Law of Ukraine
"On Ratification of the Memorandum of Understanding between Ukraine as Borrower and the European Union as Lender, and the Loan Agreement between Ukraine as Borrower, the National Bank of Ukraine as Agent of Borrower, and the European Union as Lender, on Macro-Financial Assistance for Ukraine from the European Union of up to 1 Billion Euro"
Date of entry into force:
May 21, 2014
The Memorandum of Understanding between Ukraine as Borrower and the European Union as Lender (hereinafter referred to as "Memorandum") was signed on April 28 and May 13, 2014 in Brussels and on May 12, 2014 in Kyiv.
The Loan Agreement between Ukraine as Borrower, the National Bank of Ukraine as Agent of Borrower, and the European Union as Lender on Macro-Financial Assistance for Ukraine from the European Union of up to 1 Billion Euro (hereinafter referred to as "Agreement") was signed on April 24, 2014 in Luxembourg, on May 12, 2014 in Kyiv, and on May 13, 2014 in Brussels.
The Constitution of Ukraine (Article 85, paragraph 32) states that the Verkhovna Rada of Ukraine provides consent for Ukraine to be bound by international agreements. And, according to Article 9 of the Law of Ukraine "On International Agreements of Ukraine", the Memorandum and the Agreement are subject to ratification.
The Law ratifies the Memorandum and the Agreement.
The Memorandum states that on 14 April 2014, the Council of the European Union adopted a decision to make available to Ukraine macro-financial assistance of up to 1 billion EUR in the form of a loan (Decision 2014//215/EU). The objective of this assistance is to ease Ukraine's urgent external financing constraints, alleviate its balance of payments and budgetary needs and strengthen its foreign exchange reserve position. This assistance from the European Union is complementary to the resources provided to Ukraine by International Financial Institutions and bilateral donors in support of the authorities’ economic stabilization and reform program. The assistance will be disbursed in two installments of EUR 500 million each. The disbursements will be conditional upon a satisfactory track record in the implementation of the Stand-By Arrangement (SBA) to be agreed between Ukraine and the International Monetary Fund (hereafter referred to as "the IMF"). The first installment of the assistance will be disbursed upon entry into force of the Memorandum and the corresponding Loan Agreement, provided that Ukraine receives disbursements under the SBA to be agreed with the IMF. The disbursement of the second installment shall not take place earlier than three months after the release of the first installment and will also be conditional upon a positive assessment by the European Commission (hereafter referred to as "the Commission") on behalf of the European Union, of progress made with respect to a set of macroeconomic and structural adjustment policy conditions specified hereinafter. These conditions are based on the economic stabilization and reform program endorsed by Ukraine’s authorities, and are consistent with the agreement reached by Ukraine with the IMF.
The authorities of Ukraine undertake to timely and fully service all financial obligations stemming from loans provided or guaranteed by the European Union.
During the implementation of the assistance, the authorities of Ukraine shall supply the Commission with all information that is relevant for the monitoring of its economic and financial situation and for the assessment of progress in structural reforms. In particular, the authorities will supply to the Commission on a timely basis the relevant information as set out in Annex II.
With a view to preventing irregularities and fraud related to the use of the assistance and ensuring the protection of the EU's financial interests, the relevant provisions of the Agreement will apply, notably those regarding regular checks on the use of EU assistance, and checks and audits performed by the Commission and the Court of Auditors. Also, the provisions of the Agreement on early repayment will apply in case it has been established that Ukraine has engaged, in relation to the management of this assistance, in any act of fraud, corruption or any other illegal activity.
Annex I to the Memorandum provides for structural reform policy measures that the authorities commit to have fulfilled prior to the decision with respect to the disbursement of the second loan installment, in the following spheres:
- public finance management;
- trade and taxation;
- financial sector.
Annex II to the Memorandum provides for the monitoring system. During the implementation of the European Union’s assistance, the following indicators and reports shall be provided to the Commission by the relevant authorities on a quarterly basis:
- monitoring of macroeconomic and financial developments and policies;
- monitoring of structural policies;
- publication of economic data.
According to Article 1 of the Agreement, the European Union (hereinafter referred to as "Lender") grants to Ukraine (hereinafter referred to as "Borrower) a loan in EUR, for a total amount of up to 1 billion EUR, to be disbursed in one or two installments, with regard to the provisions and terms determined in Decision 2014/215/EU, the Memorandum, and the Agreement.
The Loan maturity shall not exceed 15 years (Article 2 of the Agreement).
Article 6 of the Agreement establishes that the Borrower pays interest for each loan installment at the rate, on the dates and according to the terms stipulated in borrowing Contracts, and according to the Lender's notification under the Agreement.
The Borrower repays each Installment on the dates and according to the terms stipulated in borrowing Contracts and communicated to the Borrower by the Lender (Article 7 of the Agreement).
Obligations pertaining to inspections, fraud prevention, and audit are established in Article 10 of the Agreement.
The Agreement is governed by and interpreted according to British law (Article 13 of the Agreement).