08.Jul .2022 10:30

EU bureaucracy seen blocking 1.5 billion-euro loan to Ukraine

EU bureaucracy seen blocking 1.5 billion-euro loan to Ukraine
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The executive arm of the European Union is blocking a 1.5 billion-euro loan for Ukraine as caution prevails over the country’s urgent needs.

That’s according to Bloomberg referring to two European Commission officials, Ukrinform reports.

The European Investment Bank, the EU’s lending arm, offered the loan to Kyiv to support the war-torn nation as it faces mounting war costs and revenues collapse. The commission guarantees EIB loans for operations outside the EU, with provisions usually amounting to 9% of total funding.

But in this case, the commission wants provisions at 70% of the total, as it did with a previous proposal of 1 billion euros for Ukraine, the officials said. The commission is making the demand in case the country cannot repay the funds to the markets, they said.

A commission official said the EU needs to make sure that it can absorb losses in the event of a Ukrainian default. The commission is seeking alternative solutions, which rely on EU member states or on the EIB to share part of the additional risks associated with these loans, the official added.

As reported earlier, the EU has approved a macro-financial assistance package for Ukraine worth EUR 9 billion, announced by the European Commission on May 18 and adopted by the European Council on June 24.