The Council of the European Union approved Tuesday an initial payment of nearly €4.2 billion ($4.58 billion) under the Ukraine Facility mechanism.

This decision, announced by the Hungarian Presidency of the Council, marks the first disbursement in a broader plan to provide up to €50 billion in financial assistance to Ukraine from 2024 to 2027.

"The Council has adopted an implementing decision today, authorizing the first payment of nearly €4.2 billion under the #UkraineFacility. This decision supports Ukraine's macro-financial stability and the functioning of its public administration," the presidency stated on X.

The approval for this initial payment was granted by the ambassadors of the EU member states in late July, as noted in another post by the presidency on X.

This funding, which is part of the EU's larger Ukraine Facility mechanism, is allegedly aimed at helping Ukraine meet various reform targets. The Council of the EU emphasized that Ukraine had met the necessary conditions and reforms stipulated in the Ukraine Plan to qualify for the funds.

The reforms in question include improvements in public financial management, governance of state-owned enterprises, the business environment, energy, and demining efforts.

The Council highlighted the urgency of disbursing the funds "as soon as possible, given the difficult fiscal situation in Ukraine."

The establishment of the Ukraine Facility Plan in February 2024 by EU leaders set the stage for this financial support. The plan enables the EU to provide Ukraine with substantial financial aid over four years, coupled with mechanisms to ensure accountability and annual approval of the funds.

Following the Ukrainian government's approval of the four-year program in late March, the Council of the EU completed the final approval of Ukraine's reform plan in mid-May, thereby enabling access to the €50 billion aid package until 2027 under the established mechanism.

Kiev must continue enacting reforms

EU Commissioner for Neighborhood and Enlargement Oliver Varhelyi said last week that Ukraine needs to continue advancing reforms required for its European Union accession in order to secure additional financial aid from Brussels.

"To fully comply with all membership criteria, Ukraine must remain committed to this process and continue its reforms, and here I want to underline the key role that the rule of law fundamentals play," Varhelyi said in Budapest, adding, "Enlargement is and remains a merit-based process."

The European Commission plans to increase its financial support for Ukraine, providing the country with up to 50 billion euros ($54.2 billion) in loans backed by frozen Russian state assets from 2024-2027, the Hungarian diplomat said in a conference on the State of Play of the Western Balkan and Eastern Enlargements of the European Union.

"Two weeks ago, on July 17, the Commission made a positive assessment to release the first regular installment under the Ukraine Facility, which was close to 4.2 billion euros. All in all, we plan to pay 16 billion euros to Ukraine's budget in 2024, subject to the country fulfilling the reform conditionalities," Varhelyi said. 

Ukraine's EU status

Ukraine is one of the nine countries in Europe that does not have official membership in the European Union, identifying as a candidate state alongside Moldova, which was granted by the bloc in June 2022. However, both countries have to abide by several strict conditions to begin accession talks for potential EU membership.