EU to pitch in €9B for Ukraine as it weighs financing options for reconstruction

The European Commission will later on Wednesday announce €9 billion in financial assistance to help cover Kyiv’s budget gap as well as present EU capitals with options on how to finance Ukraine’s much larger reconstruction bill, including raising significant new EU debt, three EU officials briefed on the matter told POLITICO. 

The International Monetary Fund estimates that Kyiv needs €5 billion per month to keep its economy afloat, which would bring the amount needed for the next three months to €15 billion. The U.S. has signaled it will cover a third.

For its part, the Commission will chip in with €9 billion in macro financial assistance, which would take the form of concessional loans with very long maturity and require EU countries to provide guarantees, as POLITICO reported earlier this month.

The Commission will also present options on how to finance a “solidarity trust fund” for Ukraine, which is meant to cover the country’s reconstruction needs once the war ends.

The EU executive estimates those needs to cost between €500 billion and €600 billion, but the bill could grow as the war drags on. While other partners are likely to chip in, the EU is likely to take a leading role in the effort, which would also help Kyiv advance in its bid to join the bloc, the EU officials said.

Options to be unveiled in Wednesday’s communication include working together with G7 countries and financial institutions like the World Bank and the European Bank for Reconstruction and Development; calling on EU countries to increase their contribution to the bloc’s budget, which could then be disbursed as grants; and raising money on capital markets based on guarantees by EU countries, which would in turn be lent to Ukraine under favorable terms.

The EU executive is also thinking of using revenue raised by the sale of Russian frozen assets once those are confiscated by EU countries, as POLITICO reported last week. However, that proposal is still being worked on, the officials said.

EU leaders will discuss these options at their summit at the end of May, the officials said.