation (EU) 2021/947;

(e) the recognition of the responsibilities of the Audit Board referred to in Article 34, and the modalities of Ukraine’s cooperation with it;

(f) the obligation for persons or entities implementing Union funds under the Facility to notify the Audit Board, the Commission, OLAF and, where applicable, the EPPO, without delay, of suspected or actual cases of irregularities, fraud, corruption and conflict of interests and other illegal activities affecting the funds provided under the Facility and their follow-up;

(g) the right of the Commission to monitor activities under the Facility carried out by the Ukrainian authorities, along the whole project cycle, including inter alia projects selection and award procedures including for public procurement, to take part in these as observer, as appropriate, and to make recommendations for the improvement of such activities and commitment from the Ukrainian authorities to do their best efforts to implement such recommendations of the Commission and to report on this implementation;

(h) the obligations referred to in Article 33(2), including precise rules and timeframe on collection of data by Ukraine and access for the Commission, OLAF, the European Court of Auditors and the EPPO where applicable;

(i) the obligation for Ukraine to transmit electronically to the Commission the data referred to in Article 26;

(ja) the obligations referred to in Article 40(2) on communication activities and visibility of the Union funding.

Article 10 Financing agreements

1. Financing agreements shall be concluded for Chapters III and V. They shall set out the responsibilities and obligations of Ukraine in the implementation of Union funds, including the obligations set out in Article 129 of Regulation (EU, Euratom) 2018/1046. They shall also set out the conditions for payment of the non-repayable financial support, including in relation to the implementation of the framework agreement mentioned in Article 9, including the internal control systems as referred to in Article 9(4), points (a) and (c). The financing agreements shall also set out the Union’s rights and obligations. They shall be made available, upon request, to the European Parliament and the Council simultaneously.

2. The financing agreements shall include rules on reporting to the Commission on how activities are carried out, and on whether the conditions mentioned in Article 15(2) are fulfilled.

Article 11

Rules on eligibility of persons and entities, origin of supply and materials and restriction under the Facility

1. Participation in procurement, grant and prize award procedures for activities financed under the Facility shall be open to international and regional organisations and to all natural persons who are nationals of, and to legal persons which are effectively established in:

(a) Member States, Ukraine, Western Balkan partners, Georgia and Moldova and contracting parties to the Agreement on the European Economic Area ;

(b) countries which provide a level of support to Ukraine comparable to the one provided by the European Union taking into account the size of their economy and for which reciprocal access to external assistance in Ukraine is established by the Commission.

2. The reciprocal access referred to in paragraph 1, point (b), may be granted for a limited period of at least one year, whenever a country grants eligibility on equal terms to entities from the Union and from countries eligible under the Facility.

The Commission shall decide by means of implementing acts on the reciprocal access after consulting Ukraine.Those implementing acts shall be concluded in accordance with the examination procedure referred to in Article 39.

3. All supplies and materials financed and procured under this Facility shall originate from any country referred to paragraph 1(a) and (b), unless if the supplies and materials cannot be sourced at reasonable conditions in any of those countries. In addition, the rules on restrictions in paragraph 7 apply. The Commission shall include in the annual report referred to in Article 36(4), information on the implementation of this paragraph.

4. The eligibility rules under this Article shall not apply to, and shall not create nationality restrictions for, natural persons employed or otherwise legally contracted by an eligible contractor or, where applicable, subcontractor except where the nationality restrictions are based on the rules provided for in paragraph 7.

5. For actions jointly co-financed by an entity or implemented in direct or indirect management with entities as referred to in Article 62(1), point (c), of Regulation (EU, Euratom) 2018/1046 or for actions implemented by Ukrainian entities under Chapter III of this Regulation, the eligibility rules of those entities or Ukraine shall also apply in addition to the rules established under this Article, including, where applicable, the restrictions provided for under paragraph 7 of this Article and duly reflected in the financing agreements and contractual documents signed with those entities.

6. Where additional contributions are provided in accordance with Article 7 through external assigned revenues, the eligibility rules in the agreement with the person providing the additional contribution shall apply with the rules on restrictions provided for under paragraph 7 of this Article.

7. The eligibility rules and origin of supplies and materials in paragraphs 1 and 3 and the nationality of the natural persons referred to in paragraph 4 may be restricted with regard to the nationality, geographical location or nature of the legal entities participating to procurement procedures as well as with regard to the geographical origin of supplies and materials, in the following cases:

(a) where such restrictions are required on account of the specific nature and/or objectives of the activity or specific award procedure and/or where these restrictions are necessary for the action’s effective implementation;

(b) where the action or specific award procedures affect security or public order, in particular concerning strategic assets and interests of the Union, its Member States, or Ukraine, including the protection of the integrity of digital infrastructure, communication and information systems, and related supply chains.

8. Tender applicants and candidates from non-eligible countries may be accepted as eligible in the case of urgency or where services are unavailable in the markets of the countries or territories concerned, or in other duly substantiated cases where application of the eligibility rules would make the realisation of an action impossible or exceedingly difficult.

Article 12

Carry-overs, annual instalments, commitment appropriations, surpluses from the budgetary guarantee, repayments and revenue generated by financial instruments

1. By derogation to Article 12(4) of Regulation (EU, Euratom) 2018/1046, unused commitment and payment appropriations under the Facility shall be automatically carried over and may be committed and used, respectively, up to 31 December of the following financial year. The amount carried over shall be used first in the following financial year.

2. The Commission shall submit to the European Parliament and the Council information on commitment appropriations carried over, including the amounts involved in accordance with Article 12(6) of Regulation (EU, Euratom) 2018/1046.

3. By derogation to Article 15 of Regulation (EU, Euratom) 2018/1046 on making appropriations available again, commitment appropriations corresponding to the amount of decommitments made as a result of total or partial non-implementation of an action under the Facility shall be made available again to the benefit of the budget line of origin.

4. By way of derogation from the first, second and fourth subparagraphs of Article 209(3) of Regulation (EU, Euratom) 2018/1046, any revenues and repayments from financial instruments established under this Regulation shall constitute internal assigned revenue within the meaning of Article 21(5) of Regulation (EU, Euratom) 2018/1046, to the Facility or its successor programme.

5. By way of derogation from Article 213(4), point (a), of Regulation (EU, Euratom) 2018/1046, any surplus of the provisions for the Ukraine Guarantee shall constitute internal assigned revenue within the meaning of Article 21(5) of Regulation (EU, Euratom) 2018/1046 to the Facility or its successor programme.

6. Budgetary commitments for actions extending over more than one financial year may be broken down over several years into annual instalments, in accordance with Article 112(2) of Regulation (EU, Euratom) 2018/1046.

The third subparagraph of Article 114(2) of Regulation (EU, Euratom) 2018/1046 shall not apply to the actions referred to in the first subparagraph of this paragraph.

Article 13 Exceptional financing

1. In duly justified exceptional circumstances, in particular where a significant deterioration of the war makes it impossible for Ukraine to fulfil the conditions attached to the forms of support under this Regulation, the Facility may provide exceptional financing to Ukraine in order to maintain its macro-financial stability and to foster the achievement of the objectives referred to in Article 3. Such exceptional financing shall be granted for individual periods of up to three months and cease as soon as the fulfilment of the conditions becomes possible again. Financing under this Article may be granted in addition to and during the same period of exceptional bridge financing granted under article 24.

2. For the purpose of paragraph 1, where the Commission finds that it is impossible for Ukraine to fulfil the conditions attached to the forms of support under this Regulation due to such duly justified exceptional circumstances, it may submit to the Council a proposal for an implementing decision providing exceptional financing to Ukraine under the Facility. The Council shall act, as a rule, within one month of receiving the

Commission’s proposal.

3. The exceptional financing shall in any case be subject to the precondition referred to in Article 5 and shall be financed within the resources referred to in Article 6(1), point (a), and 6(2).

3a. The implementing decision of paragraph 2 shall set out the audit, control, monitoring and reporting rules, as well as the conditions and modalities for the exceptional financing.

CHAPTER III

Pillar I: Ukraine Plan

Article 14

Relation of the Ukraine Plan to the Pillars of the Facility

1. The Ukraine Plan (the “Plan”) shall provide for an overarching framework to achieve the objectives set out in Article 3.

2. The Ukraine Plan shall constitute the basis for the support provided under Pillar I of the Facility as set out in Article 1(2)(a) and as referred to in this Chapter. ▌The support to be provided under Pillars II and III of the Facility referred to in Chapters IV and V shall be coherent and avoid overlaps with the Pillar I support covered by the Ukraine Plan, and in particular be guided by the principles set out in Article 15.

Article 15

Principles for financing under the Ukraine Plan

1. The Ukraine Plan shall set out the reform and investment agenda of Ukraine, integrated in an economic and fiscal policy framework, towards the achievement of the general and specific objectives mentioned in Article 3. The Plan shall comprise measures for the implementation of reforms and public investment through a comprehensive and coherent package, which may also include public schemes that aim to incentivise private investments. The Ukraine Plan shall identify the measurable quantitative and qualitative steps as described in Article 15(2) corresponding to reforms and investments.

2. The Facility shall provide financing under this Chapter upon satisfactory fulfilment of the precondition set out in Article 5, as well as conditions stemming from the Plan, taking the form of measurable qualitative or quantitative steps. Such conditions shall reflect the different objectives of the Facility, as defined in Article 3, and shall include conditions related to essential requirements, such as the maintenance of economic and financial stability, budget oversight and public financial management, and conditions related to the implementation of the reforms and investments set out in the Plan.

3. The conditions mentioned in paragraph 2 shall reflect the amounts referred to in Article 6(1)(a) and (2) and relevant contributions under paragraph 4 of that Article.

3a. An amount equivalent to at least 20% of the non-repayable financial support referred to in Article 6(1)a shall be allocated to the recovery, reconstruction and modernisation needs of Ukraine’s sub-national authorities, in particular local self-government, in line with Article 16.

4. Exceptionally, measures started from 1 January 2023 onwards shall be eligible provided that they comply with the requirements set out in this Regulation. These measures shall be duly justified and properly documented.

5. The Ukraine Plan shall contribute to and be consistent with the relevant reform priorities identified in the context of Ukraine’s accession path, as outlined in the Commission Opinion and the Analytical Report, the Commission’s regular enlargement report and subsequent Council conclusions, and the Association Agreement including a Deep and Comprehensive Free Trade Agreement. It shall also contribute to and be consistent with Ukraine’s Nationally Determined Contribution under the Paris Agreement, Ukraine’s commitments under the United Nations Convention on Biological Diversity and, if available, the National Energy and Climate Plan.

6. The Ukraine Plan shall respect the general principles set out in Article 4.

Article 16

Content of the Ukraine Plan

1. In order to receive support under the Facility, Ukraine shall submit to the Commission a Ukraine Plan.

2. The Ukraine Plan shall in particular set out the following elements, which shall be duly reasoned and substantiated:

(a) measures constituting a needs-based, coherent, comprehensive and adequately balanced response to the objectives set out in Article 3, including structural reforms and measures to promote the convergence with the Union, to strengthen the rule of law, democracy, the respect of human rights and fundamental freedoms as well as the application of the conditions referred to in article 15(2), so that the Ukraine Plan as a whole raises the growth rate of the Ukrainian economy, reduces economic and social inequalities and ensures progress of Ukraine towards the Union’s social, economic, and environmental standards;

(aa) an explanation of how the Ukraine Plan contributes to and is consistent with addressing the relevant challenges identified in the context of Ukraine’s accession path, as outlined in the Commission Opinion and the Analytical Report, and the Association Agreement including a Deep and Comprehensive Free Trade Agreement;

(b) an explanation of how the Plan and its measures are consistent with the general principles referred to in Article 4, as well as requirements, plans and programmes referred to in Article 15;

(c) ▌ an indicative timetable, and the measurable envisaged qualitative and quantitative steps to be implemented by 31 December 2027;

(d) the arrangements for the effective monitoring, reporting and implementation of the Ukraine Plan by Ukraine, including the proposed measurable qualitative and quantitative steps, and the related indicators, as well as for the due involvement of the Verkhovna Rada;

(e) an explanation of how the Plan corresponds to the recovery, restoration reconstruction and modernisation needs stemming from Russia’s war of aggression in Ukraine’s regions and municipalities, and thereby enhances their inclusive and sustainable economic, social, environmental and territorial development, reinforces social cohesion, supports the decentralisation reform across Ukraine and

convergence towards the Union’s standards; this explanation shall take into account the powers, tasks and responsibilities assigned to different levels of government; an explanation of the methodology and processes used for the selection and implementation of projects, and the mechanisms to involve sub-national authorities, in particular municipalities, as well as civil society organisations, in decision- making on the use of support in the reconstruction process at local level and in the democratic scrutiny process, in particular timely and equal access to information and funds for the relevant sub-national authorities; the methodology used to track related expenditure; and an explanation of how the Plan ensures that the reconstruction projects selected and implemented by such sub-national authorities constitute an adequately substantial share of the support; that explanation shall also cover twinning and partnerships between cities, as well as peer-to-peer cooperation and programmes embedded in partnerships between cities and regions in the Union and Ukraine, where relevant;

(f) for the preparation and ▌ for the implementation of the Ukraine Plan, a detailed explanation of the consultation process, conducted in accordance with the national legal framework, and of the involvement and consultations planned during implementation, of the Verkhovna Rada as well as relevant stakeholders, including local and regional representative bodies and authorities, social partners and civil society organisations, and how the input of those stakeholders is reflected in the Ukraine Plan;

(g) an explanation of the extent to which the measures under the Ukraine Plan are expected to contribute to:

- climate and environmental objectives, including biodiversity conservation, in particular those measures related to relevant initiatives and reforms, and how compatibility with the principle of ‘do no significant harm’ is ensured to the extent possible in a context of war or post-war recovery and reconstruction;

(fb) - the promotion of the rule of law;

(fc) social objectives, including the inclusion of groups in vulnerable situations, and ensure the best interest of children;

(fd) gender equality and the empowerment of women and girls, and promotion of women and girls' rights.

(h) a detailed explanation of Ukraine’s system and planned measures to effectively prevent, detect and correct irregularities, fraud, all forms of corruption, including high-level corruption, or any other illegal activity affecting the Union's financial interests, and conflicts of interests, as well as to effectively investigate and prosecute offences affecting the funds provided under the Facility, and of the arrangements that aim to avoid double funding from the Facility and other Union programmes or donors, as well as to ensure swift judicial cooperation with competent authorities of the Union and its Member States;

(ha) an explanation of how the Plan ensures that other donors are able to contribute to supporting the measures of the Plan;

(i) any other relevant information.

3. The Ukraine Plan shall be results- and impact-based and include measurable indicators such as key performance indicators, where applicable for assessing progress towards the achievement of the general and specific objectives referred to in Article 3.

Article 17

Preparation and submission of the Ukraine Plan

1. 1. The Ukraine Plan shall be prepared by the Ukrainian government with due involvement of the Verkhovna Rada in accordance with the constitutional order of Ukraine. Ukraine shall strive to submit the Plan to the Commission by two months after entry into force of this Regulation. Ukraine may submit a draft Plan to the Commission. The Commission shall share that draft Plan simultaneously with the European Parliament and the Council.

2. When preparing the Plan in accordance with Article 16, Ukraine shall take particular account of the situation in Ukraine’s regional, local and urban areas, having regard to their specific needs for recovery and reconstruction, reform, modernisation and decentralisation.

3. The preparation and implementation of the Ukraine Plan shall be done in consultation with regional, local, urban and other public authorities, as well as with social partners and civil society organisations, in accordance with the multi-level governance principle, and taking into account a bottom-up approach. In addition, in accordance with its national legal framework, Ukraine shall ensure that the Verkhovna Rada plays its role in the implementation of the Ukraine Plan in a duly informed way, in line with its prerogatives, including its authority to legislate, approve State budget and oversee its execution, and oversee the executive branch.

Article 18

Commission assessment of the Ukraine Plan

1. The Commission shall assess the relevance, comprehensiveness and appropriateness of the Ukraine Plan or, where applicable, the amendment to that Plan referred to in Article 20, without undue delay, and make a proposal for a Council implementing decision in accordance with Article 19(1). When carrying out that assessment, the Commission shall act in close cooperation with Ukraine, and the international partners contributing to its implementation. The Commission may make observations, seek additional information or request that Ukraine modifies the draft Plan.

2. When assessing the Ukraine Plan, and in the determination of the amount to be allocated to Ukraine, the Commission shall take into account relevant available analytical information on Ukraine including its macroeconomic situation and debt sustainability, the justification and the elements provided by Ukraine as referred to in Article 16(2), as well as any other relevant information such as, in particular, the information listed in Article 15(5).

3. In its assessment, the Commission shall take into account the following criteria:

(a) whether the Plan represents a needs-based, coherent, comprehensive and adequately balanced response to the objectives set out in Article 3, including structural reforms and measures to promote the convergence with the Union, to strengthen the rule of law, democracy, the respect of human rights and fundamental freedoms as well as the application of the conditions referred to in article 15(2), so that the Ukraine Plan as a whole raises the growth rate of the Ukrainian economy, reduces economic and social inequalities and ensures progress of Ukraine towards the Union’s social, economic, and environmental standards;

(aa) whether the Ukraine Plan contributes to and is consistent with addressing the relevant challenges identified in the context of Ukraine’s accession path, as outlined in the Commission Opinion and the Analytical Report, and the Association Agreement including a Deep and Comprehensive Free Trade Agreement;

(ab) whether the Plan and its measures are consistent with the general principles referred to in Article 4, as well as requirements, plans and programmes referred to in Article 15;

(b) whether the Ukraine Plan corresponds to the recovery, restoration, reconstruction and modernisation needs stemming from Russia’s war of aggression in Ukraine’s regions and municipalities ▌ and thereby enhances their inclusive and sustainable economic, social, environmental and territorial development, reinforces social cohesion, supports the decentralisation reform across Ukraine and convergence

towards the Union’s standards; whether it takes into account the powers, tasks and responsibilities assigned to different levels of government; whether the methodology and processes used for the selection and implementation of projects, and the mechanisms to involve sub-national authorities, in particular municipalities as well as civil society organisations, in decision-making on the use of support in the reconstruction process at local level and in the democratic scrutiny process, in particular timely and equal access to information and funds for the relevant sub- national authorities are appropriate; whether the methodology used to track related expenditure for the reconstruction projects selected and implemented by such sub- national authorities is appropriate and whether such projects constitute an adequately substantial share of the support;

(ba) whether the measures in the Ukraine Plan are expected to contribute to climate change mitigation and adaptation, environmental protection, including biodiversity conservation, and to the green transition, or to addressing the challenges resulting therefrom; whether the measures included in the Ukraine Plan are compatible

with the principles of ‘do no significant harm’, to the extent possible, in a context of war or post-war recovery and reconstruction;

(bb) whether the measures in the Ukraine Plan are expected to contribute to the promotion of the rule of law;

(bc) whether the measures in the Ukraine Plan are expected to contribute to social objectives, including the inclusion of groups in vulnerable situations, and ensure the best interest of children;

(bd) whether the measures in the Ukraine Plan are expected to promote gender equality and the empowerment of women and girls;

(c) whether the arrangements proposed by Ukraine are expected to ensure an effective monitoring, reporting and implementation of the Ukraine Plan and any updates thereof, in particular the due involvement of the Verkhovna Rada, including the measurable qualitative and quantitative steps, and the related indicators;

(d) whether the arrangements proposed by Ukraine are expected to effectively ensure an adequate level of protection of the financial interests of the Union, in particular by preventing, detecting and correcting irregularities, fraud, all forms of corruption, including high-level corruption, conflicts of interests, or any other illegal activity affecting the Union's financial interests; whether the arrangements proposed support the effective investigation and prosecution of offences affecting the funds provided under the Facility, and ensure swift judicial cooperation with competent authorities of the Union and its Member States; the Commission shall also take into account whether the arrangements proposed by Ukraine are expected to allow avoiding double funding from the Facility and other Union programmes as well as other donors.

(da) whether the Verkhovna Rada has been duly consulted, and whether the Plan takes into account, where appropriate, the inputs of stakeholders, including local and regional representative bodies and authorities, social partners and civil society organisations, in accordance with the national legal framework.

(db) whether the Plan ensures that other donors are able to support the objectives of the Plan.

4. For the purpose of the assessment of the Ukraine Plan submitted by Ukraine, the Commission may be assisted by experts.

Article 19

Council implementing decision

1. In case of a positive assessment, on a proposal from the Commission, the Council shall approve by means of an implementing decision the assessment of the Ukraine Plan submitted by Ukraine in accordance with Article 17(1) or, where applicable, of its amendment submitted in accordance with Article 20(1) or (2). The Council shall act, as a rule, within one month of receiving the Commission’s proposal. The Council, acting by qualified majority, may amend the Commission’s proposal and adopt the amended text by means of an implementing decision.

2. The Commission proposal for a Council implementing decision shall set out, for the part to be funded by the Facility, the reforms and investments to be implemented by Ukraine, the conditions stemming from the Plan as described in Article 15(2), including the indicative timetable, the measurable quantitative and qualitative steps corresponding to reforms and investments and the maximum annual amount for non-repayable financial support, the indicative maximum annual amount for loans and the respective total amounts referred to in Article 6(1) point (a) and (2) and relevant contributions under paragraph 4 of that Article.

3. The Commission proposal referred to in paragraph 2 shall also lay down:

(a) the total maximum non-repayable financial support and total indicative maximum amount of the loan support to be paid in instalments, structured in accordance with Article 15(2), once Ukraine has achieved satisfactory fulfilment of the relevant qualitative and quantitative steps identified in relation to the implementation of the Ukraine Plan;

(aa) the envisaged timetable for disbursement of the support and its payment schedule;

(b) ▌ the amount of the loan support to be paid in the form of a pre-financing in accordance with Article 23;

(c) the time limit, which shall be no later than 31 December 2027, by which the final qualitative and quantitative steps for both investment projects and reforms must be completed;

(d) the arrangements and timetable for monitoring and implementation of the Ukraine Plan, including the due involvement of the Verkhovna Rada as well as where relevant, measures necessary for complying with Article 33;

(e) the indicators for assessing progress towards the achievement of the general and specific objectives mentioned in Article 3;

(f) the arrangements for providing full access by the Commission to the underlying relevant data.

(fa) information on the actual and planned contributions from other donors and an explanation on the coordination measures in the development and implementation of the Plan which would ensure the achievement of its objectives.

(fb) an analysis of the impact of the plan on the macroeconomic situation, taking into account the debt sustainability of Ukraine.

Article 20 Amendments to the Ukraine Plan

1. Where the Ukraine Plan, including relevant qualitative and quantitative steps, is no longer achievable by Ukraine, either partially or totally, because of objective circumstances, the Ukrainian authorities, after consulting the Verkhovna Rada, whenever relevant, may propose amendments to the Ukraine Plan.

2. The Commission may, in agreement with Ukraine, make a proposal to amend the Council implementing decision referred to in Article 19(1), in particular to take into account changes in the circumstances allowing for an increase in ambition or a change of the amounts available, notably due to additional contributions by the Member States or from other sources as referred to in Article 6(4). The Council may request to the Commission to assess whether the conditions set out in this paragraph are met and submit, where appropriate, the relevant proposal.

3. Where the Commission considers that the reasons put forward by Ukraine justify an amendment to the Ukraine Plan, the Commission shall assess the amended Ukraine Plan in accordance with Article 18 and shall make a proposal for an amendment of the Council implementing decision referred to in Article 19(1) without undue delay. The Council shall act, as a rule, within one month of receiving the Commission’s proposal. The Council, acting by qualified majority, may amend the Commission’s proposal and adopt the amended text by means of an implementing decision.

Article 20a Ukraine Plan scoreboard

1. The Commission shall establish a Ukraine Plan scoreboard (the ‘Scoreboard’), which shall display the progress made in the implementation of the Ukraine Plan.

2. The Commission shall be empowered to adopt a delegated act in accordance with Article 38 to supplement this Regulation by establishing the detailed elements of the Scoreboard with a view to displaying the progress in the implementation of the Ukraine Plan as referred to in paragraph 1.

3. The Scoreboard shall be operational by January 2025 and shall be updated by the Commission twice a year. The Scoreboard shall be made publicly available online.

Article 21

Loan agreement, borrowing and lending operations

1. In order to finance the support under the Facility in the form of loans, the Commission shall be empowered, on behalf of the Union, to borrow the necessary funds on the capital markets or from financial institutions in accordance with Article 220a of Regulation (EU, Euratom) 2018/1046.

2. Upon adoption of the Council implementing decision referred to in Article 19(1), the Commission shall enter into a loan agreement with Ukraine in respect of the amount referred to in Article 6(2). The loan agreement shall lay down the availability period and the detailed terms of the support under the Facility in the form of loans, including in relation to the internal control systems as referred to in Article 9(4), points (a) and (c). The loans shall have maximum duration of 35 years. In addition to the elements laid down in Article 220(5) of Regulation (EU, Euratom) 2018/1046, the loan agreement shall contain the amount of pre-financing and rules on clearing of pre-financing.

3. By way of derogation from Article 31(3), second sentence, of Regulation (EU) 2021/947, the financial assistance provided to Ukraine in the form of loans under the Facility shall not be supported by the External Action Guarantee.

4. No provisioning for the loans under this Regulation shall be constituted and, by way of derogation from Article 211(1) of Regulation (EU, Euratom) 2018/1046, no provisioning rate as a percentage of the amount referred to in Article 6(2) of this Regulation shall be set.

4a. The loan agreement shall be made available, upon request, simultaneously to the European Parliament and the Council.

Article 22 Borrowing costs subsidy

1. By way of derogation from Article 220(5) of Regulation (EU, Euratom) 2018/1046 and subject to available resources, the Facility may bear the cost of funding, cost of liquidity management, and cost of service for administrative overheads related to the borrowing and lending (“borrowing costs subsidy”), except for costs related to early repayment of the loan. For the period from 1 January 2024 to 31 December 2027, the borrowing costs subsidy shall be covered under Chapter V.

2. Ukraine may request each year the borrowing costs subsidy referred to in paragraph 1. The Commission may award the borrowing costs subsidy for an amount not exceeding the limits of the appropriations made available in the annual budget.

Article 23 Pre-financing

1. Subject to the adoption by the Council of the implementing decision referred to in article 19(1), Ukraine may request, as part of the Ukraine Plan, a pre-financing payment of an amount of up to 7% of the loan support ▌ to be provided under Chapter III.

3. ▌The Commission may make the payment of pre-financing after the approval of the Plan referred to in Article 19 and the entry into force of the loan agreement referred to in Article

21. The payments shall be made subject to the available funding on capital markets referred to in Article 21(1) and to the respect of the precondition set out in Article 5.

4. The Commission shall decide on the timeframe for the disbursement of the pre-financing, which may be disbursed in one or more tranches.

Article 24 Exceptional bridge financing

1. Without prejudice to Article 23, if the Framework Agreement referred to in Article 9 is not signed or the Ukraine Plan referred to in Chapter III is not adopted by 31 December 2023, the Commission may decide to provide limited, exceptional support to Ukraine in the form of loans for a period of up to six months starting from 1 January 2024, ▌ subject to having made satisfactory progress on the preparation of the Ukraine Plan, in order to support the macro-financial stability of the country, subject to conditions to be agreed in a Memorandum of Understanding (MoU) between the Commission and Ukraine, to the respect of the precondition mentioned in Article 5, to compliance with Article 6 and to available funding.

2. The MoU shall in particular establish policy conditions, indicative financial planning and the reporting requirements, proportionate to the duration of the financing. The policy conditions shall include commitment to the principles of sound financial management with focus on anti-corruption and anti-money laundering, as well as measures to improve revenue management.

The MoU shall be adopted and amended in accordance with the examination procedure referred to in Article 39.

1b. The amount of such support shall not exceed EUR 1 500 000 000 on a monthly basis. The Commission shall enter into a financing or loan agreement with Ukraine, which shall comply as appropriate with Articles 10 and 21, respectively.

Article 25

Rules on payments, withholding and reduction of non-repayable financial support and loans

1. Payments of the non-repayable financial support and of the loan to Ukraine under this Article shall be made in accordance with the budget appropriations and subject to the available funding. Payments shall be made in instalments. An instalment may be disbursed in one or more tranches.

2. Every quarter, Ukraine shall submit a duly justified request for payment of the non- repayable financial support and of the loan support with a view to the Commission paying the relevant non-repayable financial support and loan support, on the basis of the assessment described in paragraph 3.

3. The Commission shall assess without undue delay whether Ukraine has met the precondition in line with Article 5 and has achieved satisfactory fulfilment of the qualitative and quantitative steps set out in the Council implementing decision referred to in Article 19(1). The satisfactory fulfilment of qualitative and quantitative steps shall presuppose that measures related to the steps for which Ukraine had achieved satisfactory fulfilment have not been reversed by Ukraine. The Commission may be assisted by experts.

4. Where the Commission makes a positive assessment of the satisfactory fulfilment of qualitative and quantitative steps, it shall submit to the Council without undue delay a proposal for a Council implementing decision establishing the satisfatory fulfilment of the conditions for payments referred to in paragraph 3. The Council shall act, as a rule, within three weeks of receiving the Commission’s proposal. The Council, acting by qualified majority, may amend the Commission’s proposal and adopt the amended text by means of an implementing decision. On the basis of the Council implementing decision, the Commission shall adopt a decision authorising the disbursement of the part of the non-repayable financial support and of the loan corresponding to such steps.

5. Where the Commission makes a negative assessment of the fulfilment of qualitative and quantitative steps as per the indicative timetable, it shall inform the Council and the Parliament without undue delay and the payment of the non-repayable financial support and of the loan corresponding to such steps shall be withheld. The payment withheld shall only be disbursed, in accordance with paragraph 4, when Ukraine has duly justified, as part of a subsequent payment request, that it has taken the necessary measures to ensure satisfactory fulfilment of the qualitative and quantitative steps.The Commission shall develop a methodology for handling partial fulfilment of steps as guidance.

6. Where the Commission considers that Ukraine has not taken the necessary measures within a period of twelve months from the initial negative assessment referred to in paragraph 5, the Commission shall notify Ukraine thereof. Ukraine may present its observations within two months from the communication of the Commission’s notification. Where the Commission concludes that Ukraine has not taken the necessary measures, it shall submit a proposal for a Council impementing decision reducing the amount of the non-repayable financial support and of the loan proportionately to the part corresponding to the relevant qualitative and quantitative steps. The Council shall act, as a rule, within one month of receiving the Commission’s proposal. The Council, acting by qualified majority, may amend the Commission’s proposal and adopt the amended text by means of an implementing decision.

7. The Commission may reduce the amount of the non-repayable financial support, and recover any amount due to the Union budget, including by offsetting in line with Article 102 of Regulation (EU, Euratom) 2018/1046, or reduce the amount of the loan to be disbursed to Ukraine as referred to in paragraph 4, or ask for early repayment of the loan, in the event of identified cases of, or serious concerns in relation to, irregularities, fraud, corruption and conflicts of interests affecting the financial interests of the Union that have not been corrected by Ukraine, or a serious breach of an obligation resulting from agreements referred to in Articles 9, 10 and 21, including on the basis of the reports of the Audit Board referred to in Article 34 or information provided by OLAF.

8. By way of derogation from Article 116(2) of Regulation (EU, Euratom) 2018/1046, the payment deadline as referred to in point (a) of paragraph 1 of Article 116, of Regulation (EU, Euratom) 2018/1046 shall start running from the date of the communication of the decision authorising the disbursement to Ukraine pursuant to paragraph 4 of this Article.

9. Article 116(5) of Regulation (EU, Euratom) 2018/1046 shall not apply to payments made pursuant to this Article and to Article 23 of this Regulation.

Article 26

Transparency with regard to persons and entities receiving funding for the implementation of the Plan

1. Ukraine shall publish up-to-date data on persons and entities including contractors, receiving amounts of funding exceeding the equivalent of EUR 100 000 cumulative over the period of 4 years, for the implementation of reforms and investments specified in the Ukraine Plan referred to in this Chapter. ▌

2. For persons and entities referred to in paragraph 1, the following information shall be published in machine-readable format on a webpage, in order of total funds received, having due regard for the requirements of confidentiality and security, in particular the protection of personal data:

(a) in the case of a legal person, the recipient’s full legal name and VAT identification number or tax identification number, where available, or another unique identifier established at the national level;

(b) in the case of a natural person, the first and last name(s) of the recipient;

(c) the amount received by the recipient, as well as reforms and investments under the Ukraine Plan this amount contributes to implement.

3. The information referred to in paragraph 2 shall not be published where disclosure risks threatening the rights and freedoms of the persons or entities concerned or seriously harming the commercial interests of the recipients.Such information shall be made available to the European Commission and to the Audit Board.

4. Ukraine shall transmit electronically to the Commission at least once a year the data on the persons and entities referred to in paragraph 1 ▌, in a machine-readable format to be defined in the Framework agreement referred to in Article 9(4), point (i).

CHAPTER IV

Pillar II: Ukraine Investment Framework

Article 27 Scope and structure

1. *Under the Ukraine Investment Framework the Commission shall provide the Union support to Ukraine in the form of budgetary guarantee, financial instruments or blending operations, including technical assistance linked to the implementation of Pillar II.

2. *The Commission shall be supported by an steering board in the implementation of the Ukraine Investment Framework. The steering board will adopt its rules of procedure ▌

3. The steering board of the Ukraine Investment Framework shall comprise representatives of the Commission and of each Member State. Ukrainian authorities shall be invited to attend board meetings as appropriate. The European Parliament and the Verkhovna Rada shall have observer status. Counterparts implementing the Ukraine Guarantee and financial instruments supported by the Ukraine Investment Framework, may be given observer status. The Commission shall chair the steering board.

4. The steering board shall provide strategic and operational guidance and support to the Commission on different aspects including risk profiles, the choice of support modalities, the design of financial products to be deployed, and on non-eligible sectors. It shall formulate opinions on the use of Union support through the Ukraine Guarantee, financial instruments and blending operations including the concessionality levels, taking into account the relevant risk assessments. The steering board shall, when possible, adopt opinions by consensus.

5. The Commission shall ensure that Union support provided under the Ukraine Investment Framework is consistent with the Ukraine Plan and contributes to its implementation, and complementary to Union support to Ukraine agreed under other Union programmes and instruments, taking into account the promotion of corporate social responsibility and responsible business conduct, including in particular by the respect of internationally agreed guidelines, principles and conventions on investment.

5a. At least 15 % of the guarantees provided under the Ukraine Investment Framework shall be used to support Micro-, Small - and Medium-sized Enterprises, as defined in Article 2 of the Annex to Recommendation 2003/361/EC, including start-ups, including through financial tools which have as an objective to reduce the-risk involved in the lending operations of local Ukrainian banks.

6. For the purpose of Article 209(2), point (h), of Regulation (EU, Euratom) 2018/1046, the requirement on ex ante evaluations of financial instruments and budgetary guarantees shall be met by the positive assessments of the Ukraine Plan by the Commission, referred to in Article 19(2) of this Regulation.

7. The support under the Ukraine Investment Framework shall in particular serve the implementation of the Ukraine Plan referred to in Chapter III, while complementing the financing sources established in this Regulation.

7a. At least 20 % of the overall amount corresponding to support under the Ukraine Investment Framework and to investments under the Ukraine Plan shall contribute, in conditions of a war-torn country, to climate change mitigation and adaptation, environmental protection, including biodiversity conservation, and to the green transition.

8. The Commission shall report annually on the implementation of the support under the Ukraine Investment Framework in accordance with Articles 41(4) and (5) of Regulation (EU, Euratom) 2018/1046. For that purpose, each counterpart of the Ukraine Guarantee and each entrusted entity implementing financial instruments shall provide on an annual basis the information necessary to allow the Commission to comply with its reporting obligations.

Article 28

Additional contributions to the Ukraine Guarantee and to the financial instruments

1. Member States, third countries, and third parties may contribute to the Ukraine Guarantee, and to the financial instruments set up under the Ukraine Investment Framework. Contributions to the Ukraine guarantee shall be made in accordance with Article 218(2) of Regulation (EU, Euratom) 2018/1046.

2. The contributions to the Ukraine Guarantee shall increase the amount of the Ukraine Guarantee without leading to additional contingent liabilities for the Union.

3. For all contributions referred to in paragraph 1, a contribution agreement shall be concluded between the Commission, on behalf of the Union, and the contributor. It shall contain, in particular, provisions concerning the payment conditions. The Commission shall inform the European Parliament and the Council simultaneously and without delay of the concluded contribution agreements.

Article 29

Implementation of the Ukraine Guarantee and the financial instruments

1. The Ukraine Guarantee and financial instruments supported under the Ukraine Investment Framework shall be implemented in indirect management pursuant to Article 62(1), first subparagraph, point (c), of Regulation (EU, Euratom) 2018/1046.

2. The eligible counterparts for the purposes of the Ukraine Guarantee and the eligible entrusted entities for the purpose of financial instruments shall be those identified in Article 208(4) of Regulation (EU, Euratom) 2018/1046, including those from third countries contributing to the Ukraine Guarantee in accordance with Article 28 of this Regulation. In addition, by way of derogation from Article 62(1), point (c), of Regulation (EU, Euratom) 2018/1046, bodies governed by private law of a Member State, or a third country which has contributed to the Ukraine Guarantee in accordance with Article 28 of this Regulation, and which provide adequate assurance of their financial and operational capacity shall be eligible for the purpose of the Ukraine Guarantee.

3. The Commission shall ensure the effective, efficient, needs-based and fair use of available resources among eligible counterparts and, where relevant, eligible entrusted entities, in an inclusive approach, while promoting cooperation between them and taking due account of their capacities, added value, experience and risk-taking capacity.

4. The Commission shall ensure a fair and transparent treatment for all eligible counterparts and all eligible entrusted entities and shall ensure that conflicts of interest are avoided throughout the implementation period of the Ukraine Investment Framework. In order to ensure complementarity, the Commission may request any relevant information from eligible counterparts for the purpose of the Ukraine guarantee or from eligible entrusted entities for the purpose of financial instruments about their non-EU-supported operations.

Article 30 Ukraine Guarantee

1. The Ukraine Guarantee of EUR 7 800 000 000 in current prices shall be established to guarantee operations supporting the objectives of the Facility. The Ukraine Guarantee shall be independent and autonomous from the External Action Guarantee established by Regulation (EU) 2021/947 and shall be granted as an irrevocable, unconditional and on demand guarantee in accordance with Article 219(1) of Regulation (EU, Euratom) 2018/1046.

2. The Ukraine Guarantee shall be used to cover the risks for the following types of operations aiming at supporting sovereign, sub-sovereign, non-commercial and commercial entities, and the private sector:

(a) loans, including local currency loans;

(b) guarantees;

(c) counter-guarantees;

(d) capital market instruments;

(e) any other form of funding or credit enhancement, insurance, and equity or quasi- equity participations.

3. On behalf of the Union, the Commission shall conclude with eligible counterparts Ukraine Guarantee agreements until 31 December 2027. The Ukraine guarantee may be granted gradually.Upon their request, those agreements shall be made available to the European Parliament and the Council, taking into account the protection of confidential and commercially sensitive information.

The Commission shall provide information on the signature of each Ukraine Guarantee agreement in the reports referred to in Article 27(8). Upon their request, those agreements shall be made available to the European Parliament and the Council without undue delay, taking into account the protection of confidential and commercially sensitive information.

3a. When concluding Ukraine Guarantee agreements, the Commission shall take due account of the advice and guidance of the steering board and of the technical risk assessment group as referred to in paragraph 11.

4. The Ukraine Guarantee agreements shall contain, in particular:

(a) detailed rules on the coverage, estimated annual investments, requirements, eligibility, and procedures;

(b) detailed rules on the provision of the Ukraine Guarantee, including its arrangements on the coverage and its defined coverage of portfolios and of projects of specific types of instruments, as well as a risk analysis of projects and project portfolios, including at sectoral, regional, and national levels;

(c) a reference to the objectives and purpose of the Facility, an assessment of the needs and an indication of the expected results;

(d) the remuneration of the Ukraine Guarantee, which shall be set on concessional terms reflecting the specific situation of war-damaged Ukraine, while taking into account the respective risk profiles of the investment programmes in order to ensure a level playing field;

(e) requirements for the use of the Ukraine Guarantee, including payment conditions, such as specific time frames, interest to be paid on due amounts, expenses and recovery costs and possibly necessary liquidity arrangements;

(f) claims procedures, including, but not limited to, triggering events and waiting periods, and procedures regarding the recovery of claims;

(g) monitoring, reporting, transparency and evaluation obligations;

(h) clear and accessible complaints procedures for third parties that could be affected by the implementation of projects supported by the Ukraine Guarantee.

4a. The EIB Group shall implement operations in Ukraine, aiming at supporting Ukrainian sovereign entities and non-commercial sub-sovereign entities, covered with an indicative dedicated minimum amount of the Ukraine Guarantee of 25% of the amount referred to in paragraph 1 of this Article, which shall be allocated in accordance with the procedures laid down in this Regulation.

4b. The dedicated amount of the Ukraine Guarantee referred to in the first subparagraph shall be available for supporting EIB Group operations which have been approved by the relevant EIB Group Board by 31 December 2025. After that date, the remaining dedicated amount of the Ukraine Guarantee shall be available for all types of operations referred to in the first subparagraph to all eligible counterparts subject to Article 30(3).

5. The Commission may use up to 30% of the amount referred in paragraph 1 of this Article to increase the amounts of the guarantee provided through External Action Guarantee agreements concluded pursuant to Article 38 of Regulation (EU) 2021/947 subject to the following:

(a) for the purpose of this paragraph, the Ukraine Guarantee shall be implemented by an amendment or an addendum to agreements concluded pursuant to Article 38 of Regulation (EU) 2021/947 with the eligible counterparts selected pursuant to Article 35 of Regulation (EU) 2021/947 increasing the guarantee amount under those agreements, to be signed within four months from the entry into force of this Regulation;

(b) the eligible counterparts shall use the Ukraine Guarantee under this paragraph solely for the support of the implementation of the operations in Ukraine and only guarantee calls from operations in Ukraine are eligible for coverage by the Ukraine Guarantee under this paragraph;

(c) by way of derogation from the second subparagraph of Article 36(1) of Regulation (EU) 2021/947 the operations covered by the Ukraine Guarantee under this paragraph shall constitute a separate portfolio of Ukraine Guarantee and shall not be taken into account for the purposes of calculating the 65% coverage referred to in Article 36(1) of Regulation (EU) 2021/947;

(d) the risk sharing in the separate portfolio of the Ukraine Guarantee shall ensure alignment of interest between the Commission and the eligible counterpart in accordance with Article 209(2)(e) of Regulation (EU, Euratom) 2018/1046 and the counterpart shall contribute with their own resources to this portfolio in accordance with Article 219(4) of Regulation (EU, Euratom) 2018/1046;

(e) the counterparts shall establish separate accounting and reporting for the implementation of the Ukraine Guarantee under this paragraph;

(f) Article 31 shall apply to the provisioning of the Ukraine Guarantee under this paragraph. The provisioning shall be exclusively used for coverage of losses under Ukraine Guarantee. The provisioning established under Article 31(5) of Regulation (EU) 2021/947 shall not be used for the coverage of the operations under the Ukraine Guarantee.

6. The eligible counterpart shall approve financing and investment operations in accordance with its own rules and procedures and in compliance with the Ukraine Guarantee agreement.

7. The maximum period allowed for eligible counterparts to sign contracts with financial intermediaries or final recipients shall be three years after the conclusion of the relevant Ukraine Guarantee agreement, with possible extensions when an additional amount of guarantee is granted and the guarantee agreement is amended.

8. The Ukraine Guarantee may cover:

(a) for debt instruments, the principal and all interests and amounts due to the selected eligible counterpart, but not received by it in accordance with the terms of the financing operations after an event of default has occurred;

(b) for equity investments, the amounts invested and their associated funding costs;

(c) for other financing and investment operations referred to in paragraph 2, the amounts used and their associated funding costs;

(d) all relevant expenses and recovery costs related to an event of default, unless deducted from recovery proceeds.

9. For the purposes of the Commission’s accounting and its annual reporting of the risks covered by the Ukraine Guarantee to the Council and the European Parliament, and in accordance with Article 209(4) of Regulation (EU, Euratom) 2018/1046, eligible counterparts with which an Ukraine Guarantee agreement has been concluded shall provide the Commission and the Court of Auditors annually with the financial statements, audited by an independent external auditor, containing, among others, information on:

(a) the risk assessment of financing and investment operations of the eligible counterparts, including information on Union liabilities measured in compliance with the accounting rules referred to in Article 80 of Regulation (EU, Euratom) 2018/1046 and International Public Sector Accounting Standards;

(b) the outstanding financial obligation for the Union arising from the Ukraine Guarantee provided to the eligible counterparts and their financing and investment operations, broken down by individual operation.

10. The condition set out in Article 219(4) of Regulation (EU, Euratom) 2018/1046 on contributions with own resources shall apply to each eligible counterpart allocated with a budgetary guarantee under the Ukraine Investment Framework on a portfolio basis.

11. The European Fund for Sustainable Development Plus+ (EFSD+) risk management framework referred to in Articles 33(7) and the technical risk assessment group referred to in Article 33(8) of Regulation (EU) 2021/947 shall apply to the Ukraine Guarantee taking into account the objectives and principles of the Facility. The risk assessments for the Ukraine Guarantee shall be independent from the risk assessments of the EFSD+. The overall risk profile of operations covered by the Ukraine Guarantee may be different from the overall risk profile of the External Action Guarantee. The Commission shall ensure that the risk entailed by the guaranteed operations does not exceed the capacity of the Union budget to bear those risks as determined by the available budgetary resources and the provisioning rate referred to in Article 31(1) of this Regulation. In the framework of the reporting referred to in Article 27(8) of this Regulation, the Commission shall report annually on measures taken in this regard to the European Parliament and the Council.

Article 31 Provisioning

1. The provisioning rate for the Ukraine Guarantee shall initially be 70%.

By derogation from Article 211(2), second sentence of the second subparagraph of Regulation (EU, Euratom) 2018/1046, the provisioning shall be constituted until 31 December 2027 and be equal to the amount of provisioning corresponding to the Ukraine guarantee granted and may be constituted gradually to reflect the progress in selection and implementation of the financing and investment operations supporting the objectives of the Facility.

2. The provisioning rate shall be reviewed at least once a year following the entry into force of this Regulation. The Commission shall inform the European Parliament and the Council of the outcome of this review.

3. The Commission is empowered to adopt a delegated act in accordance with Article 38 to amend the provisioning rate while applying the criteria set out in Article 211(2) of the Regulation (EU, Euratom) 2018/1046, and, where relevant, to increase or decrease the maximum amount of guarantee referred to in Article 30(1) of this Regulation by up to 30%. The Commission may only increase the maximum amount of the guarantee if the provisioning rate is decreased. Without prejudice to Article 30(3), the Commission may provide that the increased amount of the guarantee shall be available for signature of guarantee agreements gradually over three years.

4. By way of derogation from Article 213 of Regulation (EU, Euratom) 2018/1046, the effective provisioning rate shall not apply to the provisioning set aside in the common provisioning fund in respect of the Ukraine Guarantee.

Article 31a

Grievance and redress mechanism

1. In view of possible grievances of third parties, including communities and individuals affected by projects supported by the Ukraine Guarantee, the Commission and the European Union delegation in Ukraine shall publish on their websites direct references to the complaints mechanisms of the relevant counterparts that have concluded Guarantee agreements with the Commission. The Commission shall also provide the possibility of directly receiving complaints related to the treatment of grievances by eligible counterparts. The Commission shall take information received through any complaints into account in view of future cooperation with those counterparts.

3. 1. Whenever possible, taking into account the protection of confidential and commercially sensitive information, the Commission shall publish on its webportal information on financing and investment operations and the essential elements of the Ukraine Guarantee agreements, including information on the legal identity of eligible counterparts, expected development benefits and complaints procedures.

5. 1. In accordance with their transparency policies and Union rules on data protection and on access to documents and information, eligible counterparts shall make publicly available on their websites information relating to all financing and investment operations covered by the Ukraine Guarantee, in particular information relating to the manner in which those operations contribute to the achievement of the objectives and requirements of this Regulation. Where possible, such information shall be broken down at project level. Such information shall take into account the protection of confidential and commercially sensitive information. Eligible counterparts shall also publicise Union support in all information that they publish on financing and investment operations covered by the Ukraine Guarantee in accordance with this Regulation.

CHAPTER V

Pillar III: Union accession assistance and support measures

Article 32

EU accession assistance and support measures

1. Assistance under this Chapter shall support Ukraine in attaining the objectives set out in Article 3. In particular, assistance provided under this Chapter shall aim to support Ukraine’s progressive alignment to Union ‘acquis▌’ with a view to future Union

membership, thereby contributing to mutual stability, security, peace and prosperity. Such support shall include strengthening of the rule of law, including the independence of judiciary, democracy, respect of human rights and fundamental freedoms, fight against corruption, reinforcing of the effectiveness of public administration, institutional capacities, decentralisation, and supporting transparency, structural reforms, sectoral policies and good governance at all levels. Such support should also contribute to the implementation of the Plan.

2. Assistance under this Chapter shall also be provided to ensure that capacities of stakeholders, including social partners, civil society organisations and local and regional authorities are strengthened, including through twinning and town twinning, as well as through promotion of peer-to-peer cooperation and programs embedded in partnerships between European and Ukrainian cities and regions, where relevant.

3. Assistance under this Chapter shall also strengthen capacities for conflict prevention, peacebuilding and address pre- and post-crisis needs, including through, confidence- building measures and processes that promote justice, truth-seeking, comprehensive post- conflict rehabilitation for an inclusive, peaceful society, as well as collection of evidence of crimes committed during the war. Funding for initiatives and bodies involved in supporting and enforcing international justice in Ukraine may be provided under this Chapter.

4. Assistance under this Chapter shall support the creation and strengthening of Ukrainian authorities responsible for ensuring appropriate use of funds, audit and effective fight against mismanagement of public funding, in particular fraud, all forms of corruption including high level corruption, conflict of interests and irregularities incurred in relation to any amount spent to achieve the objectives of the Facility, as well as to support deoligarchisation efforts.

5. The functioning of the Audit Board as referred to in Article 34 shall be funded under this Chapter.

6. The borrowing costs subsidy referred to in Article 22 shall be funded under this Chapter.

6a. For the years 2024-2027, the Facility shall fund under this Chapter:

(a) the provisioning of the budgetary guarantees, which is not covered by the financial envelope referred to in Article 50 of Regulation (EU) 2021/947 in accordance with the rules set out in the third sentence of Article 31(8) of that Regulation, for the covered external lending mandate financial liabilities in Ukraine under Article 12(1) of Decision (EU) 2022/1628 related to loan amounts disbursed after 15 July 2022 of up to EUR 1.586 billion;

(b) the interest rate subsidy for macro-financial assistance loans under

(i) Decision (EU) 2022/1201, by derogation from Article 1(3) thereof;

(ii) Decision (EU) 2022/1628 by derogation from Article 6(3) thereof;

(c) by way of derogation from Article 31(1) of Regulation (EU) 2021/947, the paid-in provisioning of 9% for financial assistance which has not yet been committed at the end of 2023, referred to in Article 11(1) of Decision (EU) 2022/1628.

CHAPTER VI

Protection of the financial interests of the Union

Article 33

Protection of the financial interests of the Union

1. In implementing the Facility, the Commission and Ukraine shall take all the appropriate measures to protect the financial interests of the Union, taking into account the principle of proportionality and the specific conditions under which the Facility will operate, the precondition set out in Article 5(1) and conditions set out in the framework agreement and specific financing or loan agreements, in particular regarding the prevention, detection and correction of fraud, corruption, or any other illegal activity affecting the Union's financial interests, conflicts of interests and irregularities, as well as the investigation and prosecution of offences affecting the funds provided under the Facility. Ukraine shall commit to progressing towards effective and efficient management and control systems and ensure that amounts wrongly paid or incorrectly used can be recovered. Ukraine shall also commit to ensure that the competent Ukrainian authorities treat, without delay, mutual legal assistance requests and extradition requests by the EPPO and Member

States’ competent authorities concerning criminal offences affecting the funds under the Facility.

2. The agreements referred to in Articles 9, 10 and 21 shall provide for the obligations of Ukraine:

(a) to regularly check that the financing provided has been used in accordance with the applicable rules, in particular regarding the prevention, detection and correction of fraud, corruption, conflicts of interests and irregularities or any other illegal activity affecting the Union’s financial interests;

(aa) to protect whistleblowers;

(b) to take appropriate measures to prevent, detect and correct fraud, corruption, conflicts of interests and irregularities, as well as to investigate and prosecute criminal offences affecting the financial interests of the Union, to detect and avoid double funding and to take legal actions to recover funds that have been misappropriated, including in relation to any measure for the implementation of reforms and investment projects under the Ukraine Plan and to take appropriate measures to treat mutual legal assistance requests by the EPPO and Member

States’ competent authorities concerning criminal offences affecting the funds under the Facility, without delay;

(c) to accompany a request for payment as set out in Chapter III by a declaration of assurance that the funds were used in accordance with the principle of sound financial management and for their intended purpose and managed appropriately in particular in accordance with Ukrainian rules complemented by international standards, on prevention, detection and correction of irregularities, fraud, corruption and conflicts of interests;

(d) for the purpose of paragraph 1 of this Article, in particular for checks on the use of funds in relation to the implementation of reforms and investments of the Ukraine Plan, to ensure the collection of, and access to, in compliance with EU data protection principles and with applicable data protection rules, adequate data on persons and entities receiving funding, including beneficial ownership information, for the implementation of measures of the Ukraine Plan under chapter III of the Facility;

(e) to expressly authorise the Commission, OLAF and the Court of Auditors ▌ to exert their rights as provided for in Article 129(1) of Regulation (EU, Euratom) 2018/1046, in application of the principle of proportionality. The competent Ukrainian authorities shall report to the EPPO any criminal conduct affecting the funds under the Facility that may fall within its competence.

3. The Commission shall strive to make available to Ukraine an integrated and interoperable information and monitoring system including a single data-mining and risk-scoring tool to access and analyse the relevant data, in compliance with EU data protection principles and with applicable data protection rules, including the data listed in paragraph 2(d). Where such a system is available, Ukraine shall use and feed the relevant data into the system, including with support referred to under Chapter V.

4. The agreements referred to in Articles 9, 10 and 21 shall also provide for the right of the Commission to reduce proportionately the support provided under the Facility and recover any amount spent to achieve the objectives of the Facility or to ask for early repayment of the loan, in cases of irregularities, fraud, corruption and conflicts of interests affecting the financial interests of the Union that have not been corrected by Ukraine, or of a serious breach of an obligation resulting from such agreements. When deciding on the amount of the recovery and reduction, or the amount to be repaid early, the Commission shall respect the principle of proportionality and shall take into account the seriousness of the irregularity, fraud, corruption or conflict of interests affecting the financial interests of the Union, or of a breach of an obligation. Ukraine shall be given the opportunity to present its observations before the reduction is made or early repayment is requested.

5. Persons and entities implementing funds under the Facility shall report any suspected or actual cases, of fraud, corruption, conflict of interests and irregularities or any other illegal activities affecting financial interests of the Union without delay, to the Audit Board referred to in Article 34, the Commission, OLAF, and, where applicable, the EPPO in cases that may fall within its competence. They shall be able to effectively report these cases through the appropriate channels.

Article 34 Audit Board

1. The Commission shall establish an Audit Board before the submission by Ukraine of the first payment request.

2. The Audit Board shall be composed of independent members appointed by the Commission. Representatives of Member States and other donors may be invited by the Commission to participate in the activities of the Audit Board. Other donors contributing to the Facility may be invited by the Commission to appoint observers to the Audit Board.

3. The Audit Board shall exercise its functions in complete objectivity and operate in compliance with best applicable international practices and standards. It shall act without prejudice to the powers of the Commission, OLAF, the Court of Auditors and ▌the EPPO.

4. The Audit Board shall ensure regular dialogue and cooperation with the European Court of Auditors, as well as with the Accounting Chamber of Ukraine and other institutions, as relevant.

5. In carrying out their duties, the Audit Board, its members and its staff shall neither seek nor take instructions from the Ukrainian government or any institution, body, office or agency. Strong guarantees of independence shall apply for the selection of its staff, management and budget.

6. The Audit Board shall assist the Commission in fighting mismanagement of Union funding under the Facility and, in particular fraud, corruption, conflict of interests and irregularities incurred in relation to any amount spent to achieve the objectives of the Facility.

7. For that purpose, the Audit Board shall regularly report to the Commission, and transmit to the Commission without delay any information it obtains or is made aware of, on any identified cases of, or serious concerns in relation to, mismanagement of public funding incurred in relation with any amount spent to achieve the objectives of the Facility. The Commission shall keep the European Parliament and the Council timely informed of the findings and recommendations of the Board.

In addition, the Audit Board shall adopt recommendations to Ukraine on all cases where in its views competent Ukrainian authorities have not taken the necessary steps to prevent, detect and correct fraud, corruption, conflict of interests and irregularities that have affected or seriously risk affecting the sound financial management of the expenditure financed under the Facility and in all cases where it identifies weaknesses affecting the design and functioning of the control system put in place by Ukrainian authorities. Ukraine shall implement such recommendations without undue delay, or provide a justification on why it has not done so.

The reports of, and information from, the Audit Board shall also be sent to OLAF and may be shared with the relevant Ukrainian authorities, especially in case they need to take steps to prevent, detect and correct fraud, corruption, conflicts of interests, irregularities or any other illegal activity affecting the financial interests of the Union, as well as to investigate and prosecute offences affecting the financial interests of the Union.

8. The Audit Board shall have access to information, databases and registries required to carry out its tasks. The framework agreement referred to in Article 9 shall define rules and details for the access to relevant information by the Audit Board and the provision of relevant information by Ukraine to the Audit Board.

10. The functioning of the Audit Board shall be funded under Chapter V.

Article 34a Ukraine Facility Dialogue

1. The Commission shall hold, at least every four months, a dialogue with the competent committees of the European Parliament, as relevant, to discuss:

(a) the state of progress in the implementation of the Ukraine Facility, in particular the Ukraine Plan and related investments and reforms, including reforms supporting Ukraine’s progressive alignment to Union rules, values, standards, policies and practices (‘acquis’);

(b) the assessment of the Ukraine Plan, including a possible negative assessment;

(c) the main findings of the review report referred to in Article 36(4);

(d) the main findings of the review report referred to in Article 34(7);

(f) payment, withholding and reduction procedures, where applicable, including any observation presented to ensure a satisfactory fulfilment of the conditions; and

(g) any other relevant information provided by the Commission to the European Parliament in relation to the implementation of the Facility.

2. The European Parliament may express its views in resolutions as regards the matters referred to in paragraph 1.

3. The Commission shall take into account any elements arising from the views expressed through the Ukraine Facility Dialogue, including the resolutions from the European Parliament, where relevant.

CHAPTER VII

Work programmes, monitoring, reporting and evaluation

Article 35 Work programmes

1. Assistance under the Facility shall be implemented by work programmes referred to in Article 110 of Regulation (EU, Euratom) 2018/1046. Implementing acts adopting work programmes shall be adopted in accordance with the examination procedure referred to in Article 39, with the exception of operations provided on the basis of Articles 22(2) and 32(7).

2. Assistance under Chapter V of the Facility can also be implemented by specific work programmes when the implementation of this assistance does not require the conclusion of agreements referred to in Articles 9 and 10.

Article 36 Monitoring and reporting

1. The Commission shall monitor the implementation of the Facility and assess the achievement of the objectives set out in Article 3. The monitoring of implementation shall be targeted and proportionate to the activities carried out under the Facility.

2. The financing agreements and loan agreement referred to in Article 10 and 21 shall set out rules and modalities for Ukraine to report to the Commission for the purpose of paragraph 1 of this Article. For the purpose of this reporting, Ukraine should draw on the regular consultation with the Verkhovna Rada, and other stakeholders including regional, local, urban and other public authorities, as well as with social partners and civil society organisations as per Article 17 (3).

3. The Union support provided under the Ukraine Investment Framework shall be reported in accordance with Article 27(8).

4. The Commission shall provide simultaneously to the European Parliament and the Council an annual report on progress towards the achievement of the objectives of this Regulation, complemented by quarterly presentations on the state of play of the implementation of the Facility.

5. The Commission shall provide the report referred to in paragraph 4 to the Committee referred to in Article 39.

Article 37 Evaluation of the Facility

1. By 31 December 2026, the Commission shall provide the European Parliament and the Council with an independent interim evaluation report on the implementation of the Facility, and by 31 December 2031 with an independent ex post evaluation report.

1a. The evaluation report shall, in particular, assess to which extent the objectives have been achieved, the efficiency of the use of the resources, the protection of the Union’s financial interests and the European added value. It shall also consider the continued relevance of all objectives and actions.

1b. Where appropriate, the Commission shall put forward proposals taking into account the results of the evaluation.

1c. The ex post evaluation report shall consist of a global assessment of the Facility and shall, to the extent possible, include information on its impact in the long term.

2. This ex-post evaluation shall make use of the good practice principles of the OECD Development Assistance Committee, seeking to ascertain whether the objectives have been met and to formulate recommendations with a view to improving future actions.

The Commission shall communicate the findings and conclusions of this ex-post evaluation accompanied by its observations and follow-up, to the European Parliament, the Council and the Member States. This ex-post evaluation may be discussed at the request of the European Parliament, the Council or the Member States. The results shall feed into the preparation of programmes and actions and resource allocation. These evaluations and follow-up shall be made publicly available.

The Commission shall, to an appropriate extent, associate all relevant stakeholders, including beneficiaries, social partners, civil society organisations and local authorities in the evaluation process of the Union’s funding provided under this Regulation, and may, where appropriate, seek to undertake joint evaluations with the Member States and other partners with close involvement of Ukraine.

CHAPTER VIII

Final provisions

Article 38 Exercise of delegation

1. The power to adopt delegated acts shall be conferred on the Commission subject to the conditions laid down in this Article.

2. The power to adopt delegated acts referred to in Article 20a and 31 shall be conferred on the Commission for an indeterminate period from seven days after the entry into force of this Regulation.

3. The delegations of power referred to in Article 20a and 31 may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect on the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.

4. Before adopting a delegated act, the Commission shall consult experts designated by each Member State in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making.

5. As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council.

6. A delegated act adopted pursuant to Articles 20a and 31 shall enter into force only if no objection has been expressed either by the European Parliament or by the Council within a period of two months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or of the Council.

Article 39 Committee procedure

1. The Commission shall be assisted by a committee. That committee shall be a committee within the meaning of Regulation (EU) No 182/2011.

2. Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply.

2a. For implementing acts referred to in Article 11(2), where the committee delivers no opinion, the Commission shall not adopt the draft implementing act and the third subparagraph of Article 5(4) of Regulation (EU) No 182/2011 shall apply. Where the opinion of the committee is to be obtained by a written procedure, that procedure shall be terminated without result when, within the time-limit for delivery of the opinion, the chair of the committee so decides or a simple majority of committee members so request.

Article 40

Information, communication and publicity

1. The Commission may engage in communication activities to ensure the visibility of the Union funding for the financial support envisaged in the Ukraine Plan, including through joint communication activities with Ukraine. The Commission may, as appropriate, ensure that support under the Facility is communicated and acknowledged through a funding statement.

2. The recipients of Union funding shall acknowledge the origin and ensure the visibility of the Union funding, including, where applicable, by displaying the emblem of the Union and an appropriate funding statement that reads ‘funded by the European Union – Ukraine Facility’ or ‘co-funded by the European Union – Ukraine Facility’, in particular when promoting the actions and their results, by providing coherent, effective and proportionate targeted information to multiple audiences, including the media and the public.

3. The Commission shall implement information and communication actions relating to the Facility, to actions taken pursuant to the Facility and to the results obtained. Financial resources allocated to the Facility shall also contribute to the corporate communication of the political priorities of the Union, insofar as they are related to the objectives referred to in Article 3.

3a. Information, communication and publicity shall be provided in accessible format.

Article 41 Entry into force

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels,

For the European Parliament For the Council

The President The President

Joint declaration by the European Parliament and the Council on the appropriate budgetary nomenclature for the Ukraine Facility

“Without prejudice to the prerogatives of the budgetary authority in the framework of the annual budgetary procedure and to the Commission’s powers to establish the draft budget, the European Parliament and the Council invite the Commission to propose the creation of at least one budget line for Pillar I of the Ukraine Facility, two budget lines under Pillar II, including for the provisioning of the Common Provisioning Fund for the Ukraine Guarantee established under Chapter IV of the Ukraine Facility Regulation, three budget lines under Pillar III for the Union accession assistance and other measures, the borrowing costs subsidies and the provisioning of the Common Provisioning Fund – Legacy, and a specific budget line for technical and administrative assistance expenditure for the implementation of the Facility.”

Joint declaration of the European Parliament, the Council and the Commission relating to the exceptional nature of the Ukraine Facility

The European Parliament, the Council and the Commission share the view that the Ukraine Facility is an exceptional medium-term instrument of high geopolitical importance adapted to the uncertainty and unprecedented challenges of supporting a country at war with direct implications for the security of the Union. As a result, the Ukraine Facility provides a balance between flexibility and programmability of the Union´s response to address Ukraine´s financing gap, recovery, reconstruction and modernisation needs, while supporting Ukraine´s reform effort as part of its accession path to the Union. The objectives, financing and governance arrangements agreed for the Ukraine Facility respond to the exceptional and specific context and challenges in relation to which this particular Facility has been adopted.

This solution for Ukraine should not therefore be considered as a precedent for future instruments of economic assistance to third countries.