EU blocks €1.5 billion loan to Ukraine

By Al Mayadeen English
Source: Agencies
8 Jul 2022 16:15
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As for the reason, the European Commission cites concerns over the country’s ability to repay.

€1.5 billion loan to Ukraine blocked by EU

The European Commission’s budget unit decided to block a loan that was issued by the European Investment Bank (EIB) which amounts to €1.5 billion ($1.52 billion). This decision came as a result of concerns over Ukraine’s “financial reliability", sources told Bloomberg.

70% of the total funding is demanded by the Commission instead of the usual 9% for operations outside the EU, in case Ukraine defaults on its debt.

The Ukrainian government said earlier this month that it expected the country’s post-war reconstruction to cost $750 billion. However, according to the EIB’s estimates, Kiev may need as much as $1 trillion in outside assistance.

At the end of their debates in Germany last May, the G7 finance ministers promised to mobilize $20 billion in budgetary aid for Ukraine. However, Germany’s Finance Minister later ruled out any joint EU borrowing to help cover the cost.

According to Bloomberg, the EU has been struggling to agree on even short-term financing to enable Kiev to pay its current expenses. Last week’s proposal of €1 billion ($1 billion) stalled as Germany blocked a larger package of nearly €9 billion ($9.1 billion), the publication said.